Segment 1 Of 2 Next Hearing Segment(2)
SPEAKERS CONTENTS INSERTS
Page 1 TOP OF DOC Segment 1 Of 2 DEPARTMENT OF TRANSPORTATION AND RELATED AGENCIES
APPROPRIATIONS FOR 1999
Tuesday, March 3, 1998.
SECRETARY OF TRANSPORTATION
HON. RODNEY E. SLATER, SECRETARY OF TRANSPORTATION
Mr. WOLF. Mr. Secretary, it is 10 o'clock. I think we can begin in the interest of time. I won't have an opening statement.
We welcome you. We look forward to hearing from you. You can submit your prepared statement or summarize, whichever you believe is appropriate. Your full statement will appear in the record as read, and I recognize Mr. Sabo.
Mr. SABO. I have got to be shorter. Welcome. Good to have you here again and keep up the good work. I look forward to hearing from you.
Secretary SLATER. Thank you. Mr. Chairman, Congressman Sabo, and other members of the committee who will definitely join us over the course of the hearing, I want to say at the outset that I am very thankful for this opportunity to testify in support of President Clinton's fiscal year 1999 transportation budget proposal.
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I would like to submit my written statement for the record
Mr. WOLF. Without objection.
Secretary SLATER [continuing]. And make some summary remarks concerning that statement.
Our $43.3 billion transportation budget, part of the first balanced budget in 30 years, continues the President's commitment to creating a balanced, integrated transportation system that is international in its reach, intermodal in its form, intelligent in its character and inclusive in its service.
When I took office a year ago, I reflected on what we need to meet the transportation challenges now and into the 21st century. Today our transportation system is the best in the world. Why? Because of technological innovations, infrastructure innovations and institutional innovations. We have, over the course of the year, developed a strategic plan that will continue such innovation, a plan that has been called the best in government. It sets goals for us to achieve as we prepare to meet the transportation challenges of the 21st century.
In order to continue the progress we have made in partnership with the Congress, we will focus our resources on five major areas: First, enhancing safety; second, improving mobility; third, promoting economic growth and trade; fourth, protecting the environment; and fifth, supporting our national security. To make real progress towards these goals, we have submitted tough performance measures. I look forward to working with you, Mr. Chairman, and other members of the Subcommittee, as we implement this performance plan.
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Now, to summarize our proposal and to lift up some of our funding recommendationsas I have said before, safety is our top priority. Our goal for 1999 is to reduce the number of transportation-related deaths to below 1995 levels, despite increased travel. To do this, our budget proposes $3.1 billion for safety programs, an 11 percent increase over this year and a record 7.3 percent of our total budget. This includes funding for tough laws dealing with measures against drunk driving, expanding the use of seat belts, targeting unsafe motor carriers while reducing regulatory burdens on safe ones, and hiring additional aviation and rail safety personnel. Last year the subcommittee supported our proposal for increased safety funding. We appreciate that and look forward to your support of this year's proposal.
As relates to mobility, clearly mobility means getting Americans to the places they wish to go, through a balanced and integrated transportation system. We propose a record $30 billion in infrastructure investment. This is 42 percent above the 19901993 average.
One year ago today, Mr. Chairman, you spoke on the House floor about America's transportation needs; and you stated, ''Clearly the transportation community is at an important crossroads. However, highway programs must continue to be only one component of a balanced transportation system, one that meets the needs of highway users, as well as those that depend on public transportation.'' Well, Mr. Chairman, we could not agree with you more.
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TRANSIT CAPITAL FUNDING
We want to increase transit capital funding to $4.6 billion. This includes $100 million for our Access to Jobs program, and this effort will help those individuals move from welfare rolls to payrolls and get to where the jobs are.
AMTRAK AND AIP
We also want to ensure a balanced inner city transportation system by raising Amtrak investment to $621 million, helping Amtrak to achieve operating self-sufficiency. And we want to increase FAA funding, paying for additional air traffic controllers and maintenance technicians. Also, we hope to maintain $1.7 billion for the airport improvement program.
INTELLIGENT TRANSPORTATION SYSTEMS
In the area of economic growth and trade, maintaining America's competitive edge requires we improve efficiency. We propose a record $1.1 billion for technology, including $250 million for intelligent transportation systems, which can cut by a third the cost of the new highway capacity that is needed. We propose $90 million for the Flight 2000 program, to demonstrate technologies and operating procedures which will lead to more efficient free flight, and we also propose $100 million for an innovative infrastructure credit program and $150 million for our State infrastructure banks program.
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Our budget has a record $1.9 billion to protect the environment, to help communities clean their air. We have budgeted $1.3 billion for our Congestion Mitigation and Air Quality Improvement (CMAQ) program. We also seek to reduce emissions associated with global climate change and we want to fund the Advanced Vehicles program, a partnership to cut pollution and energy consumption by trucks and other large vehicles.
On the national security front, we know that we live in a world with risk, and to support our national security programs, to protect Americans from deliberate harm, we propose significant investments in infrastructure as well. The Coast Guard's drug and interdiction effort is vital to America's security, and we want to increase its budget to $437 million. We also propose $100 million to provide airports with machines to detect explosives and to help airlines test jet cargo containers.
REAUTHORIZATION OF AVIATION AND SURFACE PROGRAMS
In closing, Mr. Chairman, much of the progress that I have described today depends on aviation and surface transportation programs which need to be reauthorized. We are currently developing our proposal for aviation reauthorization, drawing upon the recommendations of the National Civil Aviation Review Commission.
The Intermodal Surface Transportation Efficiency Act (ISTEA) reauthorization plan is pending before Congress. As Congress takes up the 1999 budget, timely reauthorization must be a top priority. I am pleased the Senate Environment and Public Works Committee is acting today to mark up the reauthorization bill in the Senate; however, I must note that I am disappointed that no additional funding was added for transit. I plan to work with the Congress to correct this situation.
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As we work with Congress on these bills, the President's proposal for a Transportation Fund for America can help us overcome obstacles that have cropped up in past efforts. This fund could assure users that new resources continue to be associated with targeted spending. All of this can be described as common-sense governmentgovernment delivering what people need as efficiently as possible.
Mr. Chairman, the budget I have described helps us to achieve our strategic goals, it helps us to respond to the transportation challenges of a new century, and helps us to ensure more and more that transportation is the tie that binds.
The President and I stand ready to work with you and members of the Committee and the entire Congress to pass a transportation budget that gives us the tools to do as the President says: strengthen our nation for the 21st century. Thank you, Mr. Chairman, and I look forward to responding to any questions that you or members of the Committee might have.
[The prepared statement and biography of Rodney Slater follows:]
"The Official Committee record contains additional material here."
Mr. WOLF. Thank you, Mr. Secretary. I understand you have to be at the White House at 1:45 for an appointment, is that correct?
Secretary SLATER. That is correct, Mr. Chairman, but this is a very important meeting, and we want to take care of our business before this committee as well.
Page 7 PREV PAGE TOP OF DOC Segment 1 Of 2 Mr. WOLF. We will go straight through the lunch hour and we will try to accommodate your schedule. I have a whole series of questions which we will go through as the day goes on, but in deference to the other members who have other appointments or are chairing other hearings, I will recognize them first.
FAA MANAGEMENT AND YEAR 2000 PROGRAM
I just have two opening comments and questions.
Secretary SLATER. Yes, Mr. Chairman.
Mr. WOLF. I personally am very, very worried about the FAA. You saw the editorial in today's Wall Street Journal. It is called the Air Traffic Wreck, it says, ''It won't seem quaint when the Year 2000 befalls us,'' talking about the Year 2000 program. ''Congress was informed this month by various experts, including the Transportation Department's own Inspector General, that the FAA lags woefully behind schedule in repairing date-related computer glitches and almost certainly won't have the necessary fixes completed by the millennium. We are not talking about expanding capacity to catch up with the growing economy and growing air travel; we are talking only about preventing the system from collapsing in a heap in 21 months.''
It went on to say, ''Scarier still is a revelation that the FAA gave itself a deadline of November of 1999, leaving itself only 2 months' slack. Whom is it kidding? The FAA is an agency that fell 15 years behind in its major computer upgrade, a job that still remains unfinished.''
Page 8 PREV PAGE TOP OF DOC Segment 1 Of 2 I am sure you saw the article in the Wall Street Journal yesterday.
''Even when it is done, it will consist of a technology that in any other part of the economy would be on its way to the junkyard; instead, it is just being installed. Yet the FAA continues to fumble in the dark. We use the expression advisedly. Several times in the past 3 years, the screens and communications have indeed gone dark at vital traffic control centers. Radio and radar contact with 300 flights was lost when the Kansas City control center went down a week before Christmas, then again in Florida a few days later.
The FAA failures have become an authentic crisis, a word much overworked in Washington, but one that really applies this time. Meanwhile, the airlines are stuck rationing the systems' inadequate capacity the only way they can, higher fares.''
We sent a letter, we met with the IG, we have met with the FAA with regard to the Year 2000 program. I am really concerned. I think you have to do more than is being done today.
Secondly, I believe that it is very difficult to measure the progress or lack of progress at the FAA. We need to establish an office within the FAA, working with external people, to monitor the progress on the Year 2000, the progress on WAAS, the progress on STARS. We have asked Jim Hall, who has agreed to provide a person from the National Transportation Safety Board; Ken Mead the IG has also done the same; as well as John Anderson from GAO. I think NASA and several other groups should be involved. There really is a credibility problem, certainly a perception, that the FAA isn't measuring up.
Page 9 PREV PAGE TOP OF DOC Segment 1 Of 2 So the one question I will have before I recognize other members of the Committee, is why are you confident that you have a handle on the Year 2000, the WAAS, and please comment on the article in the Journal yesterday. Would you tell us a little bit about that and about your thoughts with regard to how we can monitor the FAA to make sure they are keeping on track both in procurement and particularly in the safety areas.
Secretary SLATER. First of all, let me say, I think these articles that are beginning to appear in publications across the country are sobering reminders of the challenge that we have before us. But I can tell you that we have new leadership at the FAAAdministrator Garvey, who is on board, who is a proven manager, who will work with the entire FAA but also the entire Department staff, to ensure that we meet our obligations when it comes to ensuring our air traffic control system is Y2K-compliant, not only on that important day of January 1st, but long before that. We actually hope to have all of our work done by January of 1999 so we can use the full year of 1999 to test and continue to assess our compliance.
We have recently completed a review of what we call our critical FAA missions systems, and we have found that 125 of some 200 systems are already Y2K-compliant. We have a program in place to test the remainder of the systems over a time certain. We will continue to monitor that effort and continue to be vigilant as we ensure that the equipment is compliant.
We have made a request to the Congress for additional resources, I think about $30 million or so, to give us the dollars we need to take these actions over the course of the year. We have also completed a review of our host computer system, and we have determined that we need to move forward to replace that equipment. We have also established within the Department a Department-wide Y2K initiative, headed by the Deputy Secretary. I designated him to oversee that effort, to put in place a schedule where senior officials within all of the modal administrations will report directly to him on a regular basis. We then will monitor their efforts.
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We will work with the Congress to continue to monitor our progress in this regard, but we intend to meet our obligations when it comes to ensuring that our system is compliant, a year before we actually have to test it in a real-life situation. You have that commitment from me, and I look forward to working with you and the other members of the committee and the Congress in that regard.
As relates to the idea of putting together the committee that would include not only leadership from the Department, but also, as you mentioned, the NTSB and NASA and othersMr. Chairman, I think that is a good idea. I should say that we are actually working with many of these stakeholders currently, but setting up a monitoring committee, I think would be a good idea, and I look forward to working with you and other members of the Committee who would have an interest in that.
Mr. WOLF. We are going to put something in the bill to do that, because I think the Congress and the public have to have some measuring device. The slippage in so many of these programs over the years has been so dramatic. It is hard to believe why the FAA did not move on this a year ago or a year-and-a-half ago; perhaps it was because Mr. Hinson had left and there was a vacancy.
Also, I might sayand then I will end and recognize Mr. SaboI don't think Ms. Garvey has moved fast enough; she does not have enough of her own people around her. She has been on the job for over 6 months. You are losing Mr. Donohue, and I worry she has not brought in top-flight, knowledgeable people.
Page 11 PREV PAGE TOP OF DOC Segment 1 Of 2 She should have been getting the very best from the DOD, the very best from the private sector, the very best from Mitre Corporation, the very best from NASA and others; and I don't believe you have brought in enough of your own people to really get a handle on the FAA, and I think you have to be bold and innovative and imaginative because this is a very important issue.
Secretary SLATER. Yes.
COAST GUARD HEARING MOTION
Mr. SABO. Do you want to deal with the motion first?
Mr. WOLF. Yes. Mr. Rogers, the Chairman of the Commerce, Justice, State, and Judiciary Subcommittee has asked the Commandant of the Coast Guard to provide testimony to the Subcommittee on the Coast Guard's drug interdiction activities. Since a disclosure of these specific activities would endanger the national security and compromise sensitive law enforcement activities, it is necessary that a portion of the Coast Guard hearings scheduled for March 5 be closed to the public. This closed session will be brief, but it will be the first order of business when the subcommittee reconvenes on March 5, and will be followed immediately by the Commandant's testimony in support of the President's budget request for 1999 open to the public; and pursuant to Mr. Rogers' request, we are doing this.
So I move a portion of the Coast Guard hearing related to classified matters scheduled for Thursday, March 5, at 10:00 be closed in conformance with clause (2)(g), Rule 11 of the House of Representatives. The clerk will call the roll.
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The CLERK. Mr. Livingston.
The CLERK. Mr. DeLay.
Mr. DELAY. Aye.
The CLERK. Mr. DeLay votes aye.
Mr. ROGERS. Aye.
The CLERK. Mr. Rogers votes aye.
Mr. PACKARD. Aye.
Page 13 PREV PAGE TOP OF DOC Segment 1 Of 2 The CLERK. Mr. Packard votes aye.
The CLERK. Mr. Tiahrt.
Mr. TIARHT. Aye.
The CLERK. Mr. Tiahrt votes aye.
Mr. ADERHOLT. Aye.
Mr. Aderholt votes aye.
The CLERK. Mr. Sabo.
Mr. SABO. Aye.
The CLERK. Mr. Sabo votes aye.
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The CLERK. Mr. Olver.
Mr. OLVER. Aye.
The CLERK. Mr. Olver votes aye.
Mr. PASTOR. Aye.
The CLERK. Mr. Pastor votes aye.
Mr. CRAMER. Aye.
The CLERK. Mr. Cramer votes aye.
Page 15 PREV PAGE TOP OF DOC Segment 1 Of 2 The CLERK. Mr. Wolf.
Mr. WOLF. Aye.
The CLERK. Mr. Wolf votes aye.
Mr. WOLF. Mr. Sabo.
Mr. SABO. Thank you, Mr. Chairman.
Mr. Secretary, I share the concerns expressed by the Chairman as they relate to the problem for the year 2000. Let me, however, also express a broader concern as it relates to acquisition. This is not a question; I will move to the question later.
My observation over a good number of years is that we just have a terrible time on any major procurements at the Federal level and, not unique to this administration, it goeswhatever the administration and regardless of agency it just seems that in agency after agency, when we move to major procurements, we have major problems; and at some point, my own judgment is, we ask operational agencies to handle a major procurement they are somehow not equipped to do, then we run into problems. Then we try to make villains of people for doing what they probably aren't equipped to do, and we go on making the same mistakes from agency to agency.
I just think it is a very fundamental issue that at some point has to be addressed beyond individual departments.
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Normally, then, we decide we want to do some independent structure, and I am not sure that solves anything. It puts the same culture, the same framework off by itself, whether it is FAA or IRS or whatever agency.
I just think at some point there needs to be a real centralized task force in the administration, looking at how we go through the process of planning major new acquisitions, andbecause I know I had this conversation with Mr. Rogers some time ago about an agency he funds, the same experience; and it just seems toyou know, it goes on all the time. And I don't know the answer, but I think it wouldwe have wasted billions of dollars throughout the government in faulty procurement that just never gets off the ground, never accomplishes goals. I don't know if we tried to do too much to start with or some place, somehow, the planning process just breaks down, system-wide.
SURFACE TRANSPORTATION REAUTHORIZATION
Let meI would like to hear from you where we are in relationship to the reauthorization bill. What is our time frame when we really start running into problems this year? And I have to say that I also appreciate your comment that if we are going to add dollars, it should not just be for additional dollars for highways.
As I understand what is happening in the Senate, they are adding dollars. They don't know where they are coming from in relationship to trade-offs, but as I understand it, they are all highway monies, no transit money, no enhancement money. I am not sure if they are increasing some of the things to increase the capacity use, like intelligent vehicle systems or not, I just read brief descriptions of it, but it seems to me that if we are going to make the decision, we are going to take money away from other programs to spend within ISTEA, that there has to be some balance in how those dollars are spent; and clearly, the additions I see in the Senate don't achieve those goals.
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Secretary SLATER. First of all, Congressman Sabo, let me say that we are encouraged by the action that we are beginning to see in the Congress dealing with ISTEA reauthorization.
Let me also say, before getting into the details of that response, I do think it important to say thanks to the Congress for at least giving the FAA the acquisition reform legislation, and also the personnel reform legislation that was passed recently, that really gives us an opportunity to try to deal with these very thorny and difficult acquisition questions that you reference and that are a part of our reauthorization and our modernization initiative.
So I want to begin my remarks by thanking the Congress for giving us at least the ability to be much more aggressive, much more forthright and timely in dealing with acquisition questions. We look forward to staying in touch with you to keep you informed of our progress in that regard because we are learning as we go and we do intend to seek the best professional advice in this regard available.
Back to the issue of reauthorization, it is true that we are beginning to see some progress. The good thing is that both major bills in the House and in the Senate reflect the key principles that were identified in our National Economic Crossroads Transportation Efficiency Act (NEXTEA) proposal that was introduced a year ago this month. We talked about the need for maintaining flexibility within the program that allows State and local officials to make determinations about how those resources should best be spent to respond to the transportation needs that they know exist.
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We also sought maximum investment with our program, with a focus on safety, a focus on the environment, a focus on helping people move from welfare to work. All of those principles are retained within the two bills that are moving forwardone in the House, one in the Senate.
I did mention that the concern we have about the action taken by the Senate yesterday doesn't relate to the question of additional resources. It does relate, though, to the issue of whether there will be a balanced approach to the granting of those resourceswill we take care of transit needs as well as highway needs, and will we continue to focus on questions like the environment and safety and the like? And we will continue to work with the Congress as we move forward.
We are very concerned that we move forth as expeditiously as possible because, as you know, ISTEA actually expired last year, but Congress then passed an extension for 6 months. The extension expires May 1st of this year, and that is less than 60 days away, and so it is incumbent upon us to continue to act in a forthright and timely fashion in reauthorizing this most important piece of legislation.
The areas that will be hurt most severely, if we fail to act and fail to pass some kind of extension, would be the safety programsmotor carrier safety; also our ability to work with States to deal with questions like drunk driving laws; and rail safety, to a degree. So it is very important that we move on the program for that purpose.
Also, if many States are unable to move forward with the awarding of contracts early in the year, then we stand the chance of losing an entire construction season, and that is a matter of major concern for States in the Northeast and the Upper Midwest. So that is also a matter of great concern to us.
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We also have two particular agencies within the Department of Transportation that depend on administrative funds being taken down from these resources. Those are the Federal Highway Administration and the Bureau of Transportation Statistics. As you know, both of those agencies are very important to States and local governments when it comes to moving through the performance chain as it relates to designing and moving a contract to actual construction.
So those are the major areas of concern. But again, we are seeing activity and we are going to continue to work with the Congress to ensure that the bill is passed in a timely fashion.
Mr. PACKARD. Would the gentleman yield for a moment on that point?
Do you have a contingency plan if we go beyond the May 1st deadline?
Secretary SLATER. We put most of our contingency thinking on the table before the Congress when this matter came up in September of last year. We have stretched the resources about as far as they can go.
We don't think we will be able to minimize the adverse impacts that could result if this bill is not passed in a timely fashion. We will do whatever we can; we will continue to think creatively with the Congress as we move forward, but it is really imperative that we deal with this most important piece of domestic legislation before the Congressbefore that May 1st deadline.
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Mr. PACKARD. Thank you.
Mr. SABO. Just one follow-up question. And I don't understand all the technicalities on how States can proceed with bids and what they can bid today and what they have to hold back, but I represent a northern State and we have had a mild winter, which would lead one to believe El Niño has had some good effects in our Statemild winter, not much snow on the ground, and a construction season that could likely start earlier than normal.
They are limited by whatever proportion you can commit from the 6-month extension. Anything beyond that, they have to wait for actual contract-letting until further action on ISTEA occurs; is that right?
Secretary SLATER. That is correct. I would assume, Congressman Sabo, that in Minnesota in particular, they probably let contracts to take advantage of the mild construction season that they now enjoy, so you probably have work under way, but they have not been able to do what they would normally have done in a situation like this, and that is to actually front-end load many of the contracts that they would have let because of their assurance that the resources would be forthcoming, so as to really pack into this construction season as many projects as possible.
So without knowing the particulars of the case in Minnesota, that is an assumption I would make, based on my experience as a transportation official in years past.
Page 21 PREV PAGE TOP OF DOC Segment 1 Of 2 Mr. SABO. Thank you.
Mr. WOLF. Mr. DeLay.
Mr. DELAY. Thank you, Mr. Chairman.
Mr. Secretary, it is good to see you, and welcome to the committee again. During my questioning, I would like to bring up a couple of parochial things, and I will come back during a second round to national issues.
As you may know, Houston Metro serves the fourth largest city and third most populous county in the Nation, yet for some 18 months, your department has denied Metro Federal funding for all construction projects because Metro, through no fault of its own, was prohibited by a Federal court order from implementing its federally approved DBE program. Throughout that period, the Department exhibited, in my view, a very inflexible and excessively bureaucratic posture in responding to Metro's dilemma of having to comply with the court order while at the same time facing a contradictory requirement in the law.
Fortunately, however, the FTA finally granted Metro a temporary waiver from the DBE regulations which allowed Metro to proceed with its construction program, using a race- and gender-neutral small business development program. As you know, Mr. Secretary, that exemption is due to expire at the end of this month. In the meantime, Metro continues to operate under the constraints of the Federal court order and is unlikely to be released from those constraints for months, if not years, while Metro appeals the district court ruling that invalidated its DBE program as unconstitutional.
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Can you give me any reason why your Department wouldn't, as a matter of course, grant an extension of that waiver?
Secretary SLATER. Yes. First of all, let me say, Congressman DeLay, we appreciate the opportunity we have had to work with you to address this matter; and we appreciate your vigilance in continuing to press us on the issue, so as to provide maximum leeway for the City of Houston. Let me just say that in response to that, we want to continue to be mindful; and for that reason, we have already extended, once again, that date from April to October of this year, and we will continue to work with you in that regard.
DISADVANTAGED BUSINESS ENTERPRISE (DBE) REGULATIONS
Mr. DELAY. That is great to hear. I understand that Houston is not the only Federal grant recipient, though, to be sued for trying to satisfy the Department's DBE requirement. How does the DOT plan to deal with these cases where Federal grant recipients are judicially precluded from meeting your DBE requirements?
Secretary SLATER. Well, we will continue to address them on a case-by-case basis, depending on what restriction might be applied by virtue of court order or some other kind of official action, but I can tell you that in all of the instances, we will be as flexible and as forthcoming as we have been in the case involving Houston Metro.
Mr. DELAY. Are you looking at this situation within your own Department as you develop recommendations for reforming the program, especially in light of the Adarand decision.
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Secretary SLATER. We are. As you know, the President has challenged all of the administration to work on projects and programs of this nature so as to mend them and to ensure that they are compliant with Adarand. We are in the process of working across the administration and, clearly, within the department to do just that. We will soon, actually, have actions that we will announce that will go to the heart of that particular matter.
But our objective is, again, to mend the programs, to make them compliant with Adarand and to continue the benefits that we derive from the program, allowing women, minority-owned businesses, and small businesses to participate in this dynamic industry and to help in the rebuilding of America.
Mr. DELAY. Well, do you have any plans for considering approaches such as Houston's, which could very well be acceptable to the courts?
Secretary SLATER. Oh, yes, yes, we do.
Mr. DELAY. Are you going to let us see them?
Secretary SLATER. We will continue to work with the Committee and with members who have expressed an interest. We will do that, and look forward to doing that. As a matter of fact, it is situations like the Houston Metro case that have continued to give us insight as to how we might be able to modify our program so as to preserve the benefits of the program, but ensure that they are in compliance with the Supreme Court's Adarand decision, which, as you know, raises the standard by which these programs are to be measured.
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Mr. DELAY. I want to switch gears a little bit.
I69 is very important to Houston and actually, to every State from Indiana through Texas. As you know, the NHS Designation Act of 1995 designated these high-priority corridors18 and 20, I69as future parts of the interstate system. The Corridor 20 feasibility study released in August of 1996 and the special issue study released in July of 1997, together identify most of that route. At this point, the route of I69 is now mostly known; there remain a couple of disagreements, but they are fairly small.
In spite of all this, the States along the corridor have had a great deal of difficulty in getting future Interstate69 signs erected. In fact, in Texas, we have had to put up blank future Interstate signs without the numerical designation. I am working with Chairman Shuster to correct this in BESTEA.
Could you work with us to ensure that future I69 signs are placed along the route that everybody knows is the future site for I69?
Secretary SLATER. Definitely. I look forward to doing so.
Mr. DELAY. Since the corridors were first identified in the 1991 ISTEA, there have been a number of federally and State-funded feasibility and location studies. Those studies started by identifying 93 possible route locations, which have been narrowed down to a known highly cost-effective route. Corridor 18 has a cost-benefit ratio of $1.57 in return for every dollar invested, and Corridor 20 has a return ranging from $1.49 to $1.72; in the course of picking the most effective route, a lot of the segments were considered and rejected.
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There is interest among some Members of Congress in legislatively adding back sections that were eliminated in the engineering studies, or never even considered at all. Could you discuss the possible impact of those legislatively designated route additions; and would they not reduce the overall cost-benefit of I69 and slow down that project and reduce its competitiveness with other corridors?
Secretary SLATER. Well, let me say as it relates to I69, we have done a considerable amount of work, as you know, funding various studies, that have determined that the route is economically feasible, which is quite a significant feat, when you consider that the route would go through, frankly, one of the most economically depressed areas of the country; but it was determined that this kind of investment effort would actually serve to revitalize those areas. So I think that all of that is commendable.
I can tell you that from the vantage point of the Department of Transportation, we wish to work with the parties that are interested in these corridors and to do so in a way that will move us to actual design and construction as soon as possible.
And as we are talking about additional resources for infrastructure investment, this is an ideal time and opportunity to do just that, so I would be concerned about doing too many things that would continue to add to the length of the time that would be required before we can move to actual design and construction.
[The information follows:]
Page 26 PREV PAGE TOP OF DOC Segment 1 Of 2 In general, adding segments would increase both the area served by the Corridor as well as the construction, operating and maintenance costs. The specific effect would depend on the nature of the segment. For example, adding an additional major river crossing or an urban link with numerous interchanges might substantially increase both mobility and cost. Adding an existing segment which has already been improved to freeway standards would probably result in minimal improvement in mobility, but also only a small increase in cost.
Mr. DELAY. Is that a commitment for I69 that I just heard?
Secretary SLATER. That is a commitment to working with you and the individual States to move forward in this process. I want to qualify my response just a bit because we still have to deal with the issue of how it is paid for and that is going to require everyone coming to the table, but I can assure you that the Department of Transportation will be there, and this Secretary will be there to work with you and others who, I know, are very, very interested in this project.
Mr. DELAY. Thank you, Mr. Chairman. I will wait for another round.
FAA INFORMATION TECHNOLOGY
Mr. WOLF. Mr. Olver.
Mr. OLVER. Thank you, Mr. Chairman.
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I am not quite sure how I got so completely in between these microphones, but Mr. Secretary, it is good to have you here again.
Secretary SLATER. Thank you, Congressman Olver.
Mr. OLVER. You were herein place roughly a year, and I must say it must be one of the most exciting jobs in government that you have. My sense is that after Education, I think after education and maybe our commitment to research and development, there is probably nothing that is more critical than the investments in infrastructure and transportation infrastructure for keeping an economy going and really growing over time.
So I am very interested, and am very pleased with the high level of investment that you put forward in rail and transit for the urban areas, and the airport improvement and things all up and down the line. I would like to just sort of piggyback on what the Chairman and the Ranking Member have said about FAA.
Secretary SLATER. Yes.
Mr. OLVER. And I hesitate a little because the Administrator is an old friend, and I have very high respect for her administrative abilities. She has only been there half a year, and you have given rather brave talk, I think, about how we are going to deal with the host computer and Y2K along the way.
Beyond those, we have even the process of how to replace and rebuild an air traffic control system. Personnel, as part of the computer issueis, clearly, also very critical.
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I hope you are on target on the brave talk, and I suppose I am playing to what my Ranking Member said about we need to beto build a process to do these things, because perhaps more than anywhere else in transportation, the computerization of the whole system is critical to the operation. It probably in subtle ways is critical in a lot of other places, but it is more obviously critical in air transportation in the whole FAA operation. And yet, here we are with a host computer whichI keep being told by reputable people that it is generations behindgenerations in computerization are sometimes less than 3 years, often less than 3 years, but generations behind.
We just haven't been doing it. One doesn't get to that situation in a year. This has taken us a long time. We had to work to get ourselves into this situation, where our computerization is that far behind. We are trying to deal with that matter.
And then the Y2K thing, which you are saying we are in control of, but I am hearing and reading there are several airlines that have said they won't fly on January 1st of the year 2000 if we have not resolved the issues here that are so serious for the whole program. And I guess I am not convinced that we are going to be there by the year 2000, by January 1st of 2000.
I know you are putting forward a very brave front, but I am wondering whether it is a brave front or whether we have the systems in place to deal with that. This computerization thing is big, it is expensive. This one is running into problems.
We had one in dealing with the IRS computerization over there, which has been just fits and starts in computerization there; it is at least as far behind. With a country as completely committed to modernization and to technology, that the major government computing systems are in such shamblesI really am not convinced that you are going to be out of this woods by January 1st of the year 2000.
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Can you help me?
Secretary SLATER. Well, let me just say, Congressman Olver, that clearly this is a matter that requires our best effort, and I think it is important to note at the outset, as we deal with these issues, that our aviation system is the safest in the world and that what we are seeking to do is to make a safe system safer, and that we do have to make some decisions thatfranklyit would have been good had we made them earlier, but nonetheless, we are challenged and have the responsibility to make those decisions now.
I noted at the outset of my earlier response that clearly all of the articles and all of the discussions are very sobering in that they challenge us to question every assumption and every assessment that we made up to this point, and they require that we be eternally vigilant as we check and double-check all of our assessments. And we are doing that, but I can assure you and the members of this committee that when it is all said and done, we will have put forth the very best effort possible. We will have worked with members of this committee, we will have challenged and energized all of the individuals who are responsible within our individual modes, and here we are talking about especially the FAA.
We will have sought the input from the private sector, we will have touched all of the bases to make the very best effort possible. I believe that that effort will be sufficient; I am confident in that regard. But I can tell you that every day, as we read about the challenges and come to a greater understanding of the challenges we face, that we are required to continue to question, reassess, recheck, and then move forward; and that is the spirit in which we accept the responsibility we have.
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And I just want to make sure that we continue to have the opportunity to confer with this Committee, to respond to your comments and questions in this regard as we move forward. We clearly don't have a day or an opportunity to waste; I recognize that, and I come before the Committee with that understanding. We are going to give this our very best effort.
Mr. OLVER. You know, it is very easy for all of us, as members, to understand and be advocates and really push for the big transit projectsthe Amtrak modernizations and lines for those of us who really are concerned about the corridors that are involved there, for the airport improvements, the construction improvements and so forthit is obvious and it is very clear, very easy to follow where those investments go and what those investments buy.
When you have got a core investment in infrastructure, in the technology infrastructure here of the computer systems, I don't understand it. There are probably a fair number of others that don't either, but it isnothing is going to float here unless that stuff, at least in relation to the FAA, is there. And I can't even judge whether you are asking for enough money or whether you have got the systems that are going to do it in place, but it grinds to a halt if that isn't done.
Whether we improve and build more airports or name them or whatever we do with them, this computerization thing is really horrendous. It is neglect and it isyou know, you don't get there without a degree of neglect over a considerable period of time with this sort of situation. We really do need to make this system right and with a big, correct expenditure.
Page 31 PREV PAGE TOP OF DOC Segment 1 Of 2 Secretary SLATER. Well, Congressman, your point is well taken, and that is why in the R&D area, we requested a 10 percent increase in investment. Also, I mentioned earlier we have requested an additional $30 some-odd-million to invest in our modernization effort. This is on top of the increase that we request in our budget.
So we are trying to put the resources on the table, but we are also trying to put in place a process that will ensure that those resources are expended for the appropriate purposes. It is a very daunting challenge, but it is one that we are stepping up to the plate to address. And I appreciate your concerns in this regard. I am sure that we may have, over time, hearings that will be devoted solely to a discussion of this issue; and at that time, clearly we will be able to get into more detail.
AlsoI think we may have mentioned this, Mr. Chairman, either in the meeting the other day or afterwards, butafter our meeting, we talked a lot about the whole question of our team that we put in place at the FAA. And we discussed internally that one thing we might do is to invite you and other members of the committee who were interested in this matter to our site where we have our senior leadership in place to review the plan that we are putting in place, and frankly, to get the benefit of your thinking and response to that. We plan to do that with key leaders in the private sector, the aviation industry and others, and I think that it would be good to do with the members of the Committee.
Mr. WOLF. Thank you. We will come out and visit.
I am very skeptical as to whether or not you are going to make it. If you look at the record of the past, since 1982, the FAA has failed on all of these target dates. Also, the ability to attract the people who have the necessary skills, it is so difficult because they are hiring in the private sector. There was an article the other day. They are trying to get the people to come up here and get the computers here on Capitol Hill in order.
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ANNOUNCEMENTS WITHOUT INFORMING MEMBERS
Mr. ROGERS. Thank you, Mr. Chairman.
Mr. Secretary, good to see you again.
Secretary SLATER. Thank you, Congressman Rogers.
Mr. ROGERS. It is certainly good to visit with you. Mr. Secretary. A member has informed us that sometimes that member reads about an important announcement from your department in the local newspaper, not having known about it before. What do you say about that?
Secretary SLATER. Congressman, I think that if that happens as an exception, it is an oversight that is probably explainable, but if it happens as a matter of course, then that is unacceptable; and where we find that to be the case, I can assure you that we will rectify the situation.
Mr. ROGERS. Well, certainly a Member of Congress that represents that district is pertinent and key to the information; is that correct?
Secretary SLATER. That is correct.
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Mr. ROGERS. And should learn about it without reading it in the newspaper?
Secretary SLATER. That is correct.
Mr. WOLF. Will the gentleman yield?
What is your policy with regard to that? Because there was a problem last year with a member of the committee. What is your policy with regard to the notification?
Secretary SLATER. Our effort is to identify clearly all key membersif it is in a congressional district, then clearly that Member of Congress, but also, the Senators of the Stateand to do all of that before there is a public announcement, giving them the opportunity to make the announcement locally. That is generally the way we handle it. We also, from time to time, will be in touch with governors or mayors, especially if they have expressed an interest in a given project. But that is the procedure.
Mr. ROGERS. I thank you.
Secretary SLATER. A Member should not have to read about a project in the paper.
Mr. ROGERS. Thank you very much, Mr. Secretary.
Page 34 PREV PAGE TOP OF DOC Segment 1 Of 2 Secretary SLATER. Yes, sir.
NATIONAL HIGHWAY SAFETY
Mr. ROGERS. I want to ask you about the national highway traffic safety, part of your budget request.
Secretary SLATER. Yes.
Mr. ROGERS. You gave that the largest percent increase, 22 percent, the largest budget proposal increase in your whole budget; and as I understand, those monies are spent through the award of block grants and incentive grants to States to improve driver behavior and also to increase law enforcement measures.
That is a very attractive request, to improve safety on our Nation's highways. I would like to talk to you about improving the safety of our Nation's highways.
In 1996, almost 42,000 people died in accidents on our highways. That is increasing; it is up 2,500 just since 1992. FHWA maintains that road design contributed to 30 percent of those fatalities, that is, 12,000 people who died because of defective road design. I rode in my district, if you want to be parochial on the subject, the Daniel Boone Parkway. This past year, 44 people have died on that single, 40-mile stretch of road, by most people's accounts, because it is defectively designed.
Can the monies that are in your budget for traffic safety administration, can they be used for highways like the Daniel Boone Parkway, to improve the design and correct deficiencies in design that are causing people's lives to be lost?
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Secretary SLATER. Well, first of all, let me just say that you are correct in noting that NHTSA, our highway safety program, is where we are providing the largest increase. Second is aviation. Aviation is about 18 percent; for NHTSA, the funding increase is 22 percent.
That program is, as you noted, Congressman, primarily designed to benefit law enforcement officials and to aid States and local governments in promoting education programs. The total amount of that budget under our proposed 1999 budget is about $406 million. We are requesting, frankly, a much larger investment increase on the infrastructure investment side, which goes to the heart of your question.
If you look at what we, through the assistance of the Congress, are able to provide to States in 1998, we maintain that in 1999, and those numbers are actually 42 percent higher than the average for the first 4 years of the decade.
Mr. ROGERS. How can the country deal with problems like the Daniel Boone Parkway in my district that are defectively designed?
Secretary SLATER. Sure.
Mr. ROGERS. You are saying that these NHTSA monies could not be used for that purpose?
Secretary SLATER. That is correct.
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Mr. ROGERS. What could be used for that purpose?
Secretary SLATER. All of the monies that would fall into your funding categories dealing with the National Highway System (NHS), dealing with the surface transportation programs, basically your infrastructure investment programs. There may be a way of using enhancement funds if it is a parkway, as you mentionedI made a note of the 42 or so lives lost, if I am not mistaken.
Mr. ROGERS. Forty-four.
Secretary SLATER. And this is a project that, frankly, we would like toand welcome an opportunity tolook at in partnership with the Kentucky Department of Transportation, to see if there are other funding sources that might be leveraged to address this particular issue.
Mr. ROGERS. I would appreciate that very much, so we can count on
Secretary SLATER. You can count on our response in that regard.
Mr. ROGERS. That would be great if you could work with the State to see if there is a way we can remedy the problem. It is a massacre that is ongoing.
Secretary SLATER. Yes.
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DOT REQUEST FOR HIGHWAY SPENDING
Mr. ROGERS. Now, what did you request of OMB for highway spending this year.
Secretary SLATER. You mean, before we got
Mr. ROGERS. Cut by the OMB.
Secretary SLATER. Well, Congressman, you know, I am supportive of
Mr. ROGERS. I understand.
Secretary SLATER. Yes, sir. You
Mr. ROGERS. You don't need to say all that speech. You are supportive of the President's budget request and you are a loyal troop and soldier and you are going to go all the way with him, I know.
How much did you ask for before you got cut?
Secretary SLATER. As much as possible. Let me just say that we requested that we maintain our record level of investment, and that is what we have done with this budget.
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I should also add that last week at a meeting with the governorsI had a meeting with the governorsit was stressed that along with education, as has been mentioned earlier in other important investment initiatives, that transportation would be high on the list.
The President indicated his support for the speedy reauthorization of ISTEA, as well as a willingness to consider an increase in transportation infrastructure and investment, so long as we maintained our fiscal responsibility and maintained our commitment to a balanced budget, which is historic. And so there is clearly a willingness on the part of the administration to entertain recommendations for additional resources for transportation, but we want to do it in a way that is consistent with the balanced budget agreement that was entered between the administration and the Congress just last year.
Mr. ROGERS. Well, you requested $21.850, right, billion, $21,850,000,000?
Secretary SLATER. That is what we got with highways.
Mr. ROGERS. Oh, for fiscal 1999?
Secretary SLATER. Yes.
Mr. ROGERS. That is what you asked of OMB?
Page 39 PREV PAGE TOP OF DOC Segment 1 Of 2 Secretary SLATER. That is what we got.
Mr. ROGERS. How much did you ask is what I am trying to get at. It is a simple question.
Secretary SLATER. As much as possible, seriously.
Mr. ROGERS. What did you ask ofa specific figure of the OMB?
Secretary SLATER. I am pretty sure that it was basically this number. Yes, that is correct.
Mr. ROGERS. You got all you asked for?
Secretary SLATER. We got all we asked for.
Mr. ROGERS. Why didn't you ask for more?
Secretary SLATER. We asked for a lot. That is quite significant. That brings the budget to record level totals.
Mr. ROGERS. As I understand it, it is $34 million less than the current level.
Page 40 PREV PAGE TOP OF DOC Segment 1 Of 2 Secretary SLATER. No.
Mr. ROGERS. It is not a decrease from the 1998 enacted level?
Secretary SLATER. No. I understand that only as it relates to demosand that is because we have moved considerably on our investment in demos over the life of ISTEAthat it is a reduction in the outlays as it relates to demos.
Mr. ROGERS. Well, as I am sure you are aware, the Senatethe Senate, apparently, last night, voted to increase funding levels for highways. As I understand it, that proposal in the Senate would yield $28 billion in contract authority for fiscal 1999.
Secretary SLATER. Right.
Mr. ROGERS. Now, that is obviously more than you have requested and OMB has granted in your budget request.
Secretary SLATER. That is correct.
Mr. ROGERS. Can you live with that? Would you be supportive of that if the Congress came to an agreement on a higher figure.
Secretary SLATER. Clearly, I believe that the President would be receptive to that kind of increase, especially given the fact that it was a proposal by the Chair of the Budget Committee, and that suggests a recognition that it is all a part of the overall commitment of the Congress and the administration to do this, in keeping with the balanced budget agreement.
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We could definitely use the additional resources to invest in infrastructure and safety programs, and the environment and transit, as well as highways; but I do believeand I feel it is incumbent upon me to say thisthat there are other matters of importance on the table as well. Congressman Olver mentioned education and R&D investment. Those are important issues, and there is the issue of the balanced budget agreement that was historic. I think we gained a lot of trust on the part of the American people by putting our fiscal house in order and, yet, making tough investment and strategic investment decisions; and I am just hopeful that as we review the overall budget, in the final analysis, we will be able to retain that good that we have gained because of some of these tough decisions we have made in the past.
HIGHWAY TRUST FUND ACCOUNT
Mr. ROGERS. Well, as you well know, there is a debate going on here and across the country on whether or not we should take the highway trust fund account off budget, so as to be able to spend more for highway construction and not use the balance in the trust fund for the purpose of balancing the budget for everything else.
Have you a position on that?
Secretary SLATER. I do.
Mr. ROGERS. What is it?
Secretary SLATER. I don't think we should take the trust fund off budget. We have a number of trust funds that are a part of a unified budget, and because of our ability to operate with that reality, we, working with the Congress, have been able to reduce the deficit to almost zero, when it was anticipated in 1993 that this year the deficit would be more than $350 billion.
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Because of the fact that these trust fundsnot only the highway and the aviation trust fund, but the many, many trust funds, including Social Securityare a part of a unified budget, this Congress, working with the administration, has been able to exercise fiscal discipline, which has our books pretty much in order now. We have also been able to invest in those things that prepare us for the 21st century. I think that is good.
Mr. ROGERS. What do you say to those people who argue that the trust funds were collected for a specific purpose and are not being spent for that purpose, and that there is a real problem with not enough money for highway spending or airport spending, and yet those trust funds, collected for that purpose, are being held hostage to be balanced off against a purpose for which they were not designed or collected.
Secretary SLATER. I would say that, first of all, faced with an extraordinary situation, extraordinary measures were taken. But then if you look at the action over time, you can see where monies that were once placed into the general fund have now come back into the trust fund. We are actually now in discussions about how we spend down more of those resources to put the money to the use for which the resources were raised. We are working together in a collaborative fashion, putting trust into the trust fund. And I do believe that when our work is done on this issue, reauthorization, that we are going to find that we are spending an amount that is much closer to the resources going into the trust fund than is currently the case, and that we have been making ground on that commitment over the last 5 years.
Again, if you look at our proposed budget for 1999, we will be spending an amount that is a 42 percent increase over the amount that was being spent on infrastructure investment during the first 4 years of this decade.
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Mr. ROGERS. Would you be satisfied or happy or unhappy if we spent this coming year, on highway construction, the same amount of money that is going into the trust fund this year?
Secretary SLATER. That is one of the issues on the table, and clearly Congress is looking at a number of options. I think it is best for me just to repeat what the President has said.
He submitted a budget that will be balanced 3 years ahead of schedule. Within that context, we have record-level investment in infrastructure, which is a 42 percent increase over the investment levels for the first 4 years of the decade. The President has also acknowledged a willingness to work with the Congress, as we have over the past 5 years, to get to a record level of investment, where we currently find ourselves; to add additional resources, but to do so within the context of the commitment to a balanced budget that is historic and that this Congress and the administration agreed to just last year.
Mr. ROGERS. I have no further questions.
Mr. WOLF. Thank you.
Page 44 PREV PAGE TOP OF DOC Segment 1 Of 2 Mr. PASTOR. Thank you, Mr. Chairman.
Good morning, Mr. Secretary.
Secretary SLATER. Good morning, Congressman Pastor.
Mr. PASTOR. Approximately a year ago at our hearing with you, you recognized the needs that we have along the border as NAFTA and other free trade agreements have increased the transfer of goods and people across the border. We have now found that many of the facilities we do have are now allowing this free trade to move fairly quicklyone, the location of the gates themselves; secondly, the need to protect our borders due to undocumented people wanting to cross over and also the need to enforceand to make sure that drugs aren't crossing our border. So all of those factors have really caused our border crossings to back up and goods not to move as quickly as we would like.
Last year you said you were going to do a pilot program and had requested, I don't know how many millions of dollars, and I don't think the committee gave you as much as you wanted.
Secretary SLATER. Right.
Mr. PASTOR. Let me ask you, during this last year, what were you able to accomplish with the few bucks we gave you, and how did you meet the needs of the border communities?
Page 45 PREV PAGE TOP OF DOC Segment 1 Of 2 Secretary SLATER. Well, Congressman Pastor, thank you, especially for your interest regarding the border. And it is true that as a result of NAFTA, we have seen a significant increase in traffic, both on the southern border that we share with Mexico and the northern border that we share with Canada.
We have actually achieved some significant results as we have tested the benefits of Intelligent Transportation Systems (ITS) technologies along the border. What we want to do as we go forward is to have a program in the neighborhood of about $250 million for ITS investmentsI am sure that a number of those investments will find their way to the borderbut also to concentrate with about $90 million, an effort along the border dealing with the border itself and major trade corridors where we would actually deploy the technology that we have tested over the last few years. We look forward to working with you and your colleagues who have a particular interest in this matter.
Mr. PASTOR. In NEXTEA, the administration has proposed a special border programI think it is $540 millionwhich amounts to about $90 million a year.
Secretary SLATER. Yes, sir.
Mr. PASTOR. From what I read, you are proposing $45 million be used for enhancement and development of the actual roads themselves, the development of the corridors. If that money is given to you, how will the community be able to succeed in obtaining some of those monies? The reason I ask that is because sometimes the border communities, as a high priority, want to develop that corridoran example of this is Yuma. Yuma County knows that more goods are going to be coming from Mexico because of the maquiladora program increasing the investment down there, more agricultural products coming across the border from Mexico. So they know they are going to need a new site, a new gate, to develop the corridor from that gate into the freeway system that takes it on west to either San Diego or Los Angeles.
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But in many cases, the State may have higher priorities in terms of where the monies ought to be invested, so how could a community like Yuma, Arizona, who knows of the great need for the development of that border infrastructure, be able to ensure those monies are going to be made available for that purpose, rather than what the State transportation department may decide is more important.
Secretary SLATER. Well, clearly, Congressman Pastor, in those situations we would have to work with the States and the local communities; and hopefully, we would have instances where they are in agreement or general agreement. Those are always the best situations. These would be discretionary funds, and so we at the Federal level would have some say about how those resources would be expended. But we would like to get recommendations from those at the State and local levels, so we would be supporting a partnership effort.
Even if we are using, say, $90 million annually for this kind of an investment, when it comes to some of the kinds of investments we are talking about, they still require significant investment from the State level and possibly the local level. So it is important that all of the interested parties are in agreement, or near agreement, as we work on investing in the projects of this type.
Also, the monies will be limited and so we will have to make those investments strategically, and that too would require that the parties find some common ground based on common understanding, dealing with issues that we find to be of common interest.
Mr. PASTOR. You also propose $45 million, I think, to deal with the development of gates, and it has been my experience that at the border usually it is GSA that goes out and finds the location and then finds the money to build the particular gate, and then INS and Customs basically occupy it?
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With this $45 million, how are you going to work with GSA and the other agencies that will occupy it?
Secretary SLATER. We have a very good partnership with GSA and Customs along the border, because frankly many of our interests and responsibilities actually converge at those locations. What we are proposing is that we have resources that we can also bring to the table, working with GSA and with Customs to bring about the kinds of efficiency improvements that we would want to see along the border.
To underscore the issue of efficiency, it has been determined that if we could increase the efficiency of our system by 1 percent across the board, over a decade we could save in excess of $100 billion. That really speaks to the essence of why it is important for us to enhance the movement of people and goods along the border. If we can bring some of the technology to bear that we have used in the aviation sphere, in years past, as people are moving through metal detectors and the likeif we can bring that kind of technology to bear along the border where trucks can move across with that kind of sensory and X-ray material or capability, then that is just going to enhance the flow of people and goods, making for a much more efficient transportation system, and adding to the bottom line. But we think that we have a role to play at the point where these interests converge with GSA and with Customs, and that is why we are asking for resources in this particular category.
Mr. PASTOR. About 2 years ago, on the border, I saw the technology that was being developed, or had been developed, in which the manifest, which would start in Mexico with the goods that would be occupying the carrier would basically be traced to the border. At the border, the truck would cross fairly quickly because law enforcementCustoms, the FDA orexcuse me, the Ag Department already cleared this truck at the point of origin.
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At that time, 2 years ago, they were saying this was going to be implemented throughout the border and every carrier would be able to secure this type of technology. Where are we on that particular technology?
Secretary SLATER. Well, we are moving forward. I can tell you that having in place that kind of safety regime and having in place that kind of technology is essential to the process, and that is why we are working with our counterparts in Mexico. Secretary Ruiz and I have met a number of times on this issue, which deals with the establishment of a safety regime south of the U.S. border so that all of these issues are not addressed right at the border. The use of this kind of technology, putting in place a comprehensive safety regime, will allow us to make this hope, this dream that we have addressed in the past, a reality. But we have tested the equipment, and now it is a matter of deployment, and we need resources to do that.
Mr. PASTOR. I hope you continue working on the border situation.
If the Chairman will allow me one more question
Mr. WOLF. Yes.
Mr. PASTOR. Let me add to the frustration I guess you sense from some of the members about how we may not be as confident in the computers being brought in on time or some of the problems that the National Transportation Safety Board has brought forth. I will just give two examples and then you can take them, not as criticism, but at least my two examples.
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When we had the National Transportation Safety Board a year ago, we talked about the problem with the 737 and the rudders
Secretary SLATER. Yes.
Mr. PASTOR [continuing]. And how we needed to replace them, number one; and secondly, that the pilots would need new training.
A few weeks ago, Mr. Hall was here, and again, much to our frustration, the agency who has responsibility to ensure that those rudders were replaced and the pilots were trained, at least I had the impression that we weren't moving as quickly as we should.
And this is a safety problem that has been identified; this is a problem that has a solution, but yet it seems that the agency who had the oversight and the enforcement responsibility just was, for whatever reason, not moving quickly enough. And Mr. Secretary, at that point, I was concerned personally, because, you know, I travel every weekend a few miles, as well as a lot of these members. And you travel more than I do, so I want to make sure that this airline system is safe.
The other dealt with the computers. I remember a year ago we were talking about the computer system, the modernization, and late last year in this room we sat with people from the agency and the vendor. And we were discussing screens, I was talking about the big picture, and here we are talking about the screen and what color it should be, whether or not we should have a keyboard or have a wheel or have a mouse. I was frustrated because here I am worried about safety and I am micromanaging, because the issue was brought to us because the people who had responsibility couldn't come to a resolution.
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And so if you sense some frustration, it is because we have seen situations in which maybe you have been told that the modernization is going forth, that these problems are being addressed, but yet, before the committee, we are being advised that we can't move forward because the people who are viewing the screen, the people who have the responsibility to bring us a screen and the people who are managing this whole system can't agree on the screen.
And so that is why I bring that to you, so thatto add some examples of our frustration so you might get a better sense of why we may be complaining.
Secretary SLATER. Let me say, Congressman, I appreciate that, and I know that Administrator Garvey appreciates it. I am sure that we are going to have a lot more hearings on these matters as we go forward, as we should, because I think that that is a way for us to stay focused, really, on these critical matters.
I also think that our putting in place a performance plan where we actually state what our goals and objectives are in specific, results-oriented termssomething that is new for government, and new for the departmentis going to be one of the great benefits of our strategic planning and performance planning efforts.
And we look forward to working with you, and the members of the Committee and the Congress, in ensuring that our transportation system remains the safest in the world and that we meet these obligations that we haveas relates to Y2K, as relates to the modernization of our air traffic control system and as relates to the appropriate stewardship and expenditure of the record-level resources you are now considering, providing us in like manner as you have provided us with acquisition reform legislation.
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I want to underscore that again, because I think it is our obligation to follow through on the freedoms, the capabilities you have given usacquisition reform, personnel reformand this speaks to the need of getting the team together, going out and getting the best and the brightest. We have, in many respects, the ability to do that, and we should be held accountable. I respect that and appreciate it.
Mr. PASTOR. Thank you, Mr. Secretary. We have a common goal to make the transportation system safer, and you have my commitment to work with you to get to that goal.
Thank you, Mr. Chairman.
Mr. WOLF. Before I recognize Mr. Packard, I want to follow up to what Mr. Pastor was talking about. We had a hearing on STARS and that still has not been resolved. I know there has been a lot of progress made, but really it shouldn't have been necessary at all for the Committee to have had to call upon the FAA and air traffic controllers and Mitre to testify; that is something that shouldn't have had to occur.
Secretary SLATER. I agree.
Mr. WOLF. And you have new procurement ability. You also have similar flexibility on personnel. This gives the FAA an opportunity to go out and bring the talented people in quickly, and to date, that authority has not really been used.
Page 52 PREV PAGE TOP OF DOC Segment 1 Of 2 Mr. Packard.
EMERGENCY RELIEF PROGRAM
Mr. PACKARD. Thank you, Mr. Chairman.
Welcome back to the Committee again.
Secretary SLATER. Yes, sir.
Mr. PACKARD. Your first time last year was a pleasure for me to hear you, and we appreciate your testimony this year.
Secretary SLATER. Thank you, sir.
Mr. PACKARD. As you know and everyone else knows, El Niño has changed the weather patterns and created a lot of damage in some States and perhaps created some good things in other States. Certainly in my State and several other States, a significant amount of damage has been done to our transportation system. The floods have wiped out complete sections of freeways and highways.
The FHWA has an authorized cap of $100 million to address these kinds of problems, emergency relief programs. California alone, and I am sure Florida and Oregon and many of the other coastal States, particularly in the West, have had far more damage done already than the hundred million dollars. California alone is now probably in excess of that amount.
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Secretary SLATER. Yes, sir.
Mr. PACKARD. What are your plans to meet the needs of all of the States, my State as well as the others, that have had significant transportation damage done, in light of the FHWA's shortage of funds?
Secretary SLATER. Congressman Packard, let me just say that there is not one person within the DOT family that does not feel the sense of loss that many of your constituents have felt, whether it is property damage or the loss of loved ones, and we have tried to be responsive. It is true that our being responsive has put a strain on our resources, and we have actually prepared a request for supplemental appropriations that will come to the Congress for additional funds. The President was just in California and released an additional $20 million. He was joined by our Federal Highway Administrator, General Wykle; and the week before, the Vice President was there, I think providing the first $20 million, and he was joined by our FHWA Deputy Administrator, Gloria Jeff.
We want to continue to be responsive, but as you have noted, there is really the strain on the resources as currently available, so we would hope that the Congress would respond to our supplemental request. We have outstanding requests for the northeast, and we have not made a determination about the degree of damage throughout Florida, although we expect to receive a request from Florida soon. We are really being challenged at this point in time, but, as you have noted, we have to be responsive to Americans in need; and that is what we are trying to do.
Page 54 PREV PAGE TOP OF DOC Segment 1 Of 2 Mr. PACKARD. To add to that challenge, we don't know how much longer the season will go, and it may be that your supplemental request will be premature, or at least before we are finished with the damage that could come from El Niño and other storms. Also in the fall, we know that at least in California, there is almost a natural follow-up; and that is, we will probably have wildfires and other problems that could also add to the emergency need.
It is a problem, and I don't know how you are going to manage, but certainly the supplemental, when it comes, we will give it the kind of consideration we always have.
Secretary SLATER. Thank you, sir.
Mr. PACKARD. I appreciate your responsiveness in this area of emergency response.
TRANSPORTATION CONDITIONS AND PERFORMANCE REPORT
Secondly, as we continue to grapple with the reauthorization process of ISTEA and the Federal surface transportation program, it would be very helpful for the information that will come or should be available through the long overdue Transportation Conditions and Performance Report. I understand that is nearly ready for release.
Secretary SLATER. It is.
Page 55 PREV PAGE TOP OF DOC Segment 1 Of 2 Mr. PACKARD. Some of the information available in that report should be very helpful in the reauthorization process to determine the conditions of our highways, bridges and general transit facilities. It would seem that that report would be extremely important before we move forward on the reauthorization, and yet the reauthorization is, of course, critically time sensitive.
Could you give us a brief preview of what that report might show?
Secretary SLATER. I can, and let me just say that I think Congressman Rogers, in his questions a few minutes ago, actually touched indirectly on this issue.
In putting together the report, as you know, we have combined more than just highways into the report, which is a change from years past. Also, we are changing to more of an economic basis for analysis, rather than an engineering model for analysis; and I think that is consistent with some of the actions of the Congress and some executive orders that we have responded to. But the good thing that we have discovered is that we are seeing improvements in the condition of the system as it is, in particular the surface of the roadways.
Also, we are seeing improvements in the condition of the bridges. We are finding fewer and fewer of those bridges being declared as either functionally obsolete or deficient in some other way. We are also finding a significant, 3.5 percent increase in transit usage, and improvements in the conditions of our transit properties.
I think that that, frankly, reflects positively on the increase in investment that we have seen over the last 5 years that has been brought about by a partnership between the Congress and the administration. And I do believe that our proposed budget for 1999, which will continue that increase at about 42 percent above the investment levels of the first 4 years of the decade, will continue to bring about improvements to the system as a whole. So I am very pleased with those kinds of findings in the Conditions and Performance Report.
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With that said, let me just say that we are in the final drafting, if you will, of the report. We have recently gotten back comments from OMB, and we should have that report to the Congress very soon.
Mr. PACKARD. Do you have a date specific as to when it will be released?
Secretary SLATER. Why don't we say within 10 to 14 days, and if sooner, then clearly we will have it for you sooner.
Mr. PACKARD. That is all, Mr. Chairman. Thank you.
Mr. WOLF. Mr. Tiahrt.
STARS AND YEAR 2000 PROGRAMS
Mr. TIAHRT. Thank you, Mr. Chairman. I want to welcome Secretary Slater, and I want to tell you it has been a pleasure to work with your office. You have been very responsive.
It was kind of you to call last night at 6:30 in the evening when most people are worried about getting home, and you were worried about the needs of Kansans, and I appreciate that very much.
Page 57 PREV PAGE TOP OF DOC Segment 1 Of 2 Secretary SLATER. Thanks, Congressman.
Mr. TIAHRT. I also recently spoke with Kansas Department of Transportation Secretary Carlson. Dean Carlson and you, I know, have a long-term relationship. He sends his regards. He incidentally is doing a great job, and he sends his compliments.
There are a couple areas of concern I would like to reiterate. One is, we have talked about the FAA and I was recently at the control tower at Midcontinent Airport and saw againonce again, the need for a STARS program. And I am pleased with the progress that Raytheon is making.
My concern is more along the way of the Y2Kand I know others have expressed thatthat when the year 2000 rolls around, we will have some problems. The last schedule I heard from the FAA is they thought they would be on line in November of 1999.
In a previous life, I was a proposal manager at the Boeing Company. I managed several software projects, some with millions of lines of code, and unless you have an extensive testing program, your milestones are not going to be achieved, and with that short amount of time between November and January 1st, I have a great deal of concern and would hope that you also track that progress and make sure we get on line in time.
Another thing I would like to bring to your attention is the airports in Kansas. We have small and midsize airports. I was recently at a small airport in Kingman, Kansas, and the runway was so rough it would be difficult to ride a motorcycle down the runway because of all the ruts. It would cause it to be difficult to keep your balance, let alone land a small airplane.
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It is not only the small airlines that have a difficult time handling those airports, but also business jets. Many communities like Pratt, Kansas; Kingman, Kansas; Wichita, Kansas; Struther Field, between Ark City and Winfield, Kansas, are the homes of international companies. And they need to bring suppliers in, and CEOs and executives from other companies that are from big cities. And they often use business jets, and it is difficult to get them in and out of there, and it restricts the growth of rural America. So I have a great deal of concern for our small and midsize airports, and I hope you will take that into consideration and, of course, support our airport improvement program.
Secretary SLATER. Okay.
UNION PACIFICSOUTHERN PACIFIC MERGER
Mr. TIAHRT. But my main concern is related to the merger of the Union Pacific and Southern Pacific. It will double the train traffic, and that will be a problem in several areas. It is also complicated by a previous merger with the Burlington Northern-Santa Fe that was not included in the recent study done by the Surface Transportation Board, the STB.
There are 27 grade-separations in Sedgwick County, which has a half a million Americans living there. Those 27 intersections include one near a hospital, several close to fire stations and police stations. It creates a problem because these trains are a mile-and-a-half long and they cause delays.
In the area of the environment, it is hard to believe, but in Wichita, Kansas, there are several days when the wind does not blow, and on those days, we do not reach air quality standardsclean air standards. As you know, if you do not meet those clean air standards, there is a problem with Federal funding. So on those days, we have a risk; with increased train traffic, we will certainly not achieve the existing clean air standards, let alone the proposed clean air standards, which would immediately put three-fourths of the State of Kansas out of compliance. So there is a big problem with the environment created by this merger.
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Also, there is a health-and-safety problem. I told you about police; there are also fire departments, hospitals and ambulances. If they are restricted from getting to their destinations, it could cause a problem. Also in the area of safety, within the last month, a friend of my daughter from a high school she attended last year was killed at a railroad intersection. Within the last year I lost a personal friend and a fellow employee at the Boeing Company at a railroad intersection, and we have a need for grade separations to keep the traffic from colliding.
There is also the discomfort factor. You have probably seen the bumper sticker that says, ''If mama ain't happy, nobody is happy.'' Well, I am here to tell you, there are a lot of mothers in Wichita, Kansas, that aren't happy by the train delays. In my personal opinion, the Surface Transportation Board flunked the course on the Wichita mitigation study.
Now, I know that from your book you handed out here that the Surface Transportation Board is fully financed by user fees. They did not slap the hand that feeds them, and that concerns me. It also says they are to provide an effective and efficient forum for resolution of disputes. It was efficient.
So those three things are my concerns, the Y2K, improvements for our airports, and the critical needs that have risen from the Union Pacific-Southern Pacific merger.
Secretary SLATER. If I may, Congressman, let me just respond in summary fashion to the points that you raised.
Page 60 PREV PAGE TOP OF DOC Segment 1 Of 2 First of all, some of these issues are issues that we discussed last evening; and I appreciate the opportunity to hear from you again on them and assure you that we will respond to all of them.
YEAR 2000 PROBLEM
Regarding the Y2K problem, clearly, you know, based on your experience in the private sector, as you noted, and also as a Member of Congress, that November of 1999 is not acceptable, and we are not going to be in November of 1999 testing this system. We actually hope to start validating our compliance in January of 1999, so we will have the full year to test the capability of the system.
SMALL- AND MEDIUM-SIZED AIRPORTS
When it comes to small- and medium-sized airports, we feel that we are going to be able to respond to needs like the ones that you have mentioned with the increased investment, $1.7 billion in the Airport Improvement Program (AIP), and look forward to working with you in that regard.
Also, our Essential Air Service program may be a source of resources to address some of these needs.
When it comes to the issue of the rail mergers, you should know that we are learning a lot from this process. I do believe that the reauthorization of the Surface Transportation Board will give us an opportunity to actually consider how some of these issues are addressed by the Board with its powers as we go forward. But the Department of Transportation is performing its role in an aggressive fashion, where we note questions regarding safety as paramount matters of consideration during these mergers.
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We recently submitted a very comprehensive brief dealing with the Conrail merger; and, as you know, we have worked rather aggressively and proactively with Union Pacific (UP), when it comes to dealing with the UP merger. We look forward to working with you on the particular matters that you have addressed.
Unfortunately, a lot of times, with the railroad crossings, you do have situations where communities are separated from some of the major health and emergency response services that are critical to life and limb. It is true that your grade overpasses and the like are a way of addressing those concerns. But also bringing the best technology to those crossings is very, very important as well.
I can tell you that one of the things I am most pleased with as relates to our performance last year, is the fact that we saw a reduction in collisions, injuries and fatalities at highway-rail grade crossings. I think that is the result of a more comprehensive and aggressive approach on the part of the Federal Railroad Administration, led by Jolene Molitoris, working together with the Federal Highway Administration, led by General Wykle. We are going to see continued improvements in that regard, and I appreciate your mention of it during our discussion today.
Mr. TIAHRT. Thank you, Mr. Secretary.
Thank you, Mr. Chairman.
Mr. WOLF. Thank you, Mr. Tiahrt.
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Mr. Secretary, let me cover a couple subjects and then we will go back to other members.
BUDGET REQUEST FOR AMTRAK
Please describe how your budget request for Amtrak does not violate the agreement that you and Amtrak's Board of Directors negotiated with the Brotherhood of Maintenance of Way Employees.
Secretary SLATER. Well, first of all, Mr. Chairman, last year at this time we were, as you know, very much concerned about the potential of a strike and a shutdown of Amtrak. The President responded with the establishment of the emergency board, they came forth with recommendations, and the parties still weren't engaging one another.
I am pleased that, because of some more proactive steps taken by the Department, we were able to get the parties together. They did come forth with a historic agreement, with work rule changes, productivity changes and an increase in salaries for the Brotherhood of Maintenance of Way Employees.
As a result of that agreement, we were then able to come to the Congress and pass reauthorization legislation for Amtrakthe first time in some 3 or 4 years. Then, as a part of the Taxpayer Relief Act, about $2.2 billion were made available to Amtrak for capital investment.
Page 63 PREV PAGE TOP OF DOC Segment 1 Of 2 As a part of our 1999 budget, we are proposing a $621 million investment in Amtrak. When you couple the action taken by the Congress as a result of the Taxpayer Relief Act and also the record-level resources that we are providing, along with corporate revenues, we believe that Amtrak will have the resources that they need to move toward self-sufficiency in the near future.
As a part of their budget plan that was submitted to us, they had said that, over the 5-year period or so, they would need about $5 billion. Under the proposed budget, along with the actions taken by the Congress, they are actually going to have in excess of $5 billion, so we believe they will be able to meet all their obligations, and become the only inter city rail passenger train operation anywhere in the world that is self-sufficient within a reasonable period of time.
Mr. WOLF. Mr. Secretary, I am so skeptical that I don't believe that. I have been told by people who are very, very knowledgeable that they believe under the currentif the books are honest, that Amtrak will go bankrupt in the year 1999 or 2000.
Also, the labor agreement included $150 million for operating assistance in 1999. That is not in your budget. There was an additional $84 million for operating assistanceanother item agreement not in your budget. The agreement also called for $199 million to replenish the capital appropriation, which is not in your budget. Should the Committee adopt the administration's budget request for Amtrak, how likely is it Amtrak will not go bankrupt in fiscal year 1999 or fiscal year 2000?
Secretary SLATER. Well, again, based on the financial plan that was offered by Amtrak, where they requested in the neighborhood of $5 billion over the next 5 years, this is a budget that will give them in excess of $5 billion over this period, and we believe that they will be able to meet their financial obligations in that regard.
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Mr. WOLF. Should the Committee adopt the administration's budget request for Amtrak, what assurances can you provide the Committee that capital funds will not be used to provide wage increases to Amtrak's employees, wage increases Amtrak says it can ill afford?
Secretary SLATER. Again, if you look at corporate revenues and then the $621 million we are providing, along with the $1.1 billion each year over a 2-year period that is being provided under the Taxpayer Relief Act, Amtrak should be able to meet all of its requirements.
We have taken into account now, as we look at the resources that they have available, their ability, under the definition of capital within the Taxpayer Relief Act, to use some of those resources for maintenance. They have shared with us that that could total $400 million or so. Those were expenditures that, in the past, they probably would have taken care of out of the operating account. Having the ability to do so under the capital account should give them, again, the kind of flexibility and resources needed to meet both their operating expenditures as well as capital investment expenditures.
CAPITAL DEFINITION FOR AMTRAK
Mr. WOLF. That was the next question.
You were requesting $621 million in capital appropriations for Amtrak, to be available using the same preventive maintenance definition used by the Federal Transit Administration. Adopting this capital definition is really almost like a shell game, because Amtrak plans to spend up to $520 million of its capitaland I stress capitalfunds on maintenance of equipment, infrastructure and facilities, which in prior years has been paid for by the operating grant.
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Isn't this definition just moving operating funds into capital funds, thus allowing the administration to say Amtrak is not dependent on operating subsidies before the year 2002? Isn't the administration moving it around and calling it something different?
Secretary SLATER. Well, within the Taxpayer Relief Act, capital is given a broader definition which would allow for an investment in maintenance. We are, in our proposal, seeking to make capital within Amtrak budgetary considerations comparable to the definition of capital that the Congress has agreed to as it relates to transit. So we are trying to bring consistency there.
Mr. WOLF. For years Amtrak has stated that its greatest need is for capital funds, particularly if it is to be self-sufficient after the year 2002. However, if we adopt this proposal, we will be using capital funds for previous operating expenses. This is really an operating subsidy; and the capital needs of Amtrak are very, very great.
I know we will get down on the floor and there will be a number of people who want to zero out Amtrak. I speak as a friend of Amtrak. I really think it is kind of a shell game.
If the Committee were to include bill language that would prohibit the use of the TRA funds or any capital appropriation for wage increases, would you support that?
There will be a new chairman here in the year 2001 or maybe I can get Sonny Callahan to trade Foreign Ops. Maybe there will be a new chairman even next year if I could do that; but, who knows? Then the next group comes in. Maybe the distinguished gentleman from Kentucky would want to be chairman, and then all of a sudden we go through the same issue again. Aren't we really misleading the people?
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And for those of us who really want to see Amtrak surviveso would you support that if the Committee were to add bill language? This is a real test.
Secretary SLATER. Well, clearly, if the Committee were to say that no capital funds could be used for
Mr. WOLF. Wage increases.
Secretary SLATER. Oh, I thought you were saying no capital funds could be used for maintenance.
Mr. WOLF. No. The question is, if the Committee were to include bill language that would prohibit the use of TRA funds or any capital appropriation for wage increases, would you support that proposal?
Secretary SLATER. Well, I think if the Committee and Congress were also to approve our recommendation that capital resources for Amtrak be considered in the same way that we consider capital resources for transitif you couple the twothen that might work.
Because we are providing, again, $621 million for capital this yearthat is what we are proposingwith about $571 million for the year 2000 and about $521 million for the year 2001.
Page 67 PREV PAGE TOP OF DOC Segment 1 Of 2 Those resources, coupled with corporate resources and revenues, then might allow Amtrak, looking at all of the resources available, to have enough money to take care of capital needs as well as the salary questions that would fit in a broader definition of capital.
Mr. WOLF. Well, I am not unsympathetic to that, but I believe the definition moves operating funds into capital funds. We are then allowing Amtrak to come back and say they are not dependent on Federal operating subsidies. We tried get a base closing commission concept put in effect the last year. That got involved in some controversy, and the Committee didn't do that. GAO was looking at it.
I really think, potentially, what you are recommending is really going to bring about the downfall or the bankruptcy of Amtrak. I don't want to see that happen. I am very supportive of the Northeast Corridor. I am very supportive of the national Amtrak system. There are Members of Congress, perhaps some on this Committee, I am not sure, but certainly in the full House and Senate that would like to see Amtrak fold, but I am not one of them.
The other question is, do you believe Amtrak will need a capital appropriation beyond the year 2002? And, if so, how much
Secretary SLATER. They will.
Mr. WOLF [continuing]. For 2003 or 2004 or 2005?
Because if they are going to need it, why would we be using capital funds for operating expenses now? So how long past the year 2002 do you think they are going to need capital?
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Secretary SLATER. I would say for a reasonable period beyond. There are certain legs of Amtrak that are self-sufficient, but what we wish to have
Mr. WOLF. Not many.
Secretary SLATER. Not many. But what we wish to have is a national intercity rail system; and to the degree we provide for high speed rail along the Northeast Corridor all the way from Washington to Boston, that will bring additional revenues into the system. To the degree we replace aging rail cars, that will improve the efficiency of the system. We are going to see significant improvements over the next 5 years.
I think the key thing to stay focused on, if we can, is that, based on the financial plan that was submitted by Amtrak and their business plan, they ask for about $5 billion over a time certain. We are going to provide in excess of $5 billion over that period. This should be able to accommodate their investment and operating needs.
Mr. WOLF. But isn't it accurate that the agreement that was reached included the requirement that the OMB and the President seek: (1) $150 million in operating subsidies in 1999, that is not in your budget, (2) seek to make up $84 million in previous operating shortfalls, that is not in your budget, and, (3) to make up the 1998 appropriation for Amtrak capital above the 1998 TRA funds. Were these conditions not part of the agreement?
Secretary SLATER. They were part of the agreement.
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Mr. WOLF. But are they in the budget?
Secretary SLATER. Let me just say that the budget proposal is modified to some degree. We did make a request for the resources that are reflected in the agreement but that were not provided in years past.
Mr. WOLF. But if you had an agreement and the people involved thought they were going to be in the agreement, why isn't this in the budget?
Secretary SLATER. It is reflected in the total dollar amounts. We just ask for the money in a different form.
But as far as the dollar amounts being there, we have actually asked for more than we proposed that we would ask for when NEXTEA was introduced last year. We are actually seeking more dollars, but the dollars are coming in a different form. We have made that request based on the dynamics, as we understand them currentlymeaning under the Taxpayer Relief Acthaving the ability to invest in maintenance as a part of capital investment and also as a part of our proposal for $621 million to get a broader definition for capital that would be consistent with capital as defined in our transit activities. If Congress changes those dynamics, then, clearly, we have to come together and go forward with an arrangement that would continue to meet the financial needs of Amtrak.
RENEGOTIATION OF AMTRAK AGREEMENT
Page 70 PREV PAGE TOP OF DOC Segment 1 Of 2 Mr. WOLF. Two other questions on Amtrak.
Since the agreement has been broken by the administration, is Amtrak or the BMWE free to renegotiate the agreement? That was part of the agreement.
Secretary SLATER. That is true, but the responsibility primarily rests with Amtrak to make a judgment as to whether they will have the resources available to meet, first, the conditions of their financial plan and business plan and then, second, to meet the obligations resulting from the management-labor agreement.
Again, they asked for a particular amount in their financial plan that was less than $5 billion. If you look at what we are providing over the next 5 years, it is in excess of $5 billion. We believe they will be able to meet their financial obligations with these funding proposals that we have put on the table.
Mr. WOLF. Knowledgeable people that I have spoken to do not believe that is the case. They actually believe, if this proposal is intellectually honest, Amtrak will go bankrupt in the year 1999 or 2000.
AMTRAK REFORM COUNCIL LANGUAGE
One additional question.
What is your understanding of the Amtrak Reform Council (ARC) language? Does it say that if it looks like they are financially in trouble that they have to recommend that they go out of business? How is that actually structured? What is your understanding?
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Secretary SLATER. That is how the language is structured.
Mr. WOLF. And then, if they make a recommendation, the Senate has to take a positive action to overrule that, is that right?
Secretary SLATER. I am not sure on that part of it.
Steve, do you want to respond?
Mr. PALMER. Mr. Chairman, I believe, without the language in front of me, that ARC makes a recommendation to the Congress on either the ways in which Amtrak has to reform itself to get into compliance with its overall budget plans or make a report to the Congress on how it would liquidate itself. Congress, both the House and Senate, have to vote up or down as to whether or not that would happen. It does not happen without an affirmative vote by the Congress.
Mr. WOLF. How long do they have to act?
Mr. PALMER. I do not know.
Mr. WOLF. Maybe you can supply that for the record.
Secretary SLATER. We can supply that.
Page 72 PREV PAGE TOP OF DOC Segment 1 Of 2 [The information follows:]
Section 203 of the Amtrak Reform and Accountability Act of 1997 established the Amtrak Reform Council (ARC). Under the provisions of the Act, if at any time after December 2, 1999 the ARC finds that Amtrak's business performance will prevent it from meeting the financial goals established in the Act, or that Amtrak will require a Federal operating grant after December 2, 2002, the ARC will notify the President and the Senate Committee on Commerce, Science and Transportation and the House Committee on Transportation and Infrastructure. Within 90 days of making such a finding, the ARC must develop and submit to the Congress an action plan for a restructured and rationalized national intercity rail passenger service.
Secretary SLATER. And, Mr. Chairman, if I mayand this is clearly with all due respect for the position that you have articulatedlet me say that the agreement that was entered into by all of the parties we consider to be in existence still. We do not share the opinion that the agreement has been broken.
We continue to provide the resources that have been noted as being necessary by Amtrak; and, as a matter of fact, we provide more over time than was originally requested. It is in a different form and there is some disagreement about that, but the agreement has not been broken, and we do believe that Amtrak can get to where we all want it to get to and that is to become self-sufficient and a viable, well-managed organization over time.
Mr. WOLF. But Amtrak will to need capital for the foreseeable future.
Page 73 PREV PAGE TOP OF DOC Segment 1 Of 2 Secretary SLATER. Yes.
Mr. WOLF. Anyway, we will get into it more with Amtrak.
MAJOR PROJECT OVERSIGHT
One other subject, and then I will recognize Mr. Sabo. The IG and the GAO testified before this committee they believe that the Department could improve its management of large dollar highway projects by requiring States to prepare total cost estimates and tracking that progress against their initial baseline cost estimates. Why has the Department not required States to develop cost estimates for other major highway projects like the Big Dig and the Alameda Corridor?
Secretary SLATER. Well, let me just say that I think we have learned, frankly, a lot working with the Congress on these big, large dollar projects; and I would join the IG and the GAO in moving to actually make that a requirement for big ticket projects.
You should know that we have begun that process internally, with the Deputy Secretary being designated as the person who works not only with the Federal Highway Administration but also the Federal Transit Administrationwe have got some pretty large projects on the transit front as wellto begin to put in place a process that would allow us to monitor the financial decisions related to these large, sometimes, multi-billion dollar, projects.
Mr. WOLF. And you are going to do it for the Alameda Corridor?
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Secretary SLATER. Yes.
FEDERAL FUNDING FOR MEDIA CONSULTANTS
Mr. WOLF. On the Big Dig, the committee has learned that the Federal Highway Administration has participated in the costs of a media consultant hired by the Big Dig's project manager to prep him for a 60 Minutes interview. Media reports indicate that the taxpayers footed the $24,210 bill. Moreover, press accounts indicate the Big Dig is proposing a $2 million media blitz, a portion of which is being paid for by the Federal Highway Administration. Are these reports accurate? Are we paying for coaches to prepare people for 60 Minutes and for a media blitz?
Secretary SLATER. Well, it is a legitimate expenditure to use some of the resources for public educational purposes; and we do have those kinds of expenditures that occur all the time. But, clearly, those efforts should be monitored, and those expenditures should be reasonable in nature.
Mr. WOLF. But I know the Committee went through this several years ago and finally the State changed. They were using Federal moneyI think they were the only Statefor the payment of wages of police officers as traffic managers or flaggers. That was legal, but was it appropriate?
And I think what we are talking about here is this may very well be legal, but it is not appropriate. I mean, it would be like a Member of Congress saying I got a call to be on 60 Minutes. I am going to go out and hire a coach to help me.
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If you want the best information, just don't go on 60 Minutes. That is the best advice you can have. I remember John Connelly went on 60 Minutes, and they just cut him to pieces. So that is about 10 minutes worth of advice.
But should we be using Federal taxpayers' money to coach people? And the answer is no. And should we be using it to promote the Big Dig? What Massachusetts State did is they took their own money for the flagging of policemen, and that is appropriate if they want to do that, but shouldn't they be using their own money? I would hope this would be disallowed.
Secretary SLATER. They are going to actually do the same thing here. This will not be an item for Federal participation.
Mr. WOLF. There will be no Federal participation.
Secretary SLATER. That is correct.
Mr. WOLF. Could you furnish that for the record?
Secretary SLATER. We will do that.
[The information follows:]
The State's hiring of Fifield Associates was to assist the State's public information staff, including preparing the Project Director for his 60 Minutes interview. The State has withdrawn Federal participation from the $24,000 related to this.
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On large highway projects around the United States that affect large numbers of the traveling public, the FHWA has a longstanding policy of encouraging public information programs that contribute to easing the driving task during construction. The intent to help motorists find better ways to get to their desired designation during construction, including the use of intermodal alternatives such as transit, ridesharing, or water-based transportation.
FHWA has carefully ensured in the past and will continue to ensure in the future that Federal participation is authorized only where it is legally permitted.
AMTRAK CASH FLOW
Mr. WOLF. Mr. Sabo.
Mr. SABO. Thank you, Mr. Chairman.
A follow-up to the Chairman's questions on the funding to Amtrak. What is the cash flow of the money under the new, changed definition?
The reason for the question is, it is switching from operating to capital. And I assume the cash flow is much slower and might well be over a 5- or 6-year period the same, but my assumption is that, as cash flow impacts the first year, and I would share some of the concerns with the Chairman over what impact that is going to be in fiscal 1999. Because, clearly, Amtrak has had major cash flow problems and having to borrow in anticipation of revenue.
Page 77 PREV PAGE TOP OF DOC Segment 1 Of 2 Secretary SLATER. Well, we have received assurances from Amtrak that they will be able to meet their obligations based on the funding levels and the form of those funds as we have recommended. They recently passed a budget resolution to that effect.
Mr. SABO. Okay. I just have to make this observation. I know I am the only Member in the room who voted for both the nickel in 1990 and the 4.2 cents in 1993
Mr. DELAY. You probably are.
Mr. SABO [continuing]. And I am not sure why everyone voted for it, but I voted for it to reduce the deficit, and I think a significant number of Members did. And I suppose, being self-serving on this committee, I should want the maximum amount of money to come through what may be under the jurisdiction of this committee.
I have to say, I am also worried about what the other trade-offs are. Because, clearly, there is no judgment in discretionary spending limits to accommodate more money coming into ISTEA. There wasn'twhen the two and a half cents went in, I forget when that went in, and for the 4.2 cents.
I sometimes think what we should do is have a bill up to repeal the 9.2 for deficit reduction and the bill, in the next stage, to have the 9.2 to spend it for highways or transit and increased discretionary spending caps to accommodate it.
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I would be prepared to vote for the repeal and do the other the next day, but it would be interesting to see how many Members are anxious to scrape up the money that was intended for deficit reduction to spend it for a particular purpose.
My worry is that there are other priorities. I listen in our State and I find amazing agreement, from urban to rural areas, just very fundamental problems in job training, in day care and in housing, and across the political spectrum, again, from urban to rural areas. I am just afraid that, all of a sudden pretending it is some new free money, which it isn't, we are going to make some isolated decision to substantially increase that and have some real impact in cutting some other programs that are very vital to my State and many communities around the country. So I just want to add that perspective as you and others try and sort out what we eventually do.
Secretary SLATER. Sure.
Mr. WOLF. Before I recognize Mr. DeLay, I share Mr. Sabo's feelings. Frankly, the 4.3 cents was never meant for a gasoline tax; it was meant for deficit reduction.
Secondly, I think it would be fair to each state and to the entire Congress to repeal the 4.3 percent tax and allow the governors to raise that tax. One, it takes care of the donor/donee question, because every State would get 100 cents on whatever they collected. Secondly, you would not have the regulations and stipulations coming from Washington, the Federal controls and involvement. If Mr. Sabo were to offer that amendment, I would, frankly, support it because it is fair; it was never meant for highway construction; it was meant for deficit reduction; and, each and every State could do whatever they felt was appropriate.
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Yes, Mr. Sabo.
Mr. SABO. I was suggesting a dual vote, one to repeal one day and then the next day to reinstitute it.
Let me speak to the problem there, though.
One of the real problems is that most States are very restrictive in what they can do with gas tax and what is imposed there, and we have more flexibility with that money flowing through the Federal Government and is one of the reasons I am not an advocate of some folks who want to simply turn back, which on balance would probably be okay in our State.
But the reality also is that somehow we have a belief that the auto pays for itself, and the reality is it is heavily subsidized, not at the Federal level but at the State and local level by local property taxes for public safety and a variety of other services that are very tied to accommodating the auto, and it is just very heavily subsidized at the State and local level.
Mr. WOLF. Mr. DeLay.
PROPOSED AMERICAN AIRLINES-TACA GROUP ALLIANCE
Mr. DELAY. Thank you, Mr. Chairman.
Page 80 PREV PAGE TOP OF DOC Segment 1 Of 2 I know you have been on for a long time, Mr. Secretary, and I appreciate it, but I have leadership meetings all afternoon, and I want to get through my questions. It won't take but maybe 5 or 10 minutes.
One of the things I want to bring up is an issue of concern to the Houston delegation. Three Democrats and three Republicans sent you a letter asking you to disapprove a proposed alliance between American Airlines and the Taca group, which includes six primary Central American airlines.
Now we feel that this is a very serious matter that goes to the heart of what constitutes open and honest competition, especially in the international arena. Administrations, both this one and others before it, have been approving alliances for some time, but they have been approving alliances that are largely viewed by Members of Congress and even the industry as end-to-end alliances, where you take the strong network of one carrier and you combine it with the strong network of another carrier for public benefitfor example, Northwest Airlines/KLM or United/Lufthansa.
But, in this case, even the Department of Justice has ruled that this is not an end-to-end situation, that it, in fact, stands in stark contrast to the kinds of end-to-end agreements that the Department has approved in the past.
The proposed alliance between American and the Taca group is obviously not end to end.
I fear that this is a case where one airline, American, wants to combine with its largest competitor and take over that market. So we are very anxious to understand your perspective on this matter.
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Would you give serious consideration and weight to the advice of the Justice Department and are you concerned about the nature of this particular alliance? And is your Department ready to distinguish between healthy end-to-end alliances and destructive, overlapping alliances, such as American and Taca?
Secretary SLATER. Okay. Well, clearly, this is an issue that we are looking at; and we will take into account concerns that were raised in your letter, the letter from you and your colleagues, and also recommendations or insights offered by the Justice Department.
Our objective is to enhance competition. We seek to do that, as we regulate the aviation industry domestically and also as we continue to seek bilateral aviation opportunities for our carriers across the globe. So the point that you have raised is well taken, and we will continue to monitor the situation, work through it and stay in touch with you and your colleagues as we proceed and take into account all of the points that you have brought to my attention.
Mr. DELAY. I appreciate it, and I commend this administration, your Department and you, Mr. Secretary, because you have attempted to open up markets in very difficult situations. I have confidence that you will see this situation for what it is, as most people in the industry see what is going on.
CONGRESSIONAL REVIEW ACT
Page 82 PREV PAGE TOP OF DOC Segment 1 Of 2 Another question, very quickly. Something that is very close to my heart, and that I have been very involved in, is the issue of regulatory reform. I have been working with the leadership and committee chairman to make one of our legislative victories, the Congressional Review Act, a high priority in this session.
As a reminder, the Congressional Review Act was signed into law nearly 2 years ago. It requires agencies to report on their compliance with the Regulatory Flexibility Act, the Unfunded Mandates Act, the Paperwork Reduction Act and others; and it also gives Congress the ability to disapprove a regulation.
Mr. Secretary, what, if any, procedural changes in the rule development process were made in response to the passage of CRA and can you give me what regulatory policies are currently under way that are critical to achieving the Department's strategic goals and objectives during the fiscal year 1999?
Secretary SLATER. Well, first of all, we are in compliance with the Congressional Review Act. I think that we have, to date, reviewed and taken into account the details of the Act as it relates to about 2000 or so regulatory matters, and continue to be guided by the specifics of the Act.
We also view the Act as being consistent with our regulatory reform review initiative that is a part of the administration's Reinventing Government program. So we are committed to the Congressional Review Act and wish to continue to stay in contact with you and other Members who are interested in how this Act is being carried out.
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Mr. DELAY. In 1997, your Department issued 1,375 rules in 1 year. Now many of these were small rules, I understand; a couple were very big rules. I am interested to know just how do you determine that a rule is necessary and how do you decide to devote staff to developing a rule?
Secretary SLATER. We have to make a judgment that the proposed rule is in keeping with the exercise of our stewardship responsibilities, primarily in the area of safety. A lot of times these issues come to us from a number of vantage pointsa recommendation from the Congress, an issue that comes forth in the public sector or through the leadership, and proactive efforts of our staff. But, clearly, in moving forward on these regulations, we take into account the cost-benefit of the regulations and make judgments at that point as to whether to proceed or not.
Those are the kinds of considerations that we take into account.
Mr. DELAY. Let me move to CAFE standards, something I monitor and have ever since I have been in Congress. You no doubt know I am not a big fan of fuel economy regulations; and, frankly, I think it is pretty clear, they cause more harm than good. In fact, I think you could agree that CAFE standards are, in large part, responsible for the downsizing of our passenger cars by about a thousand pounds and the virtual elimination of the station wagon and other large cars like it.
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This past year, NHTSA issued a report that is entitled, Relationship of Vehicle Weight to Fatality and Injury Risk. Now, on Page 7 of that report it states that, and I quote, a 100 pound reduction in the average weight of a passenger car is estimated to result in 302 additional fatalities.
Now, if my math is correct, that means CAFE standards have resulted in about 3,000 additional fatalities per year. Now that figure is significantly higher than the one reported in NHTSA's 1991 study which determined that CAFE standards cost 200 lives per 100 pounds of vehicle weight reduction. What actions are you and NHTSA taking to address what I think is a very serious problem?
Secretary SLATER. First of all, on the CAFE standards, we are recognizing actions and recommendations on the part of Congress related to these issues; and, as you know, actions of Congress have basically held firm the CAFE standards that are currently in place; and we have respected that.
As to the effect on the industry, it is true that the large station wagons that we may have grown up with are changed in some form. They are now coming to us in the form of utility vehicles, the light trucks and the vans. So they have actually replaced the station wagon as we knew it. Because of the CAFE standards, though, these vehicles are getting pretty good gas mileage. That is bringing about a reduction of pollutants and greenhouse gases within the atmosphere. That is a positive result of the CAFE standards.
But it is true that this issue of compatibility is becoming more and more a question of interest and focus for us within the Department, especially through the leadership of NHTSA. As you know, over the last few weeks, we have engaged in a series of crash tests, the most recent just yesterday, which is adding to the information pool that will allow us to make some judgments regarding the compatibility of these types of vehicles on the roadways and how we might be able to alter the design, both of passenger cars as well as the sports utility vehicles, so as to enhance the safety of both vehicles on the roadway.
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It is a matter that is getting much more attention, and it is an issue we are committed to working with the industry and concerned Members of Congress and others to resolve.
Mr. DELAY. Are you planning any new regulations for light trucks and sports utility vehicles?
Secretary SLATER. Not at this time. What we are trying to do is to enhance the information flow in this arena so as to make those kinds of judgments. But, at this time, the objective is just to enhance our understanding.
Mr. DELAY. NHTSA Administrator Ricardo Martinez, in February, in the Wards Automotive Reports, was reported as saying that if auto makers continue to make bigger trucks without regard to their impact on other vehicles on the road, the government will find ways to regulate away their popularity.
Later in the article Dr. Martinez is quoted as saying, I realize we probably don't have the ability to regulate design, but there are other ways to skin a cat, like luxury taxes.
In suggesting a luxury tax, is Dr. Martinez representing the administration and your Department's position on tax increases?
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Secretary SLATER. Well, I think Dr. Martinez followed those comments with other clarifying comments, noting that he was not speaking for the administration. And that our objective at this time is to do as I have shared with you, to gain a better understanding of these issues regarding compatibility and then to work with the industry in deciding how we can best address the issues.
I can tell you that just last week I attended the World Congress and Exposition of the Society of Automotive Engineers, and this was a major item of discussion. I said in my remarks that I look forward to working with this industry, which I know is as concerned about safety as those of us within the Department of Transportation, and those of you within the Congress, when it comes to ensuring that our system is as safe as it can be.
So the response to that was very positive, and I just think that these tests we are now engaged in, along with our continued work with the industry, will bring us to an understanding of decisions that we might have to make to provide for greater compatibility as relates to how the sports utility vehicles share the roadways with passenger cars.
FHWA FIELD OFFICE CONSOLIDATION
Mr. DELAY. NHTSA found that making trucks more compatible with cars only saves 40 lives; and, according to our calculation, CAFE costs us 3,000 lives.
The last question, Mr. Chairman.
Page 87 PREV PAGE TOP OF DOC Segment 1 Of 2 As you probably know, Mr. Secretary, it has always been a priority of ours to reduce the size and scope of government; and, therefore, I strongly support any efforts to restructure FHWA to reduce the size and function of its regional offices and maybe remove a layer of bureaucracy in the system.
However, I understand a detailed report on this matter that was requested by this committee in last year's bill is way overdue. And in addition to commenting on when you think the full report will be submitted to the committee, could you please tell us how a reduction in regional offices will improve FHWA's operations, their working relationship with the States and the agency's budget, and how will these changes make the project approval and oversight process more efficient?
Mr. WOLF. If the gentleman will yield just for a second. In fairness to both of you, the Federal Highway Administrator came up yesterday to deliver a comprehensive report.
Secretary SLATER. I knew about his visit with you, Mr. Chairman, and was going to make reference to that.
I think that we made a lot of progress on this issue, Congressman DeLay. Clearly, we have some distance to go; and I think Administrator Wykle shared that yesterday.
As we go forward, clearly we want to be very sensitive to employees who might have to be relocated and accommodated in some way, so we want to have a schedule that respects that. We are talking about closing at least five of our regional offices but doing so in such a way that allows us, within the Federal Highway Administration, to continue to work cooperatively and collaboratively with other modes within the Department that have the regional level as their only field staff representation.
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I am speaking primarily of the Federal Railroad Administration, the Federal Transit Administration and NHTSA. So we have offered a proposal that will allow for that collaborative kind of effort to continue, while at the same time will continue to allow the Federal Highway Administration to provide that direct, day-to-day service that it provides through its division offices at the State level. I think that we have found a good compromise here, but, again, we look forward to working with you and the members of the committee as we move forward.
Mr. DELAY. Thank you, Mr. Chairman; and I thank the committee for its indulgence.
Mr. WOLF. Thank you.
Mr. Secretary, I am going to recognize Mr. Rogers; but, before I do, the distinguished gentleman from Alabama, Mr. Callahan, came in.
Mr. Secretary. I spoke to your staff. They told me you have a meeting that you want to go toor maybe you would rather get out of itbut over with the Senate at 1 o'clock. We will, you know, try to accommodate your schedule..
I have a lot more questions. I don't know that I want to bring you back, but I will submit them for the record, and we are going to try to catch a few after Mr. Rogers is recognized. We have never cut a Member off. We have a different policy here because I know it is a good opportunity. But I may want to meet with you to go over personally some of these questions, but we will submit them for the record. But about 1 o'clock or 1:05, we will end so you can make the meeting and go to the other body.
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Secretary SLATER. Thank you, Mr. Chairman.
I want to state again, since Congressman Callahan has come in, that we do have these other meetings, but I recognize and appreciate the importance of our meeting here today, and so I haven't really looked at the clock, don't plan to, and want to be accommodating of the Committee.
Mr. ROGERS. I can be brief, so I will move on.
Mr. WOLF. Yes, go ahead.
COAST GUARD DRUG INTERDICTION BUDGET
Mr. ROGERS. I want to talk to you briefly about the Coast Guard drug interdiction budget. The Coast Guard, obviously, is vital in the fight against drugs; and I am speaking now as a member of the Committee that appropriates for the Coast Guard but also the chairman of the Commerce budget, which has most of the drug fighting monies over there, DEA, FBI and the like. But it all has to be an integrated approach.
One of the most critical aspects of the Nation's drug war in interdicting cocaine, especially, coming into the country, is through the Caribbean and up the Mexican coast, both coasts, from South America. Most of the cocaine, much of the heroin and a huge supply of marijuana and other drugs come that fashion, by boat, small boats, many of them at night, running undetected under the screen we have put up.
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Why? Because the C130s the Coast Guard controls that region with only can see during the daylight hours. They can't see at night. They have no radars.
So the drug smugglers have figured that one out fairly quick, so they wait until dark to take off and flood the country with these killer drugs. It is a huge part of the problem, as I am sure you are aware.
Consequently, last year, we found the money to equip the C130s with forward-looking infrared radars, FLIRs. They are costly but very effective. They allow the C130s to see at night and see further out than anything that we have. So, at great cost, we found the money from other accounts to fund not all of the FLIRs but a good number of them for the C130s.
Now I learn that, after going through all of that with your budget, they don't have the gasoline nor the manpower to fly the doggone things. So they are going to be sitting on the ground looking at the hangar through the radars. How can you explain that?
Secretary SLATER. Well, Congressman Rogers, let me just say that, first of all, I appreciate your leadership on this issue and the support that we have gotten in years past, and I know that this is a matter that you will take up with the Commandant of the Coast Guard.
Mr. ROGERS. But he doesn't have the money. You have the money, and that is the problem.
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Secretary SLATER. I understand. But based on my conversations with the Commandant and the leadership of the Coast Guard, I don't think they are going to say that with this budget that we have proposed that they aren't going to have gasoline to do what they need to do.
Mr. ROGERS. My information is, from the Coast Guard, that they would not be able to fly the projected time with the budget that they are being given.
Secretary SLATER. Is that right? Well, I have to tell you that something as critical as that is not something that has come to my attention directly from the Coast Guard. What I will do is visit with the Commandant and our leadership team specifically about that, but I can tell you that we are all pleased with the fact that we are going to have about a 2 percent increase in the operating budget and about a 5 percent increase in the equipment budget of the Coast Guard.
Mr. ROGERS. Hang on. That is smoke and mirrors, and you know that.
You have increased the O&E account of the Coast Guard by 2 percent, but they have got to give a cost of living of 3.1 percent, which nets out that they are going to lose $68 million. So the operational account is going to lose money, rather than gain it.
Number two, you are asking or assuming that we are going to enact and let you put on a user fee to help finance the Coast Guard at $35 million the first year and the second year; and you know that is not going to pass. So they are going to be out of money in both accounts.
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In fact, according to the 1999 projected workload activity levels that the Coast Guard has releasedand I can file this for the record if you like or let you look at it, at page PP56they project the number of drug enforcement aircraft flight hours that this budget would allow them, which is 14,100 hours, that is down 5,000 hours from 1997, in spite of the fact that we have gone at great expense and great trouble and great consternation here to find the money to equip those planes with radars that will make them effective, which they haven't been in the past. Your O&E account of the Coast Guard is going to have them down by $68 million; and, according to the Coast Guard, that means they can't fly those planes; and, boy, that is going to make some real problems up here.
Secretary SLATER. Let me just say that it may mean that some of the things that we are doing we will not be able to do, but I can assure you that we will be able to fly the planes and make effective use of the enhanced technology that you have made available. I can say that because that is the indication that I have been given by the leadership of the Coast Guard, and we have set a very high mark in that in 1997. We had the largest interdiction and most successful interdiction effort related to cocaine and marijuana because of our comprehensive Frontier Shield effort.
Mr. ROGERS. And that is just during daylight hours. Think what you could do if you operated all night long.
Secretary SLATER. Well that included some night efforts.
Mr. ROGERS. Not much.
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Secretary SLATER. But, clearly, we appreciate the Congress providing us with the resources for the enhanced technology. Again, I know that you are going to get a report, a confidential report from the Coast Guard; and what I will do is follow up on the comments that you have raised here for me as well.
Mr. ROGERS. If there is a way you can shift monies around in the Coast Guard account, even though you don't get any more money, in fact you may get less, to effectively use the surveillance machinery we have made available to you, that will enhance it tenfold, at least. I think all of us would cheer.
Secretary SLATER. I think that is something that, clearly, we would be committed to doing.
Mr. ROGERS. Sandy Berger, the national security adviser, would cheer, because he asked OMB for more money for Coast Guard as well as the Commandant. Both of them were turned down by OMB. I suspect you were turned down for more money, too, down there. Is that right or wrong?
Secretary SLATER. I stand with the Commandant and with the Coast Guard in making the strong case for their resources.
Mr. ROGERS. Well OMB accountants turned down Sandy Berger, the national security adviser, the President, the Commandant of the Coast Guard and I suspect the Secretary of Transportation in providing more monies for the drug interdiction efforts so we can fly the C-130s at night. And the auditors and secretaries and any member at the OMB says that doesn't fit our pencils, and I just think it is absolutely ridiculous that the OMB and that administration is doing this type of thing.
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Secretary SLATER. Well, if I may, Congressman, let me just say that, as you know, the work of the Coast Guard is an important part of a very comprehensive drug interdiction effort that is headed by General McCaffrey; and, recently, General McCaffrey has gone on record as saying that the resources that they need, they havemeaning for the whole operation.
Mr. ROGERS. Now you are really going to get me
Secretary SLATER. If I may
Mr. ROGERS [continuing]. Riled up.
Secretary SLATER. Then I will welcome the comments.
That may mean, as you have noted, that we may have to make some hard choices and redirect some of our focus and some of our resources, but the point I am making is that it is a much broader context in which those judgments and decisions are made, rather than just a focus solely on the Coast Guard.
Mr. ROGERS. Of course it is, and that is true in the Congress as well. As I say to youand my subcommittee makes the decisions on FBI and DEA and most of the Justice Department enforcement agencies and another makes judgments on Customs and Secret Service and the like and this Committee does Coast Guard and other things, but some of us do see the larger picture.
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Now where you could find the monies is in Barry McCaffrey's office, which is absolutely useless in the war on drugs. There is no coordination going on from his office. He has no troops, no forces. He only has a few people sitting down there thinking and talking. They do not have any authority to command FBI and DEA and Customs and Coast Guard and the like because the budgets are written else-wise.
The Nation's drug war is uncoordinated, and it is a sad thing. It is tragic, and it is disastrous for the country. It is not General McCaffrey's fault. He is a fine man. It is just the Drug Czar's office has no control or authority out here to run the real war where the troops are, and that is in the agencies of Justice and the Coast Guard and military and so on. So, in my judgment, you can take the money that runs that office of his and put it in the Coast Guard and DEA and FBI; and we would be further along than we are now.
I will get off my soapbox. Thank you very much. I hope you can find money for the FLIRs.
Secretary SLATER. I assure you we will, and I look forward to the upcoming meeting you are going to have with the Coast Guard. And we will follow up with continued discussions with the Coast Guard.
Mr. ROGERS. Thank you, Mr. Secretary.
PROPOSED COAST GUARD USER FEE
Page 96 PREV PAGE TOP OF DOC Segment 1 Of 2 Mr. WOLF. Before I recognize Mr. Callahan, let me follow up on what Mr. Rogers said.
The user fee is a very difficult issue, and your user fee imposed last year by the FAA was thrown out by the courts. The FAA is $70 some million dollars in the hole because of that. So that is a double problemnot only imposing a user fee but, the constitutionality of it. What Mr. Rogers says is very valid because you have a big hole there, beginning at the outset.
FIRING DIRECTLY AT DRUG SMUGGLERS
Secondly, Iand I only speak for myself, not necessarily for the others on the CommitteeI think we have to be much more aggressive, and I think we have to consider changing the convention which will allow our people to fire directly on these ships and airplanes. We know the fast boats are coming out and going into southern Mexico are not tourists. We know who they are. We have been reluctant, and I know there is a convention that we now notify the Peruvians. I think we should be much more aggressive.
EFFECT OF DOD DRAWDOWN ON DRUG INTERDICTION
Thirdly, you have a problem with regard to the decrease of our military forces overall. The drawdown of DOD has had a significant impact on this.
I was in Bosnia in December visiting the troops, and, boy, these guys have been in Somalia, they have been in Haiti, they have been in Desert Storm, some have been back in Bosnia for the second time, and the stress it is putting on their family. You don't have the DOD efforts down there, and in the end, drug transits will increase. And the administration has given the impression it has a very strong policy with regard to that; but I think it has been, in many respects, more rhetoric than action, without the necessary funding.
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So I recognize the gentleman from Alabama, Mr. Callahan.
COAST GUARD BUDGET REQUEST
Mr. CALLAHAN. I thank you, Mr. Chairman.
Mr. Slater, I was real happy to hear Mr. Rogers, who comes from a landlocked community, who doesn't really benefit from the Coast Guard as greatly as I do, as a representative of an area on the Gulf of Mexico. But I am going to get up on his soapbox and talk about the Coast Guard and to tell you that your request for the Coast Guard is inadequate. I don't know why this is. You are not the first Secretary of Transportation I have said this to. You are about the fourth Secretary of Transportation I have said this to.
I don't know what the solution is. I know drug interdiction is failing. The Coast Guard admits that they do not have the facilities to interdict.
If you will just look at the charts when the Coast Guard sees drugs coming out of Colombia and Bolivia and other areas and as quickly as they can stop it in one area, they are already going into another area. The very fact that the Coast Guard could reduce this by adequate funding is unforgivable.
I see that you requested a 4.7 percent increase for Amtrak; and yet, really, the only basic increase, which is actually a decrease if you include the pay raises for the Coast Guard, is far less than that if you eliminate the user fee request, which is going to be very difficult.
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We have got to recognize how important the Coast Guard is. The Coast Guard is like a stepchild. I mean, I sometimes wonder why it is even under The Department of Transportation. Maybe we should put it someplace else. Maybe we ought to put it under The Department of Defense or someplace else. But since it is under the Secretary of Transportation, we must put more emphasis on the importance and the needs of the United States Coast Guard, period.
Your budget submission is inadequate. The Commandant is a good soldier, and he recognizes the chain of authority, and he recognizes your authority over him and the President's authority over you, but the fact that the President is telling you you cannot ask for more money than this is not something that is going to fly.
We must make a change either in the mission of the Coast Guard or we must make a change in the amount of money we are going to give them to fulfill these missions. The administration is turning the Coast Guard into the meter maids of the Gulf of Mexico. They are more concerned about finding a shrimper with a turtle excluder device (TED) violation than some guy bringing up 10 kilos of cocaine through the Caribbean.
We must recognize that if we are going to be the meter maids every time the Fish and Wildlife Service is going to come forth with a new rule and regulation, or if they expect the Coast Guard to enforce fisheries, they are going to have to pay the Coast Guard to do it.
You should be and the Commandant should be prioritizing your needs. You should come before this committee and say, Chairman Wolf, we need this much money for drug interdiction capabilities, and we need so much money for navigation, and we need so much money for search and rescue, and then we need so much money in order to fulfill the requirements that the Fish and Wildlife service come up with monthly telling them what to do.
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The Coast Guard is boarding ships in the gulf of Mexico, motor yachts in the Gulf of Mexico, and they are spending useless dollars on fisheries enforcement that they do not have in letting drugs come into the United States. So what you should request is: you need $400 million or $5 billion for drug interdiction programs; you need a billion dollars for your navigational safety programs; you need a billion dollars for search and rescue. And then if the Fish and Wildlife Service wants you to monitor their rules and regulations, you ought to tell them to give you the money to do it.
But somebody has to come to their senses about the United States Coast Guard with respect to funding request. And I know your limitations; and I know that, just as the Commandant is a good soldier, you are a good soldier. You have been told not to ask for more than X dollars, and we appreciate that. But if that is the mandate, that you can't ask for more than such, that is fine with me; but we are going to have to find a way, with your help, to redistribute the allocation that has been given to you. Because you request, is so inadequate that I might not be able to vote for the entire bill unless some change is made to adequately prioritize the use of money that we are giving to the Coast Guard and for you and the President and the Coast Guard to understand that drug interdiction is important, sufficient to request a separate part of the money.
Now, if they are enroute to intercept some drug or some type of drug activity and they they see a shrimp boat out there shrimping without a TED, they should give them a ticket and make a little bit of money. But this ought not be our priority, unless the Fish and Wildlife service wants to fund it. So I don't know what resolve we are going to take, Mr. Chairman.
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I will certainly yield in just a minute. But, Mr. Chairman, I want to put you on notice. I am coming forth with a substantial, additional request for the United States Coast Guard; and I think next year the Commandant should come to us and tell us what money he needs to have the most effective drug interdiction program he can possibly have. He should tell us what he needs, and we will get him the money.
Mr. Secretary, then you say, we need this much for navigation; we need this much for search and rescue; and we need this much to enforce all these silly policies the Fish and Wildlife service dreams up every 3 months. We will then see if we can get the money for them, too. But we have to recognize that drug interdiction is now the most important thing you can do for the United States Coast Guard.
I would be happy to yield to my landlocked friend from Kentucky.
COAST GUARD PRIORITIES
Mr. ROGERS. I just wanted to bolster the gentleman's point.
If you look at the cutter operating hours, comparing 1997 and your 1999 estimate, you will have decreased drug enforcement cutter operating hours by some 26 percent. By the same token, you are increasing fisheries enforcement by significant amounts.
So you are cutting drug enforcement, you are going to fisheries enforcement and cutting operating hours and aircraft flying hours, you have decreased drug enforcement flight hours in that period by 26 percent, and you have held steady on the fisheries aircraft operations. So you are turning the forces that were designed to interdict the poison for our kids in the country to keeping somebody from catching some fish they are not supposed to catch.
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I don't understand the administration's priorities, that it is okay to smoke cocaine but not tobacco, but that is another subject. But it justI don't understand that, and I think the Secretary needs to explain why you are cutting drug enforcement aircraft and cutters to the bone, even below the bone, while you are increasing surveillance of American citizens fishing in the water.
Secretary SLATER. Well, first of all, let me just say thanks to Congressman Callahan and also to you, Congressman Rogers, for the spotlight that you have put on the work of the Coast Guard. Also, Mr. Chairman, thank you for your comments in that regard.
You know, I personally can think of no other entity within the Department or, frankly, within government, that has streamlined morethat has risen to every challengeas has the Coast Guard, especially over the last 5 years that I have been affiliated with the broader DOT of which the Coast Guard is a part. And it is true that we have set quite a mark for ourselves with the success of our efforts last year, in particular, where we had record level interdiction seizures of cocaine and marijuana. So, with that performance, I know that we have got that high standard.
And even with some of the cutbacks that we are discussing, we think that we can operate in a smarter, more efficient manner so as to maintain that level of performance and to play our role as a Department and as a Coast Guard in the context of a time when we are trying to put our economic house in order; and where many agencies and departments are being cut back, at least we can acknowledge an increase in important areas.
Page 102 PREV PAGE TOP OF DOC Segment 1 Of 2 Mr. ROGERS. If the gentleman would yield briefly.
Mr. CALLAHAN. I would be glad to.
Mr. ROGERS. We have seized more cocaine, but much, much more is getting through than before. We are not making a dent in the problem.
Secretary SLATER. Well, I think, though, that we have clearly enjoyed some success here. The good thing is that we are focusing as much on demand as consumption; and the reports have demonstrated that, frankly, we do have fewer people consuming
Mr. ROGERS. Mr. Secretary, as Secretary of Transportation, are you telling us that your job is to get people not to smoke cocaine and use heroin? No, your job is to interdict the stuff coming in, let someone else do that, but it is not working.
Secretary SLATER. But that is where we have had some success on the interdiction fronts. Have we done as much as we can do and must do? No. That is why I am really pleased that the members of the Committee are giving serious consideration as to how we might work together to ensure that the Coast Guard has the resources it needs and to ensure that they have the equipment needed over the long term.
Let me just mention, as I close my response here, that I am very pleased that, as a result of this budget, we are going to start a long-term assessment of the kind of equipment that the Coast Guard will need over time. Most of the equipment that the Coast Guard depends on is aged equipmentsome of it, you know, 40 or so years old. And we do have, as a result of this budget, the down payment of a program that will allow us, in the not-too-distant future, to enhance the capability of our equipmentmuch like, with the support of the Congress, we were able to provide the infrared technology that gives us the ability to use our equipment at night.
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So we are, as an administration, trying to respond to the needs of the Coast Guard both on the operational front and the equipment front and look forward to working with the Congress to address these concerns.
Mr. ROGERS. If the gentleman would briefly yield.
Mr. CALLAHAN. Yes.
Mr. ROGERS. It is not the administration that sought and got the FLIRs. You didn't ask for the money for FLIRs. We made you do it. We gave you the money and made you do it. So don't come here and tell us it is the administration that wanted to do this. You are cutting their flight hours, and you didn't want the radars.
Secretary SLATER. In the budget process, there is always the give and take that occurs between the administration and the Congress. We propose, you dispose, and ultimately the President decides whether he will sign a bill that is passed by the Congress.
So there has been this give and take that has gone on, and I think it is a positive foundation on which to build. But it is true, as we have debated the issues over time, a lot of time the Congress has been able to raise concerns and raise issues that have contributed considerably to the overall health and well-being of the Department's budget as a whole; and for that
Mr. CALLAHAN. Mr. Secretary, I want to make certain you get out of here at your designated time; and I know you said you would stay a little longer.
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But let me just tell you that, in your position, you have the authority to go to the Fish and Wildlife Service and say that just because some scientists that can't even park their bicycles straight have come up with a plan saying you should not catch more than 10 snapper, doesn't mean that we are going to dedicate the entire resources of the United States Coast Guard return to serve as game wardens, just because Fish and Wildlife mandates, through some rule, that there are not a sufficient number of snapper in the Gulf of Mexico.
Secretary SLATER. That is a good point.
Mr. CALLAHAN. That is fine with me. You call the head of the Fish and Wildlife Service and you tell him you do not have enough money in this budget, this year, to enforce those silly rules and regulations that they are passing. That, indeed, you are going to use the money for drug interdiction. And if they want you to enforce their policies to give you the money for enforcement or either go to Congress and get Congress to give more enforcement money. But don't come to the Congress asking for more money for fisheries enforcement than you are asking for drug interdiction. Which has the highest priority, in your opinion?
Secretary SLATER. The drug interdiction effort has to
Mr. CALLAHAN. Then why didn't you submit a request for more money for drug interdiction than you did to monitor the silly regulations of the Fish and Wildlife Service?
Page 105 PREV PAGE TOP OF DOC Segment 1 Of 2 Secretary SLATER. Well, we submitted, with the support of the Coast Guard, a budget proposal that we thought and still believe will help us meet our needs. Now, again, it is before the Congress at this point in time, and I want to state once again that I very much appreciate the interest that you have in this matter. I appreciate the interest that Mr. Rogers has.
Mr. CALLAHAN. I understand that. But let me tell you, I expressed this to your predecessors, and I have gotten nowhere.
I am calling upon you because you have been southin fact, that is where I met you, in Mobile, Alabama, when you were the Federal Highway Administratorso you have seen the beauty and the greatness of the Gulf of Mexico. And I am telling you that we want to make an immediate change in requesting that you forget about policing the rules and regulations of some environmental agency and prioritize the money we are going to give you for drug interdiction. I mean, that is a very simple, logical request, that you just admitted that you support.
So why don't you just go back to your officeand I know I am making you late getting back thereand call them and tell the Fish and Wildlife Service that, we have had a change of heart. That if you want to implement all these rules, create your own game warden. That we are not your meter maid, and we are not your game wardens. We are professional protectors of the United States of America, and snapper is not going to hurt the first American. That is just the way it is.
And neither is some shrimper out there trying to make a living. First of all, they came out with TEDs, which is a turtle excluding device; and they made every shrimper in America put a TED in their net to let the turtles escape. Then we let the Texans and South Americans take the entire shrimp market away from us.
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And now they have come up within addition to the turtle excluding device, they want to put a device in one end of the net, to let the little snapper get away.
So you tell them you no longer have the resources available and that you are going to reprogram this enforcement for fisheries money into drug interdiction. You have the authority to do that.
You are up here asking us to reprogram all the time. So if you would rather we do it for you, I am sure the Chairman would agree, that we can just reprogram this, take out fisheries enforcement and put it in drug interdiction.
Would you object to that?
Secretary SLATER. Mr. Chairman
Mr. WOLF. Well, let meI share the gentleman's concern. I thank the good Lord every night my children are not at that age now.
I was down in one of my rural counties on Saturday at a Lincoln Day dinner; and they told me the impact in this county, which is a very, very rural county. It is all over America.
I think this administration's policy has been inconsistent, beginning with when the President went on MTV and said he tried drugs and did not inhale. The message that sent
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Many people laughed at the Reagan program of Just Say No, but if you go into the schools, as I do perhaps more than just about anybody else around, I go into all of my high schools, every session of Congress, and sit down with the kids, answer questions and just listen to them. They will tell you, drugs are all over.
I was up at Governors Island the other day, made an unannounced visit; and they have Coast Guardsmen raking leaves. This Committee was asked to provide funds for custodial care of the island and we complied, so that the Governors Island didn't just wither away. The Committee provided $6 million. But to see 24 Coast Guardsmen raking leaves, when you could have taken that money and used it for fuel for drug interdiction operations.
So it is a serious issue, and I do believe the rhetoric coming out of the administration.
In closing, you are
ADMINISTRATION'S SHIFT IN THE DRUG WAR
Mr. ROGERS. Mr. Chairman, would you yield just briefly on that point, and I promise this is the last. But this summarizes, I think, the predicament we are in.
In 1993, the White House announced, in all good conscience, what they call a control shift in the drug war from transit zone interdiction by the Coast Guard and Customs Service to source country eradication programs and drug treatment programs here at home; and they sort of downplayed the war in betweenthe interdiction at sea and so forth. Unfortunately, the shift never occurred; and interdiction and source country programs were introduced, both of them, and the money put in drug treatment here at home.
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In 1998, interdiction and source country programs were funded at about 80 percent of the 1992 level, and that is not even counting inflation. At about the time that controlled shift took place, leading indicators immediately showed the results. Most troubling, the sharp rise in teenage drug use. It had trended downward from 1980 to 1992.
When you cut out the monies for interdiction, according to your latest OMB/CDC figures, 54.3 percent of high school seniors have used drugs. That is up from 40 percent in 1992. That is a 14 percent increase in a short span of time when you had this controlled shift.
You say, well, we are doing treatment programs. Well, your relying on treatment to win the war on drugs is like relying on field hospitals to win a field of arms. You don't win those by defensive measures, first aid to the wounded. You take your battle to where the bullets are coming from and you catch them out there. But this administration has decimated the interdiction effort, and this Congress is not going to let you go any further.
Mr. WOLF. Go ahead.
Secretary SLATER. I think I should say I don't think the administration has been on the defensive as it relates to the war on drugs, and I think that General McCaffrey has done a good job in coordinating the effort of the administration in this regard.
Clearly, we don't have as many resources as we would like to have; and we join the Congress in that regard. But I can tell you that we have got those in the Coast Guard out there day in and day out who are making the sacrifice, and last year they raised a very high standard for us to meet with their record level interdiction for cocaine and for marijuana.
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It is not our intent to propose a budget that would cause us to fall from that standard that has been established, and I do look forward to working with the members of this committee and with the Congress and with my colleagues within the administration to ensure that we move from strength to strength and that we continue to rid our society of this menace. I know that that is a goal that we share.
Mr. WOLF. You never commented on the idea of the Coast Guard and our forces firing directly at the planes.
Secretary SLATER. If I may do this, Mr. Chairman. Let me consult with the Commandant on that issue and other
Mr. WOLF. The Commandant never addresses that. He talks about an international convention. The subject sort of shifts, and he drifts away from it. I think, frankly, nobody wants to deal with it.
If there is a real war on drugs, will have an impact on our children and on the families in America, then I think it certainly ought to be something we should be willing to consider and not just necessarily call the Peruvians in to shoot the aircraft out of the air. I think our forces should also be able to do the same. Without that, people say they are going to spend more money on the drug war and talk about it, but we won't be successful with it.
PROJECTED COAST GUARD DRUG INTERDICTION
Page 110 PREV PAGE TOP OF DOC Segment 1 Of 2 Mr. ROGERS. Mr. Chairman, will you briefly yield?
Your own records, Coast Guard records and the government records, show that your budget would anticipate the pounds of cocaine to be interdicted would decrease in 1998 and 1999 from the 1997 level with the money that you are putting into interdiction. You are anticipating a lot less cocaine interdictions. You would be going from 103,617 pounds, I guess, down to 89,000 in 1999.
Secretary SLATER. I think that is based on a performance level that is consistent with the level this year without any enhancement, without the use of the enhanced technology dealing with the infrared capability that you have mentioned. I can assure you that the Coast Guard, with this budget, is not going to respond in a way that we are not performing at the level or beyond the level that we performed at last year.
Mr. ROGERS. That is what your budget would show would happen.
Secretary SLATER. I think that is, when you are looking at it, only in terms of dollars. There are other streamlining and enhancing efforts
Mr. WOLF. I think he is talking about pounds seized.
Secretary SLATER. The judgment is being made only when you focus on the resource side of our initiative, rather than focusing on our effort to streamline our operation, become more strategic and focused in our endeavors to work better in a collaborative way. I mean, there are other ways
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Mr. ROGERS. When you talk to the Coast Guard people, they disagree with you. They say you are going to cut back big time on the patrol hours and that will mean fewer interdictions and pounds seized.
Secretary SLATER. We will see.
REPROGRAMMING FOR COAST GUARD DRUG INTERDICTION
Mr. CALLAHAN. I want to ask one question. I think you understand and you share our concern about drugs.
Secretary SLATER. I do.
Mr. CALLAHAN. Then would you fight a possible reprogramming of maybe small percentages of some of these areas of your Transportation Department to increase the Coast Guard's ability up by $100 million, at least, for drug interdiction? Would you support us taking a few million dollars away from Amtrak, a few million dollars away from the Jobs program, a few million dollars here or there, in order to adequately fund the United States Coast Guard and their ability to interdict drugs? Would you adamantly be opposed to that? Do you think we could not take a few million dollars from each and every project to increase the Coast Guard's ability for drug interdiction?
Secretary SLATER. I would support
Page 112 PREV PAGE TOP OF DOC Segment 1 Of 2 Mr. CALLAHAN. Good.
Secretary SLATER. I would support an effort to work with the members of the Committee and to work with the administration and the Congress to ensure
Mr. CALLAHAN. In Alabama, we would say that was a commitment, that you agreed to it.
Secretary SLATER [continuing]. To ensure that the Coast Guard has its resources to do the job we all agree it must do.
GAMBLING CASINO ON GOVERNOR'S ISLAND
Mr. WOLF. In closing, let me give you an easy question.
On the Governors Island, when I went out there, I saw piles of leaves, and Coast Guardsmen who were raking them.
Secretary SLATER. This sounds like it is going to be a tougher question, Mr. Chairman.
Mr. WOLF. I also reflected, as I looked out, on the historical events that have occurred on the island. Ronald Reagan met with Gorbachev there. Bush met Gorbachev. It is a historical place. I urge Members to visit it.
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It also has the building where Mitterrand stayed, and the fort out there was used as a prison during the Civil War. The number of famous people who have served on the islandI, think one of the Wright Brothers' more important flights took off from there.
There is a lot of beautiful land there that could be used for a park. As you look out, you can see Ellis Island, where many of us, you know, had relatives come to reside in the United States. That was their first port of entry.
Lastly, it also looks out on the Statue of Liberty and Ellis Island, which are side by side.
Would you agree with me it would be inappropriate to have a gambling casino out on Governors Island?
Mr. ROGERS. Easy question.
Mr. WOLF. Was that a yes? You shook your head yes.
Secretary SLATER. I just said umm. The questions are getting tougher.
Mr. CALLAHAN. I will bet you two-to-one you are not going to get an answer.
Page 114 PREV PAGE TOP OF DOC Segment 1 Of 2 Mr. WOLF. I don't bet, but we really need to hear from you. What are your feelings?
Secretary SLATER. I should sayI wanted to say, I pass. But, clearly, we are working with the City of New York and New York State to try to come up with some way that this land could be used for a purpose that is consistent with its rich history; and I am looking forward to working with all concerned to accomplish that end.
Mr. WOLF. Okay. But you really didn't answer. Do you think gambling would be appropriate out on the island? If you can just tell me yes or no.
Secretary SLATER. Mr. Chairman
Mr. WOLF. This is what leadership is all about.
Secretary SLATER. Well, clearly, you and I have had discussions about this; and I can tell you that I definitely understand the sensitivities you have raised. In many respects, I share them. Again, I just want to go back to my point earlier, that we have been in negotiations with New York State and with the City
Mr. WOLF. But all of the members of the congressional delegation of New York all share my feelings. Senator Moynihan is against gambling. Carolyn Maloney, who represents the area, and Jerry Nadler are against it. The only one pushing for it is the City of New York and the mayor. The New York General Assembly is against gambling.
Page 115 PREV PAGE TOP OF DOC Segment 1 Of 2 And, you know, this administration has been very weak on the issue of gambling. This administration has taken extensive contributions from the gambling interests. This is a real test, and the Clinton administration will go down in history as fundamentally and I believe morally corrupt
Secretary SLATER. Oh, Mr. Chairman.
Mr. WOLF [continuing]. If it permits gamblers to come in with political contributions to influence this in such a way that, 5 or 10 years from now, when people come out onto the island and look out and have a gambling casino that looks out on the Statue of Liberty, which is the symbol that the students in Tiananmen Square made a papier-mache to symbolize liberty and freedom, and look out on Ellis island, where a large number of people living in the country today had their grandparents and sometimes their parents and their great grandparents enter this country,to even allow the gambling interests to establish themselves there would be a disgrace. I think history will demonstrate, history will show, and I would make sure I reminded people of that history.
That is why I am disappointed that you are not willing to say, Congressman Wolf, I agree with you. I think it would be inappropriate. And a red flag goes off because I watched some of the people who came to the White House and some of these coffees; and they were from the gambling interests, giving an extensive amount of money.
In fairness, let the record show that both political parties have taken a considerable amount of money. But when I looked and saw the list of the coffees at the very time the President was making appointments to the Gambling Commission, which I authored, your reluctance creates a real concern in my mind.
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I thought that was an easy question, honestly an easy question. My God, why would you ever want to put gambling on Governors Island?
I thought we could end the hearing quickly by saying I completely agree with you. It would be inappropriate for gambling to look out on the Statue of Liberty and Ellis Island given all the historical aspects that have taken place there. It should be open to an educational consortium, and a place where moms and dads can take their kids out on a weekend. It is not compatible to take your kids out on the island on a weekend and have the gambling interests out there.
But I am not going to put you down on it, but I am disappointed you were not able to be forthright and answer me.
Secretary SLATER. Mr. Chairman, note that I did say you and I have talked privately about the matter, and many of the concerns you have raised are concerns I share. I know the administration to be working with New York City and New York State to ensure that these properties are used in a way that is compatible with the historic role that the properties have played in the past.
Mr. WOLF. But that is in the defining of the person that says compatible.
The mayor is not a bad person. He believes that would be compatible, to have it down on one end of the island.
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You are an important person. I have great respect for you. You are someone who the President of the United States listens to. You are valued by him. I mean, it is clear when I see the number of meetings that you attend, and that is to your credit.
It troubles me that you would not sayyou know, I don't know if you are signalling me that I agree with you, Mr. Wolf, but I am not going to say it here. But I was hoping you would say, Mr. Wolf, I completely agree. I think that it would not be a legacy that we in the Clinton administration would want to leave for future generations as they look out to the Statue of Liberty, they then look back and see that there is a gambling casino on the tip of the island.
I think it would be horrible, and I just wanted you to say that, and I don't know how this is going to come out on the record. Is it going to be that Secretary Slater hedges or Secretary Slater signals Wolf with a wink and a blink that he really is with him but didn't want to say? I am not really sure. It is an issue I care deeply about.
Secretary SLATER. I understand, and this is why I made reference to our previous conversations on the matter and why I said now three times that the concerns you raised are some concerns that I share
Mr. WOLF. I appreciate that.
Secretary SLATER [continuing]. And I think that we are going to resolve this matter over time, that it will prove to be acceptable for all concerned.
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And I can say thisand I think I shouldthat, unequivocally, this administration will not make a decision based on any contributions that it might have received. We will deal with this matter in an up-front, objective and thoughtful fashion.
Mr. WOLF. I take you at your word, and let me just stipulate that I think you are an honest and decent person.
I just have to say, though, without knowing the fault or blame and have not spoken out on the issue, we have seen that there has been an outside counsel appointed with regard to the Indian tribes in the Midwest with regard to a member of the Cabinet, and certainly I don't know if there is a problem there or not. Secretary Babbitt seems like a fine guy. I don't know anything about it.
But for the first time we have now seen this. There has been significant corruption on the part of gambling. We know that for the record. Now we are beginning to see it percolate within the last year or two up at the Federal level, and this latest thing with regard to the Indian tribes troubles me.
Supposedly we will know eventually from the outside counsel about conversations in the White House and what different people have alleged, and I don't know what they are. I hope nobody is hurt by it. But we have now seen it has pierced the Federal veil and is now up at the Federal level.
And I plan on doing this on a very high profile, with regard to this. Because, long after I am gone, I don't want to see a gambling interest. I think it will look bad if they are successful in doing this, and it is very difficult to kind of connect these. I mean, when the gambling interests make the contributions, it generally isn't because they support the Member or the person because they like his view or her view on troops in Bosnia or on the capital gains tax. It generally is to be involved with regard to the gambling interest.
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Again, I apologize. We wanted you out by 1:00.
Secretary SLATER. Sure.
Mr. WOLF. But this will give you plenty of time to make your meeting at the White House.
We will have a series of questions that we will submit for the record. Please return the answers quickly.
Secretary SLATER. We will provide that. Thank you.
Mr. WOLF. Thank you very much.
"The Official Committee record contains additional material here."
"The Official Committee record contains additional material here."
Thursday, February 12, 1998.
OFFICE OF INSPECTOR GENERAL
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KENNETH M. MEAD, INSPECTOR GENERAL
RAYMOND J. DE CARLI, DEPUTY INSPECTOR GENERAL
LAWRENCE H. WEINTROB, ASSISTANT INSPECTOR GENERAL FOR AUDITING
TODD J. ZINSER, ASSISTANT INSPECTOR GENERAL FOR INVESTIGATIONS
ALEXIS M. STEFANI, DEPUTY ASSISTANT INSPECTOR GENERAL FOR AVIATION
PATRICIA J. THOMPSON, DEPUTY ASSISTANT INSPECTOR GENERAL FOR SURFACE
Mr. WOLF. Welcome to the Committee. We are on a tight schedule, although we will probably stay here the whole day. The House is going to break at about 2:00 o'clock, or maybe even sooner, because of certain events. We have a series of questions, but we will wait until you finish your statement. If your answers could be relatively crisp, we would appreciate. You can elaborate in depth for the record.
We want to welcome you, Mr. Mead, and your staff. I have great respect for you; I think you all have done a fantastic job over the years. This Committee has relied on your comments. I personally rely quite heavily on the work the IG has done, so we appreciate it very much, the good work. If you could, take back to all of your staff the appreciation of the Committee. I want to make sure you know that because this is a day Members are getting out of town, your statement will be available to all the Members so that they can see what you have done, too. But please proceed as you see fit.
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Mr. MEAD. Thank you, Mr. Chairman, and I will try to be brief and crisp. Before I begin, I want to express my appreciation to the Congress and Secretary and the Deputy Secretary, Operating Administrators and the Assistant Secretaries at DOT for their support and responsiveness. And I wanted to say that in public session because I wanted you to know I think we and they have made a special effort in establishing a working relationship based on trust and mutual respect, and that is very important when you are, in effect, the internal auditor and have to do objective work.
I would like to introduce my colleagues, too, for the record. Mr. DeCarli the Deputy Inspector General, is on my right; Larry Weintrob, he is our Assistant Inspector General for audit and evaluations; Todd Zinser is our Assistant Inspector General for investigations; Alexis Stefani is at the table, she is Deputy Assistant Inspector General for aviation; and back here is Pat Thompson, Deputy Assistant Inspector General for surface, and John Meche, Deputy Assistant Inspector General for Financial, Economic, and Information Technology. This is my first time before the Committee to present the OIG budget request, and I just wanted to briefly elaborate on the principles under which we are operating. We don't want to simply react to allegations, problems, and tragedies; we are here to catch problems.
Mr. WOLF. Mr. Sabo is going to chair. I will be right back.
OIG BUDGET REQUEST
Mr. MEAD. Mr. Sabo. We are here to catch and correct problems early whenever possible. We are requesting a total funding level of about 43 million dolalrs. That includes 665 thousand dollars from the highway trust fund to cover FTEs. It is an increase of 1.2 million over our fiscal year 1998 enacted request. Our requested staffing level is 442, which is two more than our current level. I believe that that is sufficient. The details are provided in our budget submission.
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Now a word on our accomplishments last year. We issued 144 audit reports, directed $138 million in funds, prompted decisions recovering $196 million and adjusting $32 billion in the Department's accounting records. During the first 4 months of this fiscal year we issued 65 reports and identified more than $500 million that could be put to better use.
I want to say a word about our investigative staff, whose work secured 103 convictions last year and led to fines and judgments totalling a little more than $12 million. Criminal investigations currently are emphasizing illegal spare parts for aircraft, HAZMAT, motor carrier safety, and contract and grant fraud. Our work in fiscal years 1998 and 1999 will concentrate on significant issues facing DOT and the Congress.
Now I know your work will be complicated this year by significant reprogramming requests dealing with the FAA fiscal year 1998 budget and Amtrak finances. Of course, the latter isn't particularly a new item.
FOCAL OIG ISSUESAVIATION SAFETY
I would like to provide highlights of the key issues as we see them. First, aviation safety. After the ValuJet crash in 1996, you will remember that the FAA established a task force that came up with 31 very credible, comprehensive recommendations. Action is completed on 8 and much remains to be done. Several of those recommendations pertain to the level of surveillance given new entrants. On another safety issuedangerous goods and cargo securityassessments and tests show that indirect air carrier operations are not sufficiently complying with FAA requirements. These indirect air carriers are the people who show up at the airport and carry luggage or baggage that can be checked but which might contain hazardous materials.
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A third safety area I want to highlight has to do with collisions on runways, also known as runway incursions. They have increased fairly dramatically in just several years. They have risen 54 percent from 1993 to 1996, from 186 to 287. The goal now is to reduce incursions to 41 by 2001, so we have a long way to go. On one last aviation safety issue, we found FAA inspectors were not routinely provided basic technical training.
Moving to surface safety, the motor carrier compliance program needs to expand coverage and more accurately target carriers. A related item is unscrupulous motor carriers that put the public at risk by deliberately falsifying driver's licenses and requiring drivers to falsify logs. We now have over 20 criminal cases under investigation in this area. FRA's safety program and grade crossings are the subject of our ongoing work.
YEAR 2000 COMPUTER ISSUE
As for Year 2000 computer issues, I think you've probably read enough about that. This issue deals with computers that cannot distinguish between 2000 and 1900. Seventy percent of the department's mission critical systems are within the FAA, and the most difficult challenge is fixing the problems by January 1, 2000. Testing the fixes and putting compliance systems on line is ahead. I know money is important, especially to this committee, but time is the key issue here. We think FAA should move up its November 1999 compliance date to June because we don't think there is much of a cushion with the November 1999 date.
Page 124 PREV PAGE TOP OF DOC Segment 1 Of 2 AIR TRAFFIC MODERNIZATION
On the subject of air traffic modernization, I want to just footnote my observations with some remarks about Administrator Garvey. She has recognized the need to take control of this multi-billion dollar program, and as a result of the efforts and initiatives she has undertaken, you will see in this year's appropriation cycle a greater disclosure of risks, more focused program definitions and greater realism in project schedules.
However, some of the key items facing air traffic modernization are the human factor issues and the standard terminal automation replacement system, called STARS for short. We had testified at a hearing on this some months ago. Those human factor issues have to be resolved and they better be resolved soon or you are going to see considerable slippage in the schedule. The cost of the wide area augmentation system, called WAAS for short, has to do with satellites for navigation. Costs have increased, mostly because of costs that weren't previously included. There remain big questions about backup systems, such as whether you need a backup system, whether you can rely exclusively on satellites, and on the number of satellites needed. You will also hear about cost to users.
The HOST computerthe computer used to control high altitude traffichas year 2000 problems as well as parts availability problems. The HOST computer must be repaired and it must also be replaced. We have serious doubts as to whether it can be replaced though, in all 20 centers, by January 1, 2000. That is a lot of computer work for FAA to complete in less than 23 months time.
COST MANAGEMENT SYSTEMS
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On FAA cost management systems, FAA has to develop a cost accounting system that reflects the agency's debt, investments, allocated costs and revenues. This is needed for a fee-for-service system, and also, more fundamentally, needed so as to know what the agency's costs are. The committee may be expecting this system to be delivered by October 1st. I think that is very, very optimistic. I don't believe it will happen by then.
On infrastructure needs, in order to minimize cost overruns on major infrastructure projects, a requirement for a financial plan, similar to that required by this committee for Boston's Central Artery and L.A. Metro, is a good idea. That combined with FTA and FHWA oversight is, in our view, worthy of replication in other major construction projects.
As a result of our work and legislation, airport revenue diversion problems have been reduced. Another item, passenger facility charges for non-air-side projects, such as transit systems that facilitate access to airports, needs a clear, articulated policy.
On financial accounting, I should say that since passage of the Chief Financial Officers Act, we have seen a lot of progress in the department, but it is still going to be a real challenge for DOT to get an unqualified opinion by fiscal 1999. I want to point out here that last year on the highway trust fund, we gave an unqualified opinion. A similar unqualified opinion is unlikely this year if we can't resolve certain issues. The problem with the highway trust fund is external to DOT and relates to the Treasury Department's support for estimates of gas tax receipts.
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AMTRAK FINANCIAL REQUIREMENTS
On Amtrak, recent reform legislation requires a thorough analysis of Amtrak's financial requirements. We are issuing a statement of work on this and we hope to have a contract awarded by mid to late March. This is an important one because Congress is looking to this analysis to assess what Amtrak's financial requirements and viability are over the next 5 years.
A major issue the Committee will be asked to address this year is Amtrak's need for direct appropriations. DOT's budget request asks for 621 million in direct appropriations. That is in addition to the 2.2 billion that will be made available for Amtrak for capital under the Taxpayer Relief Act. Amtrak's Board of Directors would like to use the 621 million for what they call capital assistance.
GOVERNMENT PERFORMANCE AND RESULTS ACT
Finally, with regards to the Government Performance and Results Act, a major challenge facing the department is implementation of a strategic plan. And with that plan, they are required to establish performance measures. I want to advise the committee that these measures are not going to be free from controversy. For example, improved safety and highway maintenance will depend on the performance of third parties, such as the States, and we encourage the committee to weigh in on the usefulness of these measures.
Mr. SABO [presiding]. Excuse me. I have about five minutes to get there to vote, so why don't you suspend until the chair is back.
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Mr. MEAD. Yes, sir.
Mr. SABO. We will see you later.
[The prepared statement and biography of Mr. Mead and biographies of DeCarli, Stefani, Weintrob, and Zinser follow:]
"The Official Committee record contains additional material here."
Mr. MEAD. I finished my statement while you were voting.
Mr. WOLF. I appreciate Mr. Sabo doing that, that way it doesn't take as much of your time. I am going to go straight to the questions because I am not sure Mr. Sabo had any particular ones.
FAA'S MANAGEMENT CULTURE
Work conducted by the GAO and others indicate that the FAA has a unique management culture which is resistant to change. The former IG said ''the FAA tolerates poor judgment and protects bad management''. A May 1997 survey of FAA's acquisition managers said the authoritative management style and back room decision-making characterized as ''negotiating with stakeholders crisis to crisis'' were commonly mentioned examples of a dysfunctional organization. The need for major cultural changes was frequently raised.
The internal report went on to say, ''the perception continues that FAA's culture actively opposes change; senior executives do not seem to actively encourage change; no one wants to punish mistakes; and there is an undercurrent of cynicism.
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Are you seeing changes at the FAA under the new administration?
Mr. MEAD. Yes. I think your point about cultural issues and all the baggage that is associated with that is a correct one. I believe it is accurate to say we have seen changes under the Administrator. But the key here, as it has been in the past, is persistence, leadership, and insistence on the part of the Administrator. This time around, it is different. This is the first time we have had an Administrator, who, going in has a 5-year term. People know this is for 5 years, it is not 18 months, a year or 3 years or 4 years. It is 5 years, which is a good period of time.
I would say that we need to see some changes in personnel reform and procurement reform, and I think they go hand in hand. I believe you need to encourage an environment at FAA where people, when they come forward with problems, aren't going to be made into a scapegoat.
When Ms. Garvey comes here for hearings, you will see full disclosure of the risks associated with the acquisitions the Committee is funding, and the Committee will also see a more realistic set of schedules. The key again, Mr. Wolf, is follow-through.
Mr. WOLF. Well, I agree with that. That question is not meant as criticism of Ms. Garvey. You know my feeling with regard to Ms. Garvey and I think she has been one that has been open. She doesn't get defensive, she is open. But I think she is going to have to develop, and we won't get into this today, a team of Garvey people around her, 5 or 6 people. She should get the best person from the DOD, the best person from NASA, the best person from maybe your office, the best person from Mitre and develop a Garvey team in whom she has complete confidence and trust.
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Mr. WOLF. What changes are still needed to promote more accountability among FAA managers?
[The information follows:]
The Administrator and her senior-level managers need to change the way FAA does business by encouraging an environment that fosters accountability at all levels of management. Managers need to change their mindsets and consider the cost and staffing implications of their decisions. As our reports over the past several years have shown, managers have not been held responsible for their decisions. For example, it has been over two years since we issued our report on abuses of FAA's training program, which permitted employees to obtain free air transportation for personal gain. To date, no changes in the program have been made and managers continue to let employees abuse the program. We also reported that air traffic managers had little incentive for negotiating agreements that were cost-effective, because they were never held accountable for the effects their decisions had on operations.
To change this culture, the Administrator and her management team must focus on responsibility and accountabilitydirectly linking managers' pay and bonuses to their performance.
Mr. WOLF. Past IG reports have shown an agency rife with what might be called petty corruption: Officials taking buyouts they were not entitled to; others abusing rental car privileges; detailed employees remaining on the field payroll for several months in order to collect bonus pay they were not entitled to; employees requesting and collecting PCS money which they were not entitled to.
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Do you see evidence that stronger supervision and management controls are taking root at the FAA which can help stamp out these kinds of abuses by individual employees?
Mr. MEAD. I am going to ask Mr. Zinser to answer that question. Mr. Zinser is Assistant Inspector General for Investigations. He sees these cases when they come in and he sees what FAA does with them.
Mr. ZINSER. Mr. Chairman, I would have to say no, I don't see that taking root. The FAA is still a very large organization, 50,000 employees, and I think an organization that size is going to have those kind of problems. But I will tell you that we have increased our staff, in my office and in headquarters, to personally address a lot of those types of issues that are coming in, and we are trying to deal more directly with the management to try to address those issues.
Mr. MEAD. Let me add a postscript on that. I find when we get on the phone and call the Administrator directly on an issue, something happens. But too much depends on having to go directly to the Administrator to get something done. We have a number of cases we have investigated, and have made recommendations on only to find it has taken far too long for remedial action to be taken.
FAA PERSONNEL REFORM
Mr. WOLF. In a couple months, on 4198, it will be the second anniversary of personnel and acquisition reform at the FAA, which, as you know, this committee did. Yet after almost 2 years, very few personnel changes have been implemented and important modernization programs are still experiencing cost overruns and schedule slippage.
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Has the FAA moved fast enough to utilize the flexibilities and management tools provided in these reform efforts?
Mr. MEAD. No. On the personnel reform, there are lots of lines of business over there and they do have plans. But these plans have to be implemented and formed in some coherent agency-wide manner, which the Administrator is trying to come to grips with now. On personnel reform, it is not totally obvious to the FAA why this is so important. Over on the acquisition side, they need to bring in high-caliber talent to oversee these contracts and administer these contracts.
You have seen the press reports about how tight the market is for the software specialties. Well, personnel reform is tied to the capability to bring in the talent. One of the things we see holding up personnel reform is having systems in place to figure out what people are doing and what they are getting paid. FAA is going to have to put in some of these advanced systems. Complicating this on the controller side is the matter of union negotiations. I expect these negotiations to go on for some time. The short answer to your question is no. I do not believe personnel reform has moved quickly enough. FAA needs to put the pedal to the metal.
Mr. WOLF. I remember Secretary Peña made a big deal about vacuum tubes and saying if we could only get reform. Yet nothing really has changed to the point you can dramatically see it.
Mr. MEAD. I should add, on procurement reform, you will see quicker start-ups of procurements. Moreover, there are features of procurement reform that are now in place that are allowing FAA to design acquisiton better up front rather than at the tail end.
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Mr. WOLF. Has Ms. Garvey hired 5 or 6 new people to surround her, that you know of, since she has been on, since August?
Mr. MEAD. No, sir. The Administrator needs to have a team, as you were alluding to earlier.
Mr. WOLF. Which part of the FAA would you say is farther along in utilizing the freedom of personnel and procurement reform, the acquisition, regulatory, or air traffic organization?
Mr. MEAD. I am going to ask Alexis Stefani to answer that question. She is our Deputy Assistant Inspector General for Aviation.
Ms. STEFANI. The acquisition area has made the most progress.
Mr. WOLF. From listening to the air traffic controllers union, it is apparent that they are not happy with FAA management. For example, in a recent document called ''FAA Broken Promises'', they asked Congress to improve a ''badly deteriorating situation'' at the FAA. They say ''history is repeating itself''. From what you have seen, is personnel and acquisition reform reaching down to the field level controller?
Ms. STEFANI. The personnel reform faces, within the FAA, the difficulty of having so many different missions and different types of work forces, and each of these must be worked out with whatever unions are involved. If you look at air traffic services, they in fact have three unions they have to be concerned with and two different missions, so it is a very difficult and expensive experiment we are going through to change the culture that is too used to the current government pay, reform, and benefit system.
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Mr. WOLF. But in April it will be 2 years.
Ms. STEFANI. That is true.
Mr. MEAD. You know, it is interesting. Sometimes people call for freedom and liberty, and once they have freedom and liberty, they find they are perhaps more comfortable with the status quo. It is difficult to extricate yourself from this pattern.
Mr. WOLF. That is very troubling because that was given as the solution of all these problems, and yet you say ''no'' with regard to the question that Todd answered, and the ''no'' with regard to the second anniversary. That is very troubling.
Before you can hold someone accountable, you need a baseline against which to measure their performance. In FAA acquisition programs, that means the establishment of cost, schedule and technical baselines approved by the Joint Resources Council, the JRC. However, FAA's own review found that almost three quarters of JRC meetings in the first year were cancelled or postponed, and only 4 percent of programs, 6 out of 145, have approved baselines.
How can the FAA hold people accountable without baselines against which to measure their performance?
Mr. MEAD. The answer is you can't.
Mr. WOLF. You can't.
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FAA FINANCIAL REFORM/COST SAVINGS
In last year's hearings, Mr. DeCarli and Ms. Fleischman, the acting IG, agreed with Coopers & Lybrand financial assessments of FAA, which said that cost savings were possible. Mr. DeCarli said, ''There are a lot of opportunities for them to reduce their operating costs.''
Is the FAA seizing any of these opportunities in the fiscal year 1999 budget request, to your knowledge?
Mr. DECARLI. I would have to review the specifics of the ones that we are talking about to give you an honest answer, Mr. Chairman. I can answer that one for the record, but I don't know the answer right off.
[The information follows:]
The specific areas for savings we identified last year related to: the elimination of ''revitalization pay'' for air traffic controllers ($485 million); acquisition reform from which FAA had projected a $2 billion savings; FAA's plan to eliminate ground-based systems by switching to satellite-base communications, navigation and surveillance; and cost reductions from consolidating flight services stations used by general aviation.
There are no savings in FAA's fiscal year 1999 budget request related to these four issues.
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FAA FIELD OFFICE CONSOLIDATION
Mr. WOLF. Mr. Belger admitted to us in last years hearing that consolidation of the regional offices had already been studied and found cost-effective by the agency and the matter only awaited a decision by the new administrator. As you know, the Coast Guard has already consolidated their district offices, so it might be possible for the FAA to follow their lead.
Has your office reviewed the possibility of regional office consolidation of the FAA?
Mr. MEAD. No, but we will if you want us to.
Mr. WOLF. If you would, I would appreciate it. The next one we will do for the record, then I will ask one or two more and then I will go to Mr. Olver.
FAA FUNDING PREDICTABILITY
In a speech last September, FAA Administrator Garvey stated the FAA ''must have an adequate, stable, and predictable source of funding. We don't have that today. We definitely need it for tomorrow.'' Of course, it would be an ideal world if all organizations, all families, and all individuals had such a thingadequate, stable, and predictable sources of funding for the things they wanted to buy or accomplish. But this is the real world. All budgets are plans which change as circumstances dictate. Airlines and other businesses don't have predictable or stable funding. Neither do families or government agencies.
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Do you know why the FAA and the department continue to pursue an automatic funding mechanism for the FAA?
[The information follows:]
FAA believes it needs a stable and predictable source of funding to carry out the modernization of the National Airspace System. According to FAA, the current appropriations process is full of uncertainty because projects must compete with other projects, as well as with other Federal programs, for a piece of a declining budget. As a result, FAA officials have stated that there may not be sufficient funding in future years for any project started in the current fiscal year. Notwithstanding this, I do not believe it is productive to focus on the appropriations process as the use or for FAA's various problems in managing acquisitions. The agency would be better advised to look inward and ask itself why it did not ever request sufficient appropriations for the year 2000 computer problems and to replace the host computer.
Mr. WOLF. Over the past 3 years, when deficit cutting was the hardest, we found funding to add hundreds of new FAA safety inspectors, air traffic controllers and security personnel. We protected, in this committee, in a bipartisan way, and even added funds above the budget for high payoff capital programs, such as WAAS and data link. The increase we put in for the ATC operating budget last year was two to three times the increase in air traffic operations. Last year's increase in air traffic was almost 10 percent and this year the administration is requesting a 6 percent increase. But despite all this we hear the appropriations process cannot provide funding in an adequate or stable manner.
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Should we consider shifting some of this operating money into capital programs to keep the people happy who say we cannot do enough?
Mr. MEAD. No, I don't see the basis for that. I do think that the committee needs a more coherent explanation of what the operating budget is being used for and what the facilities and equipment budget is being used for. As you know, FAA is under an obligation to put together a cost accounting system to allocate costs to various functions. You should know, for example, what all the costs are that are associated with an enroute center. FAA is supposed to be get that cost accounting system on, I think, October 1st of this year. But earlier in the summary, as I pointed out, I don't believe a credible cost accounting system will materialize this year.
FAA AND YEAR 2000 COMPUTER PROBLEMS
Mr. WOLF. On the year 2000 problem, I know you have taken a look at this, along with the GAO who will appear later today. You have been analyzing the year 2000 problem at the FAA.
Does the FAA have a good handle on the scope of the problem?
Mr. MEAD. They just completed what they call an assessment phase. That is where they diagnose what their problems are. The big task lies aheadthe fixesand I believe it is too early to tell.
Page 138 PREV PAGE TOP OF DOC Segment 1 Of 2 Mr. WOLF. Should this have been done sooner?
Mr. MEAD. Oh, yes. FAA's assessment process was done 7 months after the OMB deadline for the rest of government. I am concerned about the final implementation date that FAA has established, which is November 1999, because of the agency's track record with computers.
Mr. WOLF. Which has not been very good?
Mr. MEAD. No, it has not been something to write home about.
Mr. WOLF. Do you believe this is a potential safety problem in the year 2000?
Mr. MEAD. No, I don't believe a safety problem will be allowed to materialize. I think it will be more a question of efficiency and whether there will be a need to keep some planes on the ground. At the same time, again, this November 1999 date ought to be moved up to June of 1999 so you have a cushion. If FAA finds that one of the computer fixes isn't working properly, FAA will need time to fix it; only allowing from November to the first of the year is too close a call.
Mr. WOLF. When the FAA says a system has been, quote, ''fully assessed'' for its Y2K problems, does that imply there has been a technical audit to verify the approach needed or is it more a survey, and to what extent is an in-depth technical audit necessary?
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Mr. MEAD. Good question. To some people, the term assessment implies that an audit or an independent verification was done. You should not conclude that. FAA has a quality assurance process that kicks in after an assessment is done, and that quality assurance process is supposed to validate and assure that the assessment was done properly. Those quality assurance steps are supposed to be complete on February 15th.
Mr. WOLF. Will they make that deadline in a sufficient way that will tell us very much? That is next week.
Mr. MEAD. I feel uncomfortable providing you an answer to that offhandely. We will get back to you.
[The information follows:]
As of February 26, 1998, the quality assurance review team has completed the review of 209 Air Traffic control mission-critical systems. FAA also has expanded its quality assurance review for all of FAA systems. However, these reviews have not been completed. The quality assurance review process did result in improvement to FAA's assessment work. However, we noticed critical elements missing from assessment work (e.g., identifying all system interfaces, contingency plans) were not consistently detected by the quality assurance review team. We plan to continue our review of the assessment results during the next few months.
YEAR 2000 COMPUTER ISSUE
Page 140 PREV PAGE TOP OF DOC Segment 1 Of 2 Mr. WOLF. The FAA currently estimates $152 million to fix the year 2000 problem. How much confidence should we have in that figure and why?
Mr. MEAD. I don't have that much confidence in it. I have been told FAA used sophisticated models to come up with this estimate, but until they have assessed all the fixes they have to make, and how much all those fixes are going to cost, as well as dealing with the Host computer issue, I don't believe the committee has seen the last figures on the cost estimates. If I were in the committee's shoes, I would err on giving FAA slightly more money on this year 2000 problem than on the conservative side. The year 2000 problem must be our number-one priority in the acquisitions area.
Mr. WOLF. Just out of curiosity, is there someone here from the FAA? I don't want to call you up, I want to make sure someone is taking the information back. Could you kind of scratch your nose? Okay, there you are.
How many FAA people are working on this issue and, in your opinion, is the FAA staffing the program in a manner appropriate to the severity of the problem?
Mr. MEAD. They are now.
Mr. WOLF. That began when?
Mr. MEAD. Adequate staffing fell into place about 3 or 4 weeks ago. The leadership issue was resolved just last week.
Page 141 PREV PAGE TOP OF DOC Segment 1 Of 2 Mr. WOLF. Just last week. One last question on this issue, and then I will defer to Mr. Olver.
OMB recently moved the required year 2000 implementation date for mission critical systems from November of 1999 to March 1999. Based on your work, do you believe the department can meet the earlier date?
Mr. MEAD. It will be difficult, but they can do it. I think it would be very, very difficult for FAA. I would say they should shoot for June.
Mr. WOLF. So the FAA will not be able to meet the March date, and the department could meet it but might not meet it?
Mr. MEAD. No. In fact, Mr. Chairman, all of our recommendations on the year 2000 problem have been accepted by FAA, but we have yet to receive an affirmative response to the recommendation on accelerating the final implementation date to June of 1999. November 1999 is too late.
Mr. DECARLI. Mr. Chairman, 70 percent of the mission critical systems in the department are FAA, and FAA does not currently plan to meet the March date. Their current expectation is November of 1999. We have said you need to push it back and you need to get it to at least June of 1999, and that is still 3 months after the OMB date.
Mr. WOLF. November would be 7 months later.
Page 142 PREV PAGE TOP OF DOC Segment 1 Of 2 Mr. DECARLI. Absolutely. November, as Mr. Mead said, is pushing it to the limit and allows no cushion at all in case you have a problem. We think it has to go back. We would like to see the March date, but FAA is going to struggle to get to June.
Mr. WOLF. Year 2000 is a fixed time, too. You cannot move it. It is kind of like election day, it is coming when it is coming.
Mr. OLVER. Thank you, Mr. Chairman. Had the IG given his full testimony before we started questioning? I went off to vote and I sort of lost the whole thing.
Mr. WOLF. Yes, and it was an excellent statement. In fact, we are going to do a letter to all the Members, and this is a difficult day, and Members are going to be getting out early. It has been a hectic time. I am going to do a letter to send the statements, and if staff for both sides could read particularly the IG and GAO statements because they do an overview of the whole department. But Mr. Sabo was the Chairman at that time and he did finish.
Mr. OLVER. Okay. I want to just address a couple sort of questions. I have been trying to catch up here rather quickly, having only seen the testimony as I was coming back from the vote. The computer issue, the computer 2000 issue, your comment, I don't know whether this mission600 mission critical system, 70 percent of which are in the FAA, there must be substantial computer problems in other parts of the department as well, I take it, with the departments behind on all of them. It is just that they are concentrated in the FAA by the degree of the computerization there. Are we so far behind in computerization in other areas? I would think that all agencies would be pretty heavily computerized at this point and that the problem ought to be a somewhat similar problem in each of them.
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Mr. MEAD. Well, that is so. Actually, the number that you are quoting there are mission critical systems. These systems are a subuniverse of the larger number of computer systems in the whole department. And the mission critical systems tend to predominate in FAA because the agency is so operational. It affects public safety. The Coast Guard is another one.
HOST COMPUTER REPLACEMENT
Mr. OLVER. On air traffic modernization, you have indicated here that the air traffic modernization program is itself rather substantially behind and you speak to STARS and WAAS, and then again back to the host computer situation. In the host computer situation there is just one subgroup of all of the computer 2000 problems, is that correct?
Mr. MEAD. Yes, sir, but it would be mistaken to assume that the issue on the host computer is just the year 2000 problem. The host computer must be replaced, irrespective of the year 2000 problem. And that is because the parts for this computer, which is used in the 20 en-route centers for high altitude traffic, are very scarce. There is one particular part. The FAA has only 7 in stock and they have 96 machines in the system using this part. Over the past 3 years, they had nine failures of this particular part. And it is no longer made.
Mr. OLVER. Well, what is the route, then, to a resolution in a situation like that?
Page 144 PREV PAGE TOP OF DOC Segment 1 Of 2 Mr. MEAD. FAA is considering proceeding on a two-track approach. One is to try to repair the host computer, in terms of the
Mr. OLVER. With parts that are no longer made.
Mr. MEAD. They feel they can perhaps cannibalize some from computers that aren't in the en-route centers. They also believe on the year 2000 problem that they can fix that, and move concurrently to replace the machines. But as my testimony notes, I believe it is too optimistic for FAA to think they can accomplish this in less than 23 months time at all 20 en-route centers.
Mr. OLVER. And what is the WAAS problem? Can you give mecan you make that understandable for the lay person?
Mr. MEAD. I can try, sir. The WAAS program essentially involves the use of satellites for navigation. At the present time, we have a ground-based system. The big issues in the satellite program are: first can we have only a satellite navigation program; in other words, no more ground-based system? What happens if the satellites go out? What happens if there is interference with the satellite's signal? So that is an issue; do we need a backup system? If we need a backup system, the committee will face annual appropriation issues for a ground-based system as well as a satellite system.
The second key issue is, how many satellites? This is a satellite program. At some point, the committee needs to know how many satellites does FAA have to buy or lease and when will they be deployed? A third issue is the avionics cost to users. This is on-board aircraft equipment, which is the type of equipment one needs for satellite navigation that will be different from the equipment needed for ground-based navigation. Most commercial carriers have already got the equipment on board, the largest constituency that does not is general aviation. So when you talk to general aviation about moving to the WAAS system, a big issue on their mind is, how much it is going to cost them.
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Mr. OLVER. That is installation of equipment in the capital stock.
Mr. MEAD. On the plane.
Mr. OLVER. And that is just not moving in the general aviation area, where in our passenger systems, it is something systems are able to do.
Mr. MEAD. Most large commercial carriers already have what they call inertial navigation systems, which rely on satellites. They are also equipped, incidentally, with ground navigation systems, so this WAAS program, I don't think, would result in a great deal of cost to commercial aviation.
Another issue that the Committee will be hearing about in the coming weeks is the cost of this program; initially, you may have heard it would be about $1.4 billion, then it moved to approximately 2 billion, now it is nearer to 3 billion. It is more because certain costs were not included in prior estimates that the committee received. It is not so much a cost increase, if you will, as it is costs that were not included, such as the number of satellites. Satellites are not cheap.
Mr. OLVER. I notice on your comments about airport security that the officeof the Inspector General is currently reviewing FAA's acquisition and deployment of new sophisticated explosion detection systems. What does that mean? What is going on in that area?
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Mr. MEAD. I would like Ms. Stefani to answer that question.
Ms. STEFANI. Basically, the FAA is buying advanced equipment, using technology such as a CAT scan or an MRI or trace detection to detect explosive material in baggage or in parcels, and they are planning on spending, in the next year or so, about $170 million to procure the equipment and place it at the busier airports so that the airlines can use it.
Mr. OLVER. What is the review that you are involved in?
Ms. STEFANI. We are looking at FAA's acquisition and deployment of the equipment. We are looking at things such as, are the operators that are using it at the airport receiving the appropriate training?
Mr. OLVER. My impression is they are committed to a particular technology here, and the way technology is developing, is it wise to be committed to a single technology at an early stage in this process?
Ms. STEFANI. One of the things they are looking for is equipment they can certify that will reduce the false alarms and provide good information. At this point, in the technology that uses the CAT scan, there is only one company. The FAA is looking at different types of technology. There could be others. We could look to see if there are other concepts, and other ways of detecting explosives.
Page 147 PREV PAGE TOP OF DOC Segment 1 Of 2 Mr. MEAD. We are driving a great deal of money into the security area, and the thrust of our work is to make sure that investment is cost-effective, and that we get trained people to run that equipment. The equipment basically falls into three categories. One is the CAT scan type device that Ms. Stefani was referring to.
Another is a trace device, where they wipe a cloth-like material over your briefcase if you are carrying that on the plane, and they put that material in a device and it can determine whether you are carrying an explosive.
A third type is an advanced X-ray machine. Those are not deployed anywhere as of yet. You would see those as you go through the scanner. The CAT scan device would be used for checked luggage.
Mr. OLVER. Okay. Thank you.
Mr. WOLF. Thank you, Mr. Olver. I am going to recognize Mr. Tiahrt, just to give him advance notice. But just to make a comment before I do, we would like to have your help. Yesterday, Mr. Olver asked a number of questions and Mr. Pastor asked questions about turbulence, about the 737. Mr. Sabo asked questions about the parts and the inspections and all these other issues. And of course we have WAAS and we have STARS, and you know what is going on with regard to the year 2000 in computers. We just have a lot of issues. And there is a great skepticism, or I have a great skepticism. I have sat through the hearings over the years, both in the minority and majority, where FAA says when something crashes they rush to it, all of a sudden, then it kind of gets forgotten. What we would like to do, and Jim Hall from the Safety Board has agreed, is to set up a group which will do the following. It will develop a measurement device, it will look at the FAA, where it is today, not in an adversarial way, and of course all the comments we make don't apply to Ms. Garvey, who I like and I think has a pretty no nonsense approach to the place, because you really can't hold Ms. Garvey responsible for the year 2000 problem, because she was not there when it should have been looked at. But it is something she can look at, the public can look at and the Members of the House can look at and Members of the committee, to set up a group that will look at the FAA, but somebody from Jim Hall's office of the Safety Board, who has agreed to participate, someone from GAO, someone from the IG's office, someone from NASA, which is very, very important, somebody from the Flight Safety Foundation, someone from ALPA perhaps, and some other groups, to do two things, one, go in and look at all the systems that are delayed and problems that are out there, and develop a measurement device that the FAA can look at, but that laymen can also usethe public can look at to hold people accountable, just like I do in my office. We have a list of things we are working on, we come back every 3 months to see what we have done on them, and develop the measurement and put together an annual report with quarterly updates to give the public and the traveling public an opportunity to be able to monitor these issues. Not to go way back into the past, but to begin now. I think it would be a group that Ms. Garvey could deal with, too. Would you participate; could we get the participation of the IG in this group?
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Mr. MEAD. Sure. Actually, the Administrator might find something like that useful. The Government Performance Results Act, in fact, requires that the Federal Aviation Administration, and every other agency, establish performance measures. This is a key year for formulating them. I do believe that there would have to be dialogue with the Hill and with the user community on just what these performance measures will be. This is because these measures will depend on the performance of parties outside of FAA. Safety is an example. FAA oversees safety, but in the end the bottom line depends on the airlines. Yes, I would be delighted to participate in this group.
Mr. WOLF. I appreciate that. Mr. Hall, if I understood him, also thought the ATA should participate. We are talking about a group that would come together and develop the measurements, so we are all starting from the same information, that everyone out there, everyone up here, everyone in Des Moines, everyone in Winchester in my district, everyone knows, and then one report per year, but on a quarterly basis, as a check, to see where we are going. I think had this been in effect with the year 2000 thing, it certainly would not have gotten to where it is. Anyway, I appreciate your participation and we have gotten the Safety Board's participation, and I appreciate it.
WIDE-AREA AUGMENTATION SYSTEM COSTS
Mr. TIAHRT. Thank you, Mr. Chairman. Good morning. I have a couple questions that related to the Wide Area Augmentation System. Maybe this was covered, forgive me if it has been, but the growth in the life cycle cost, is it from 1.4 billion to 3 billion, is it double, is it that much, and if it is, it seems like we went through this modernization fiasco before where the costs just got way out of control and we had to start all over. I hope that is not what is happening with the WAAS program. Has it grown that much, has it actually doubled?
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Mr. MEAD. The terms ''growth,'' and ''cost growth,'' always have to be placed in context. What has actually happened on WAAS is that there has been some cost growth, but the bulk of the increase in the estimate, from 1.4 billion to 2.4 billion and now you will soon hear 3 billion is the inclusion of costs that should have been included all along but were not. Several examples are the cost of satellites and the cost of maintaining the system after it is fielded. FAA used to come here and say, here is how much the system is going to cost. And then the Hill would find out later on that there were costs associated with installing it, costs associated with maintaining it, and also costs associated with building a redundant system.
Mr. TIAHRT. Are there more surprises out there waiting for us?
Mr. MEAD. I believe there are; the principal surprises are a backup system, how much that is going to cost, and whether there will be one. There have been some issues you perhaps have heard about as to whether or not it is prudent to rely exclusively on satellites for navigation or whether we should have a backup system in place that is ground-based. All along on the WAAS program, until very recently, I believe the general thinking was that satellites would be the exclusive means and we would not have a ground-based system. Well, there has been a shift in that thinking and some believe that we will need some type of backup system if, for example, there is satellite interference or some other reason that the satellites cannot be relied upon.
Mr. TIAHRT. I think redundancy is quite common in the aircraft industry. They do it for safety reasons.
Page 150 PREV PAGE TOP OF DOC Segment 1 Of 2 Mr. MEAD. Does that respond to your question?
Mr. TIAHRT. Yes. I am just concerned about how much more it is going to grow. I understand redundancy, but is that in the $3 billion or is it another billion dollars?
Mr. MEAD. It is not in the $3 billion; FAA would reason, well, that is not the WAAS program per se. Most auditors would sit down and cost it out and say, well, we are talking about a navigation system here, I want to know what the whole package will cost. In addition, I believe there will be some increases in the cost of the satellites.
Mr. TIAHRT. These aren't new satellites, though, are they? We have some 20 some satellites for GPS now.
Mr. MEAD. The types of satellites we are speaking of there are not global positioning satellites. We are speaking of communication satellites; there has been some uncertainty about how many of those they will needthe number estimated generally ranges from 2 to 5. They will probably lease those rather than purchase them, in perhaps a 7-year lease. We can give you quite a bit of backup detail on that, if you would like us to furnish your office with that, sir.
Mr. TIAHRT. If it is available. I don't want you to generate anything new.
Also in your written testimony, it says we should know exactly what WAAS phase one will provide to potential users. Is there not a set of requirements that is considered phase one? I mean, is there a milestone and a set of requirements that go along with phase one?
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Mr. MEAD. The last time we testified on WAAS and phase one, I thought we had a solid definition. I thought that it meant that in the en-route environmentthat is, at the higher altitudesyou would be able to navigate by satellite. Moreover, that you would have at practically every airfield in this country category-one precision landing capability. I am not certain that this would be an accurate statement today. Ms. Stefani will amplify on that.
Ms. STEFANI. Part of what we see in the program is that the category onethe approach capabilitypromised for WAAS phase one will not guarantee for about 146 airports that you will have the same capability that you have today with the ILS systems. That deals with the reliability and availability of the system. We are seeing a lot of changes in this program due to uncertainties and technical risks that they are trying to address, and it is difficult, at this point, to really say, at the end of phase one, what the private pilot and commercial aviation pilot will get from WAAS.
Mr. MEAD. You will be getting a report from the Secretary very shortly that this committee requested on WAAS; you will find that the report is clearer than prior reports have been on some of the uncertainties associated with it.
Mr. TIAHRT. Okay.
Mr. MEAD. I certainly don't want to characterize WAAS as a program that we should not do, as I believe there are some big benefits. Clearly, for general aviation, if they are equipped. WAAS will allow them to make precision landings or something close to precision landings, and many places do not have precision landing capability now. But these uncertainties do need to be resolved as do the uncertainties about a backup system, the number of satellites, and so forth.
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Mr. TIAHRT. I am concerned because I don't want to see the system fail.
Mr. MEAD. We don't either.
FAA'S YEAR-2000 TIMETABLE
Mr. TIAHRT. This has probably been hashed before and will be rehashed until the year 2000 comes, but this is referred to as Y2K or the year 2000 computer program. I noticed the FAA, I believe, thinks they have the problemor they are progressing well toward solving the problem but their end point isn't until November of '99, if I remember correctly.
Mr. MEAD. Yes, sir.
Mr. TIAHRT. I am concerned about that because I haven't seen their schedule, and what testings they have in there to have 100 percent confidence, that in November, which is just a month or two away from the year 2000, that everything is going to work fine, and I noticed that this is of some concern to you too, and I would like to have some confidence that they are going to have testing, redundant testing, to make sure the system is 100 percent by November and not just ''let's see what happens when we flip the switch.''
Mr. MEAD. I can attest to the committee that the sense of urgency at FAA today on the year 2000 problem is very, very high. I give you that assurance. Still, I share your concern on the November '99 date I think it is much too late. As the Chairman was pointing out earlier, on January 1st 2000, we can't come before the committee and say we are here to report a slippage and a procurement delay. This is one time the date does not slip. It is an externally set date. Perhaps there is a system or two out there, but I cannot recall a computer hardware or software acquisition that FAA has done where there hasn't been a slippage of a month. In fact, I don't think I would even report a month slippage to the committee normally but this time I will, sir.
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Mr. TIAHRT. Thank you very much. Thank you, Mr. Chairman.
Mr. WOLF. Thank you, Mr. Tiahrt. I think these questions are good and I think they validate the need to set up this group. I think you are being too kind when you answered the question on the year 2000. You said there is a sense of urgency. The reason there is a sense of urgency is because of basically two people, Jane Garvey and yourself. If you and Jane Garvey had been hit by a bus back in August of last year, I don't know where we would have been at this point. So there is an urgency over there, but only because the IG's office and Ms. Garvey have sensitized the agency to it. And that report you refer to is here, it came in yesterday, and the committee will give you a copy. We will give it to members on both sides of the aisle, but I think the whole WAAS thing is another indication of why we need an ongoing group that can come in and say ''here is where we are, we slipped over these 3 months and this is what the problem is.''
Mr. MEAD. Mr. Chairman, I do want to say, I think the Secretary, the Deputy Secretary, the Administrator, the head of air traffic, also are engaged on the year 2000 issue.
HOST COMPUTER REPLACEMENT
Mr. WOLF. Well, everybody will state that, but I think this thing should have been looked at long ago.
In June of '96, IBM advised Lockheed-Martin officials that the company might not be able to continue support for the HOST computer, the main brain in our en route centers today, beyond the year 2000. Despite the urgency, apparently FAA officials waited until February of 1997 to ask IBM for detailed documentation.
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Do you know why the agency waited so long, 8 months, to take that step?
Mr. MEAD. No, sir. I am incredulous as to why at this late hour they are saying ''by the way, we want to replace the HOST computer,'' when they have had all this advance knowledge. So I thought it was incredible when I saw the letter. And you know, I don't believe there is any money for the HOST computer in the '98 budget.
Mr. WOLF. We are going to get to that. In October of 1997, IBM wrote Lockheed-Martin, quote, ''IBM remains convinced that the appropriate skills and tools do not exist to conduct a complete year 2000 test assessment on the HOST computer. IBM believes it is imperative that the FAA replace this equipment prior to the year 2000. IBM has invested considerable resources to research this situation and communicate needed action to Lockheed-Martin and the FAA.'' Yet 18 months after the original letter from IBM, this committee has no budget request, and no reprogramming request from the FAA to begin this apparently urgent program.
Is it urgent for the HOST computer system to be replaced by the year 2000?
Mr. MEAD. It is urgent for the HOST computer to be compliant with the year 2000 issue by January 1st, 2000. You probably can afford some lag over that date for replacing because, remember, we are going to be replacing systems at 20 en-route centers. But doing that in less than 23 months time, I couldn't vouch that FAA could swing that and get it certified too. It is urgent though that the HOST be replaced.
Mr. WOLF. That was the next question. How much time is needed to make that change and how much money?
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Mr. MEAD. I believe the Committee is looking at at least $160 million for replacement: this is the interim replacement of the HOST computer.
Mr. WOLF. Do you know why the FAA hasn't requested any money for the effort?
Mr. MEAD. It is in the process of doing so from what I understand.
Mr. WOLF. Do you think they will make the supplemental?
Mr. MEAD. I believe they are considering a reprogramming request. I think they are considering two reprogramming requests, one dealing with the year 2000 problem and STARS and some security issues, and perhaps a second one for HOST. Now, once you get to the HOST, we are starting to squeeze a rock. What programs are we going to squeeze to come up with the money? You won't need the whole $162 million in fiscal year 1998. But I can't tell you exactly what amount, Mr. Chairman, will come in under the reprogramming request. But it is going to be tight, and you will hear from FAA, the community, and probably from us, about programs that may have to suffer in terms of their schedule, if it all is going to come out of fiscal year '98 appropriation.
Mr. WOLF. I am going to recognize Mr. Sabo, but I will give him a moment to collect his thoughts.
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Mr. WOLF. What are the five most important modernization programs, in your view?
[The information follows:]
The National Airspace System (NAS): Modernization is critical to the continued safe and efficient operation of the air traffic control system. In our view, the five most important NAS modernization programs include the Interim HOST Replacement, Display System Replacement, Standard Terminal Automation Replacement, Wide Area Augmentation System/Local Area Augmentation System, and Flight 2000.
Interim HOST Replacement: The HOST computer system currently is the primary en-route air traffic control computer used in the NAS air traffic control system. It provides various services for center, terminal, and tower controllers. Two serious problems exist which may affect the ability to provide full services. Critical parts are in short supply and there is an absence of trained service personnel to make repairs. Further, IBM, the manufacturer of the HOST Computer System, claims the HOST Year-2000 problems cannot be properly assessed and recommends replacement of the equipment.
Display System Replacement and Standard Terminal Automation Replacement System: The Display System Replacement and Standard Terminal Automation Replacement System programs are automation systemfor the en-route and terminal airspace, respectivelythat will replace controller workstations, computer software and processors necessary to handle increased air-traffic volume. Due to age and design, the existing systems have limited capacity and increased maintenance costs.
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Wide Area Augmentation System/Local Area Augmentation System: These two systems will augment the Global Positioning System to provide the accuracy, integrity, availability, and continuity of service necessary to meet the navigation and landing requirements of the National Airspace System.
These systems are but two of many systems that need to be developed and deployed to effectively shift to satellite-based technology.
Flight 2000: Flight 2000 is a precursor of Free Flight, a revolutionary air-traffic management concept that greatly increases users' flexibility to plan and fly their preferred routes. Flight 2000 will demonstrate advanced communications, navigation, surveillance, and air-traffic management capabilities to validate system benefits to all airspace users. The potential benefits of Free Flight include fuel and time savings and a more efficient use of airspace.
GPS WIDE-AREA AUGMENTATION SYSTEM (WAAS)
Mr WOLF. One of the FAA's largest modernization programs is the Wide Area Augmentation System (WAAS), which would use signals from the GPS satellite to guide and land aircraft. From what we see, this program seems to have serious cost and schedule problems. In 1995, WAAS was estimated to cost $604 million to develop. The current estimate is $958 millionand doesn't include satellite costs. According to SAIC, the current program is about seven months behind its baseline schedule. You've been reviewing this program at our request. Can you give us a general overview of the status and health of the program?
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[The information follows:]
The WAAS program is in flux. While the WAAS contract appears to be on track to meet all established milestones, technical and program uncertainties must be resolved. Resolution of these uncertainties will affect WAAS costs. The current WAAS life-cycle cost estimate is $3.049 billion. It includes $1.007 billion in Facilities and Equipment funds to develop the system and $2.042 billion for operation and maintenance. Communications satellite costs now are estimated at $1.282 billion.
The WAAS program is subject to interference from deliberate sources (jamming), unintentional sources and ionospheric changes. The program has yet to finalize the number of satellites needed, Phase 3 software requirements, access to a second GPS civil frequency, and the schedule for decommissioning ground-based navigation systems. FAA has established mitigation plans to address the uncertainties. However, in our opinion, these
issues, coupled with plans to reduce funding for WAAS in fiscal year 1999 and the potential need for a back-up system, may affect the WAAS requirements, schedule, and costs.
Mr. WOLF. FAA has recently announced that the life cycle cost estimate for this program has risen from $2.4 billion to $3 billion. How much confidence should we have in the $3 billion figure?
[The information follows:]
Page 159 PREV PAGE TOP OF DOC Segment 1 Of 2 FAA formally approved the WAAS life-cycle cost estimate of $3.049 billion at the Satellite Navigation Investment Analysis and Acquisition Program baseline briefing to the Joint Resources Council on January 9, 1998. FAA is 80 percent confident that the program will be accomplished within the $3.049 billion baseline. However, due to uncertainties associated with the costs of the communications satellites, selection of a second civil frequency, and whether a backup system for WAAS will be needed, we would not place as much confidence in the FAA's life-cycle cost estimate for the WAAS program.
For example, FAA estimated that if the second civil frequency is the current L2, there would be an estimated one-time cost of about $50 million to equip all WAAS reference and master stations with the capability to receive and process the coded signal. However, if the second civil frequency is not the current L2, then costs to the Department of Transportation to modify the satellites to use a new frequency could reach $250 million.
After baselining WAAS life-cycle costs, WAAS program officials were informed that funding for fiscal year 1999 may be reduced by $20 million. The impact of this proposed funding cut is expected to cause a slip in the WAAS program of about six months. Although we can not estimate the associated dollar impact, in our opinion, a schedule slip to the WAAS program will result in an increase to the WAAS life-cycle cost.
Mr. WOLF. What are the remaining technical risks to achieving satellite navigation capability and how significant are they?
[The information follows:]
Page 160 PREV PAGE TOP OF DOC Segment 1 Of 2 On February 11, 1998, the Secretary of Transportation provided the ''Wide Area Augmentation System (WAAS) Report on Program Status, Management, and Satellite Communications'' to Congress. The report acknowledged there are technical uncertainties relating to interference from unintentional and intentional (jamming) sources and ionospheric variations related to solar activity. The report also identified program uncertainties associated with finalizing the number of communication satellites needed, defining Phase 3 software requirements, access to a second GPS frequency, and the schedule for decommissioning ground-based navigation systems.
Resolution of these issues will have an impact on when, and to what extent, FAA will be able to decommission its ground infrastructure. Additionally, these technical issues may affect the cost estimate for the WAAS program. According to the Secretary's report to Congress, FAA has initiated a study to assess the technical uncertainties and will determine if there is a need for an independent back-up system for the WAAS. FAA indicated that based on the results of this study, FAA will evaluate various alternatives and their potential impact on WAAS requirements, including cost implications.
Mr. WOLF. On November 26, 1997, you reported to the Subcommittee that ''FAA has not completed a comprehensive, agreed-upon, lucid plan and strategy for transitioning to satellite technology''. Has that plan been completed at this point? If not, why not?
[The information follows:]
FAA has not completed a comprehensive, agreed-upon lucid plan and strategy for the shift to satellite technology for communications, navigation, and surveillance. We discussed this with FAA and the FAA Administrator. The Administrator concurs on the need for such an action plan. FAA has taken steps to begin formulating a comprehensive plan.
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FAA's revised National Airspace System (NAS) Architecture for modernizing the system was issued in draft in December 1997 and is being reviewed by FAA and the aviation industry. FAA has stated that this new architecture will serve as its plan for transitioning to satellite technology. In our opinion, the revised architecture can provide a good foundation for a successful transition to satellite technology if it addresses systems, components, and avionics requirements, acquisition timeframes, costs, and
funding requirements. The usefulness and credibility of this plan, however, will depend on FAA's ability to achieve a consensus.
The Administrator's National Airspace System Modernization Task Force is addressing the issue of developing a comprehensive plan. One of the action items of the task force is to develop an integrated, agency-wide plan that includes architecture, operations concept, and certification plans. This action item is scheduled to be completed in October 1998.
Mr. WOLF. The SAIC report says ''current analysis suggests six satellites, but requirements could drive the system to eight satellites. The program office has four leased satellites budgeted, but only two are currently on contract.'' Why is it so difficult for FAA to determine how many satellites are needed?
[The information follows:]
The two satellites currently contracted for make WAAS' Phase I possible. FAA needs additional satellites to meet the performance requirements of the end-state WAAS. That would include triple coverage over the continental United States, and at least dual coverage over the remaining portions of the airspace where WAAS will be available, including Alaska, Hawaii, the Caribbean, and surrounding oceanic airspace.
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Myriad factors make it difficult to determine the exact number of satellites needed. For example, the types of satellites to be used (payload capabilities and size) and their orbital location (geostationary earth orbit versus medium earth orbit) must be determined, and decisions must be made whether to lease or purchase the satellites, and on the performance and life span of the satellites.
Additionally, FAA has only limited experience in acquiring satellites. To assist its efforts in acquiring the communications satellites, FAA is using the Department of Defense's National Reconnaissance Office. On January 8, 1998, FAA issued a Request for Information to industry for qualified vendors to provide approximate costs for the communications satellites services. Responses to the request have been received and will be used by FAA to refine cost estimates.
Mr. WOLF. The President's Commission on Critical Infrastructure Protection recently concluded that FAA's plans to adopt GPS as the sole means for aircraft navigation provided ''the most significant vulnerabilities'' for catastrophic outages within the entire transportation industry. What does this mean, and how might this affect FAA's plans for pursuing satellite navigation?
[The information follows:]
The augmented Global Positioning System was slated to be the sole source of radionavigation for aircraft landing guidance systems by the year 2010. The investment analysis for the WAAS assumed that all ground navigation and Category I instrument landing systems would be decommissioned by the end of 2010. Although cost-efficient, this creates the potential for single-point failure. That is, if the WAAS failed, there would be no back-up system to perform WAAS navigation functions. FAA's intent was to use operational procedures (rerouting, missed approaches) to achieve the required safety levels in the event of a loss of service.
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The President's Commission on Critical Infrastructure Protection report states that systems with air-ground communications and data links such as the WAAS/LAAS are ''susceptible to interference and signal jamming''. The low signal strength of GPS makes it particularly vulnerable. For example, lightweight, hand-held, battery powered jammers could interfere with the signal reception, as could malfunctioning satellite-based cellular phones. Interference can cause a loss of navigation capability for aircraft within the line-of-sight of the interference source, but it cannot distort information.
FAA is reconsidering the need for a backup system for WAAS. According to the Secretary's report to Congress on the WAAS Program, FAA has initiated a study to assess the technical uncertainties which have been identified and will determine if there is a need for an independent backup system. FAA plans to evaluate various alternatives (such as surveillance and air traffic control procedures, inertial navigation, a skeletal VOR/DME network, an advanced Loran network, and advanced avionics) to provide the backup. FAA staff plan to brief the results of this analysis to the Joint Resources Council and the Administrator in the spring of 1998. The recommendations of the Joint Resources Council will be subsequently reported to the Congress.
Mr. WOLF. What is the local area augmentation system (LAAS) and how does it relate to WAAS, and who will provide its funding, according to FAA?
[The information follows:]
FAA has two programs to augment GPS. They are the Wide Area Augmentation System (WAAS) and the Local Area Augmentation System (LAAS). WAAS will ensure accuracy and operational integrity so GPS can support en-route navigation and Category I precision approaches to airports. The Local Area Augmentation System (LAAS) will complement WAAS by broadcasting navigation information in a localized service areatypically one airport, or multiple airports in close proximity. LAAS should be able to provide Category I/II/III precision approaches and surface navigation at the airports where it is located. Additionally, LAAS will let GPS be used for all Category I precision approaches in areas not reached by WAAS.
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On January 9, 1998, WAAS held the Joint Resources Council investment decision briefing for the LAAS program. Approved at that meeting was the WAAS acquisition program baseline, which set cost and schedule boundaries. The recommended approach was FAA and an industry consortium sharing the funding for full-scale development of four initial systems. That phase is scheduled to be completed in 2002. FAA would then fund 139 additional LAAS ground stations for NAS implementation, bringing 143 LAAS systems on line. Total FAA life-cycle costs for 143 systems, estimated through 2021, are $877.1 million.
Mr. WOLF. The FAA's capital plan was originally called the NAS plan. In the early 1990s, it was named the CIP. Now the FAA is calling it the NAS architecture. FAA officials claim that the 3.0 version of this architecture is the key documentation for modernizing the NAS over the next 20 years. They have been working on this document for about 2 years.
Two parts. One, the most recent draft of the architecture plan assumes an average annual F&E appropriation of $2.9 billion over the next 3 years. This is approximately 1 billion, 55 percent more each year than was appropriated in the 1998 budget.
First question, do you believe it is realistic and sensible for the FAA to plan for such huge increases? Secondly, if the Administrator has established a NAS modernization off-site team to review and provide recommendations on how modernization efforts should proceed. This is separate from the acquisition organization which is running the program and developing the architecture. You are one of the off-site team members. What are the main findings of this group and how are they being coordinated with development of the NAS architecture? So we are asking two questions, do you believe it is realistic and sensible for the FAA to plan for such huge increases and what are the main findings of this group and how are they being coordinated with development of the NAS architecture plan?
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Mr. MEAD. I would have to say regarding the $2.9 billion, it would depend on what the trust fund receipts were going to be over that period as to whether that figure is going to be reasonable or not. I am sure they could absorb 2.9 billion a year. On whether they could do it prudently in every year, I have some reservations about that. In terms of the off-site, the basic conclusions of that were that there should be a greater understanding and disclosure to the Hill and to others about risks that were associated with the acquisitions; that there needed to be greater clarity in program definition; that there wasn't necessarily a consensus on program definition for some of these key undertakings; that the schedules needed to be more realistic; that there needed to be focus; and, that with free flightof which I am sure you have heardthere needed to be a better consensus around that. Now I don't believe all that has been folded into the architecture to which you refer, and that that will have to reflect some adjustments based on this off-site, as you put it. In some ways, I think that even though you will hear that some of the stated schedules will slip, once they have a dose of realism injected into the process, I believe the approach being taken will result in getting those systems earlier than we otherwise would, notwithstanding what the document says the scheduled date was.
Mr. WOLF. Mr. Sabo.
Mr. SABO. Thank you, Mr. Chairman.
INSPECTORS GENERALROLES AND DUTIES
Let me understand a little bit what your office does. Do you serve really two functions? One is to make sure that money is spent appropriately, and then, secondly, look for significant problems that are ongoing in the programs run by an agency; is that a pretty good summary for what you do?
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Mr. MEAD. Yes, sir. And part of the organization deals with problems that are no longer economy and efficiency and effectiveness issues, but have crossed into a criminal category. And we call that part of the operation investigations. The law says that our job is to prevent, and detect fraud, waste and abuse and promote the effective, efficient, economic running of programs.
Mr. SABO. I am curious; how many inspector generals do we have, do you have any idea?
Mr. MEAD. I believe there are 26 presidential appointment, Senate confirmed, who are the Cabinet-level Inspectors General. Then there might be another 20 or 25 for the smaller units of governments, sir.
Mr. SABO. Is there any mechanism where all of you meetdo you meet regularly?
Mr. MEAD. Yes, sir. There is the President's Council on Integrity and Efficiency, of which the deputy director of OMB is the chair, and Eleanor Hill, who is the inspector general for the Department of Defense, is currently the vice chair. They meet every month and discuss problems of mutual interest.
PROBLEMS WITH FEDERAL ACQUISITIONS
Mr. SABO. The reason I ask, I am a generalist, I get lost in lots of the technology and what it is and what it does and all of this. But I have observed Federal Government now for a good number of years, and it strikes me that there is one thing that we simply have major problems doing, regardless of agency, and that is making big acquisitions. It is not unique to FAA, IRS has problems; it just seems like every agency, we decide that when we head off into some major acquisition, particularly in a new computer technology, we end up with just massive problems. And somehow I think at some point, we have to figure outit is quite an issue we have to deal with, we have to figure out some solution.
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I don't know what the problem is, but my hunch is that we take and put on operating agencies responsibility for major acquisition, which is, youI wouldn't know how to begin to handle a major computer acquisition. And so we have operating agencies with responsibility for major acquisition, and it just doesn't work. And then we tend to make villains out of people who don't make it work; that probably was not within their skill level. We need to figure out some mechanism, then we decide generally where we want to make the agency independent. So we have done some of that on FAA, we are going to do some of that on the Internal Revenue Service.
I am not sure where all that works out, but somehow that is going to solve this inherent problem, and my hunch is it doesn't do anything. It is still the same people, with the same background, being operational folks, all of a sudden having responsibility for major acquisition. Lots of it requires very precise early planning, and some uncertainty in the software. It seems to me it is an issue that is uniquenot to any agency, it has been ongoing for yearsand that at some point, we need to take a pretty close look at how we handle the things.
I don't know what the problem is, if it is law, if it is our personnel rules. And I have had people suggest we should be able to bring in outside folks for a period of time, but they probably don't want to deal with all of our conflict of interest rules so they probably wouldn't want to come. I don't know. But it just seems to me it is an inherent major problem and it goes on from year to year, from agency to agency, and we keep stepping along and the same thing happens from agency to agency.
Page 168 PREV PAGE TOP OF DOC Segment 1 Of 2 Mr. MEAD. I would like to make several general observations on your thoughts, and then I will yield to Mr. Weintrob and Mr. DeCarli, who have tenure, at the Department of Defense. I would say, first of all, I wish you were going to be in town next Thursday or Friday because we are having an annual retreat for the inspectors general, we will discuss congressional expectations and concerns, and you would be a great speaker. But we are having difficulty finding members of Congress in town on that particular day.
But things are better at FAA in acquisitions today than they were three or four years ago, no question about it. What we are seeing now are, for example, in STARS, is the issue of human factors. That procurement was ongoing with no obvious problems and all of a sudden, at the 11th hour, the controllers realized they might have some fundamental concerns about how they were going to interface with the STARS equipment. So FAA put together a human factors team to try to analyze what to do with the STARS acquisition which was already long underway.
But things are a lot better now. I believe FAA is spending a lot more time up front and not trying to reinvent the wheel when something already exists out there. When we talk about the WAAS system, we are not talking about the advanced automation system or anything like that. Do you remember the advanced automation system from several years ago? I do want to say that with STARS, there has been quite a bit of progress. Now I will ask Mr. DeCarli to comment on it. He has been a keen observer of the entire process.
Mr. SABO. I think a major impetus for that improvement on the human factors was the Chairman's hearing.
Mr. MEAD. It was this committee. Yes, that is exactly right. And what we found was not a problem isolated to that acquisition; it was an entire human factors discipline process that needed to be built in, up front, and throughout the process, for all acquisitions. This problem is not confined to STARS.
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Mr. DECARLI. I think the government as a whole has tried to address the issue two different ways. First of all, we tried to do the acquisitions in-house, using our own technical expertise, and we fall short when we try to use our own expertise because we just don't have it. In the case of the advanced automation system, we basically went out and hired a major contractor, IBM, and said, ''You go out and build this for us, we think you have the expertise to do that.''
But the problem that occurs in most of the systems is that you don't have a well-defined requirement when you start these acquisitions. They are basically incremental. You keep adding on and adding on and adding on. And without a good understanding of what you want up front, without a very tight statement of work that doesn't continue to change, you can't deliver these kinds of programs. It has all got to start with the up-front definition of what the requirement is.
Mr. SABO. Do you know of any major acquisition for any agency that has worked well?
Mr. MEAD. There is one that may potentially work quite well at the FAA. It is called the display system replacement. You are funding it here. It is going to come in roughly on schedule, late this year. I think the acquisition has clearly benefited from some of the up-front design attention, adherence to schedule, not adding on a lot of bells and whistles. Display system replacement is the display that the controllers will use at en-route centers. Is that correct, Lex?
Page 170 PREV PAGE TOP OF DOC Segment 1 Of 2 Ms. STEFANI. Yes.
Mr. WEINTROB. There is another one we know of that we issued a report on. Before I came to transportation 8 years agoas Mr. Mead said, I was at the IG at the Department of Defense, responsible for audits of naval forces, major acquisitions, and I saw a lot of programs. The Coast Guard has an ongoing program up in Marinette, Wisconsin on coastal and seagoing buoy tenders. We issued a report saying it was an outstanding program. The boats have come in with less than 2 percent change orders, and on a 3-year construction program, it was less than 5 percent for inflation. They came in and they were delivered on time. In fact, the first boat was operating seagoing tests off of New York the evening that TWA 800 crashed. It was the first boat on the site. It is an outstanding program, the best one I have seen, and we congratulate the Coast Guard for it.
The key there is they had the right acquisition professionals in the Coast Guard monitoring the program, and they held the contractors' feet to the fire. And when I met with the president of the firm, just myselfthe Coast Guard was unhappy I didn't invite them to the meetingI asked if he had any complaints, and his biggest complaint was the Coast Guard was holding them too close to the specs, and I said that is what I like to hear, both as an IG and as a taxpayer.
Mr. MEAD. I will raise your point at the PCIE Conference if it's okay with you.
Mr. SABO. Yes, I would be happy to have you do that. But it just seems to me, someplace, I don't know if it should be with OMB or where it should be, but we need, probably rather than further and further decentralization, we need more centralization, putting in place the planning requirements for major acquisitions. I don't know the answer, it just strikes meI happened to be at a panel sometime ago in which our colleague, Harold Rogers, was, and I raised my concerns; and his immediate response is he had seen the same problems at the State Department and the FBI. And, you know, it seems to me it is systemic throughout the Federal Government.
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Mr. MEAD. I believe we are past the days at FAA, where the agency would come up to the Hill and say, well, we have a program we would like to startjust say, for example, to detect wind shear. But at the point the FAA is called up to the Hill, the technology may have to be invented. FAA and Congress don't realize it has to be invented, so you start funding this thing that needs to be invented and we are really funding an R&D, project or some lightly generalized concept. And I truly believe FAA has learned its lesson there.
Mr. SABO. Thank you.
Mr. MEAD. Thanks for that very thoughtful observation.
Mr. WOLF. I thank you, Mr. Sabo. We are not going to ask any more questions on the GPS, except a series we will submit on the record, because so many Members have asked about it already. FAA recently announced that the life cycle cost estimate for the program had risen from 2.4 to 3 billion.
Then in December of 1997 there was a report for the FAA by prime contractor SAIC that concluded that the O&M costs and satellite costs are understated in the FAA's cost estimate, and that the life cycle of WAASand this is what Mr. Sabo was talking aboutcould grow by 1.874 billion over the existing budget of 2.411. This indicates the costs could go as high as $4.3 billion, not the $3 billion reported by the FAA.
How does the FAA's number differ from that of the contractor? What are your feelings about that? I mean, could it go that high?
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Mr. MEAD. I don't know. I certainly hope not.
Mr. WOLF. Have you seen the SAIC report?
Mr. MEAD. No, I am not familiar with that. We will get familiar with it.
Mr. WOLF. It was December of 1997. Well, if you would do it, because it is the same thing Mr. Sabo was talking about. They are talking about $1.87 billion over the existing $2.4, which could go as high as $4.3, not the $3 billion that was reported by the FAA.
Also, one other question, all the others will be for the record. There was testimony last October, where Mr. Donahue testified before the House T and I Committee that when WAAS is fully implemented, taxpayers will save over $100 million a year because the satellite-based navigation systems are cheaper to maintain than today's land-based system. However, the FAA is now talking about keeping a land-based system in operation as a backup. What does that do to the cost-benefit ratio of WAAS?
Mr. MEAD. I think the cost-benefit ratio would remain positive, certainly not as much so if you have the ground-based system, and that is for two reasons: one, as a cost to the government of maintaining a ground-based system; and secondly, because you want every airplane to be able to use a backup system if they need a backup. There is a set of user avionics costs that must be factored in also. I would say the cost-benefit ratio would be lower, but it is my understanding based on work GAO did, it would still remain on the positive side.
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Mr. WOLF. STARS, very briefly. Could you update the subcommittee on what has happened in the STARS program since our hearing in December?
Mr. MEAD. Yes, sir; 98 problems, human factor issues, were identified. That is not an unusual number to identify, so I don't want to overstate that. However, only 33 of those have been resolved. It is my recollection that we were going to resolve all of these things by the end of January. We are now in the middle of February, and a substantial number of these have not been resolved. By resolved, I mean agreement on what we are going to do about them, and advising the contractor of what needs to be done and then attaching a price to the fix, and then assessing what the schedule implications will be.
This is a two-way issue. The controllers need to be included and included absolutely in these decisions, but there also has to be an exit strategy. At some point we have to move on and make the decisions about what we are going to do.
Mr. WOLF. When do you think that should be and how is that being set up to have a definite time?
Mr. MEAD. That needs to be done, Mr. Chairman. They have not set a date.
Ms. STEFANI. They are still working on the 98 identified areas to determine a potential solution to each. They still have to go through a process of agreement on all 98, identifying the costs and identifying the schedule.
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Mr. WOLF. All of the air traffic controllers, as well as everybody else, have felt a good spirit, that they have all been able to participate.
Mr. MEAD. Yes, sir. I think that is a very positive aspect. The committee should take credit for that. Now the task is to us decide what we want to do, figure out how much it is going to cost, and move on.
Mr. WOLF. The FAA requested $183.5 million in its submission to OMB for STARS program costs in fiscal year 1999. How much is included in the final President's budget, and is it adequate for the STARS program needs?
Mr. MEAD. Probably not, because they have not costed out the human factor issues. In fact, you will be receiving a reprogramming request.
Mr. WOLF. I understand that it will be 28.9.
Mr. MEAD. A question I have is on what is that figure based? How does it cover the human factor issues? If we haven't resolved what we are going to do with human factor issues, how do we know how much it is going to cost?
Mr. WOLF. Your office is still participating in that.
Mr. MEAD. We are participating in that, yes. There is one issue about our involvement with the human factors team. I don't want them to get in the practice of looking too much to the inspector general to resolve human factor issues. That has to be a job ultimately between FAA and the union, or the controllers.
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Mr. WOLF. Given the delays in STARS software development, will the schedule for the Boston TRACON slip?
And also, I have heard the FAA may not be able to meet their schedule for deploying the ''early deployment system'' of STARS at Washington National Airport. Is a schedule slip likely here, for Boston TRACON and the Washington National Airport?
Mr. MEAD. Washington National is going to be very tight, because a number of these human factor issues relate to the display, and the display is what is going to go in. It is now February; we haven't resolved issues with this display, and so, yes, I would say the date is in jeopardy.
Mr. WOLF. For Boston.
Mr. MEAD. Boston is definitely in jeopardy.
Ms. STEFANI. On human factors.
Mr. WEINTROB. National will have something by December of 1998, but it may be the new body with the old engine and transmission; it certainly won't be the end piece of STARS. They are already actually shipping some stuff in.
Mr. WOLF. At the hearing in December, we had a discussion about the Sony monitors for the STARS system. It is the committee's understanding FAA cannot find the money to continue production of the system; is that right? If so, what is FAA planning to do to procure the extra monitors they need?
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Mr. MEAD. That is another one I thought would be resolved based on the last hearing we had with this committee, but it wasn't. Lex?
Ms. STEFANI. At this point in time, FAA does not have a definitive plan to acquire the remaining 1,200 monitors it needs. In the Sony plant that was manufacturing this, the production run for the FAA has stopped. The unit produced in Japan is different than the one that was produced in the United States, and that it doesn't give the same clarity of resolution, so when you look at the screen, it won't be the same monitor. Though FAA doesn't physically need these monitors until the year 2001, they must identify a plan that will get them a monitor that will provide similar attributes that the controllerswe don't want to create new human factors issues because you have two different monitors being used. We have asked FAA to provide us with a plan to acquire the remaining units.
Mr. MEAD. You are not going to get them from the original source in California.
Mr. WOLF. One of the factors is the aircraft symbols go fuzzy as they get to the end of the screen.
Mr. MEAD. The visual acuity on the screens with the Sony tubes was constant throughout the screen. In models that are not quite as good as that, the visual acuity that is sharpest and best in the dead center of the screen does not extend to all four corners. There are other issues too, but that is one of the major ones; the controllers want constant visual acuity throughout their display screen, which seems to be a reasonable point.
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Mr. WOLF. I think so. Okay. We will submit the others for the record.
Mr. WOLF. The original STARS contract required software development to be completed by September 1, 1997. Raytheon did not meet this date, and FAA subsequently modified the contract, extending the completion date to November 15, 1997. What is the status of software development today?
[The information follows:]
FAA and the contractor have indicated that software development for the early display configuration and the initial system configuration was completed in late January.
Mr. WOLF. FAA requested $183.5 million in its submission to OMB for STARS program costs in fiscal year 1999. How much is included in the final President's budget, and is that adequate for STARS program needs?
[The information follows:]
The President's budget includes $210 million for STARS. We cannot say at this time whether this amount is sufficient because all of the human factors issues have not been identified, resolved, and priced. In addition, formal testing has not been conducted which may identify other issues that need to be addressed.
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Mr. WOLF. The Department is expected to seek a reprogramming of $28.9 million, to provide additional fiscal year 1998 funding for STARS. FAA also requested, and Congress did provide, an additional $10 million for this program in a fiscal year 1997 reprogramming. Why is additional money needed in fiscal year 1998, and does this represent a growth in total development costs?
[The information follows:]
FAA offers two reasons for seeking the additional $28.9 million. Additional funding of $23.5 million will sustain increased software development and testing to stay on schedule, to accelerate equipment deployment at Ronald Reagan Washington National Airport, and to address recently disclosed human-factors issues. An additional $5.4 million will be needed for site survey and preparation at New York and Dallas/Fort Worth TRACONs to facilitate installation of the Early Deployment Configuration (EDC). However, FAA has not yet determined if the EDC will be installed at these facilities.
STARS development costs have increased over initial estimates. Costs, including personnel needed, have been higher-than-expected for contract software development and contractor productivity has been lower than planned. Further, human-factors issue resolution and the early EDC deployment at Washington National will increase fiscal year 1998 contract costs.
Mr. WOLF. Have the controllers and FAA management reached agreement on which issues need to be resolved, and in what timeframe?
Page 179 PREV PAGE TOP OF DOC Segment 1 Of 2 [The information follows:]
As of February 12, 1998, members of the STARS rapid prototyping team agreed on recommendations to address 81 of 98 air traffic control issues. Resolution of the remaining 17 items is expected by February 28, 1998. STARS program officials are developing information on the cost and schedule implications of designing, developing and testing the proposed solutions. This program data should be available in March or April of 1998.
Mr. WOLF. Last year the Secretary asked you to investigate FAA's actions on the Potomac Metroplex program, following up an investigation done by this committee's S&I investigative staff. What were your findings?
Mr. MEAD. We found the committee had been ''misled,'' and that the cost-benefit analysis that had been represented to the committee as indicating that the Potomac Metroplex was not the best choice was not based in fact. Since then, the FAA has announced that they will proceed with the Potomac Metroplex, and they are proceeding accordingly.
Mr. WOLF. Hopefully that will mean quieter and less expensive, too. That was quite a battle.
Did that tell us anything about the management cultureand none of this has to do with Ms. Garvey, I want the record to show thatdid that tell us something about the management problems over at the FAA?
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Mr. MEAD. It spoke volumes.
Mr. WOLF. Because when they write the history of the FAA, this won't be in the history, it will be a footnote in the back; but it did speak volumes, it seems.
Mr. WOLF. Does the FAA's benefit-cost analysis indicate that a single, consolidated facility in the Washington metropolitan area is the most cost-effective option?
[The information follows:]
FAA performed a series of studies between 1994 and 1997 to examine the costs and benefits associated with the Potomac Metroplex program. While the studies varied to reflect changes in the underlying assumptions, they all concluded that a seamless airspace, controlled from a single facility, offered the greatest benefit at lower cost.
In 1997, FAA asked Booz-Allen & Hamilton to perform an independent assessment of the costs and benefits of the Potomac Metroplex program. The firm weighed FAA's cost-benefit studies. In its August 27, 1997 report, Booz-Allen & Hamilton concluded that full consolidation was the most cost-beneficial option.
Mr. WOLF. Your office has been involved over the past years in aviation safety. Two months ago you issued a reportand this issue came up yesterdayon FAA's runway incursion program. As your report shows, runway incursions are increasing around the country.
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Why has the FAA been ineffective in addressing runway incursions, especially after they received so much attention a few years ago?
Mr. MEAD. In short, the FAA put together a plan that looked pretty good overall, but it wasn't being implemented. We went to the FAA regional offices, and they were unaware of the plan. They were unaware of FAA's goal to reduce runway incursions to 40 a year, when in fact
Mr. WOLF. Where are they now?
Mr. MEAD. Between 250 and 260.
Mr. WOLF. And growing yearly.
Mr. MEAD. I don't know what it has been in the last couple of months, but most of 1997, they were on an upward trend. There is an article in the paper today, incidentally.
Mr. WOLF. What paper?
Mr. MEAD. The Post, that identifies runway incursions. It is the last paragraph of the article.
Mr. WOLF. Staff said it was 318 at the end of 1997.
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Mr. MEAD. Oh, it went way up. I don't have the end of the year, 1997 data. I was using 1996, which is approximately 260.
Mr. WOLF. That is quite dramatic.
Mr. MEAD. The article in the paper identifies this today as one of the top safety issues, and it is one that FAA must make real inroads on. We talk about putting more planes in the air and reducing separation minimums between planes. All that leads to more planes landing at airports, and if you have more traffic at airports, you can have just as bad an accident there.
Mr. WOLF. We will go into depth on that with Ms. Garvey.
Because of the attention this received in 1994, the FAA expressed their concern and developed a Runway Incursion Action Plan. However, as your auditors discovered, after the immediate interest waned, the FAA did not follow through on implementing this plan. Now you point out to them that runway incursions are increasingmy staff said 318 at the end of 1997and they are now quote, ''very, very concerned,'' and they will develop a new plan. How do we know that 3 years from now we won't learn that they stopped working on it when the spotlight is not on this particular safety issue?
Mr. MEAD. That is why, as part of our strategic plan, we are going to take this high-profile work, our important work, and we are going to keep following up. This ties into the performance measure issue you were mentioning earlier, and we are going to follow up on this.
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Mr. WOLF. I think it does, because then the group could say quarterly, here is how many runway incursions happened and here is what happened at the half year and here is what happened after three quarters of the year.
Mr. DECARLI. On that issue, when we issued that document, we told FAA to establish a specific performance element to track that measure, so hopefully that will put some spotlight on those numbers, rather than having them forgotten after the report is issued.
Mr. WOLF. What if the report had not been issued? You know, it is like the fad of the day; this is a big issue, it is a big story; they go to it and deal with it and kind of move on.
The committee added funds to the FAA's budget for runway incursion devices such as the AMASS computer in past years. Are these useful technologies for helping to address the runway incursion problem?
Ms. STEFANI. Yes, they are. Runway incursions are normally human error based. The technology will provide immediate information to the controller to try to avert the situation. But in addition to technology, you have low cost, doable procedural changes and local initiatives that can be performed.
Mr. WOLF. Another important safety concern is adequacy of training for FAA inspectors. In that regard, let me quote testimony you offered the subcommittee way back, in 1991, 7 years ago, when you were just a young boy out of college. [Laughter] You said at that timeyou were at GAO, let the record show that''Aging aircraft requires inspectors to assess airline corrosion control programs and evaluate major structural repairs. New technology, on the other hand, places additional demands on the inspector staff. So be prepared for FAA investing heavily in training to keep inspectors current.''
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The FAA was aware they needed more training in 1991. Why, then, were they in a position for you to report in November of 1997, now as the DOT Inspector General, that FAA inspectors, quote, ''were not routinely provided basic technical training or recurrent training for the aircraft systems they were assigned to inspect''?
Mr. MEAD. Because they have never adequately dealt with the problem. Training is one of the first cost items to get slashed when budget times are hard. And it is not my place to give gratuitous advice to the committee, but this, like runway incursions, is one where FAA's feet need to be held to the fire. We keep putting more people over there. It is important that these be people be proficient in what we are asking them to do.
Mr. WOLF. Closely allied with aviation safety is the issue of aircraft security. Your office has been reviewing FAA's plans to procure and deploy new explosive detection machines at our high threat airports. Is the FAA managing this effort well?
Mr. MEAD. From what we can see, this is an ongoing effort, so I don't want to pass judgment on it. But I would say anytime you see a lot of money being infused in an area, that is the time one starts experiencing some management problems. That is why we are going in now.
SIMULATOR TRAINING FOR FAA INSPECTORS
Page 185 PREV PAGE TOP OF DOC Segment 1 Of 2 Mr. WOLF. This past December you criticized the FAA for a ''quid pro quo'' arrangement with the airlines where FAA requires the airlines to provide free simulator training to FAA inspectors in return for FAA approval of air crew program designees. You found at least one case where this arrangement precluded FAA officials from pursuing needed enforcement action against an air carrier. You said, quote, ''This type of agreement could very well preclude the grounding of an aircraft, airman or an air carrier for a prolonged period, even if there was a high safety risk.'' Has the FAA agreed to discontinue this ''quid pro quo'' arrangement?
Mr. MEAD. Yes. We just thought it was inappropriate for FAA to say, in exchange for free training, we won't take enforcement action. Short and sweet. That is what the report was, a very short and to-the-point report.
Mr. WOLF. Last year we had a considerable discussion with the acting IG about an audit showing deficiencies in FAA's regulations on aircraft deicing. Mr. Pastor asked that question yesterday. Can you update us on the FAA's response to your recommendations on deicing?
Mr. DECARLI. Not at this time. We will provide that for the record.
[The information follows:]
In last year's testimony, the Acting IG noted that we were pursuing several followup issues with FAA regarding our report. In particular, we had requested that FAA: (1) provide air carriers and aviation safety inspectors with ''best practice'' information on deicing procedures; (2) provide instruction to inspectors on using surveillance data to perform followup inspections or to change air carriers' deicing programs, (3) provide a listing to OIG of enforcement actions taken, and (4) reconsider requiring airport operators to participate in the development and implementation of local deicing plans. On the first three items, FAA took the requested actions. On the fourth item, however, FAA still sees no need to require the development of deicing plans or the participation by the airport operators in such plans. FAA notes it knows of no situation that occurred in deicing operations during the 19931997 winter seasons which could have been alleviated if the airport operator had developed a deicing plan. We agree with FAA's actions and consider all recommendations closed.
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COST ACCOUNTING SYSTEM
Mr. WOLF. Your office has been reviewing FAA's development of a new cost accounting system. Will the FAA be able to meet its commitment to field a fully functional cost accounting system?
Mr. MEAD. The commitment, I think, was October 1. The answer is no. And just a postscript on that one: It is better that we do this right than to try and meet a deadline and create a system that is fundamentally flawed.
Mr. WOLF. Two other questions on that issue will be for the record.
COST ACCOUNTING AND FINANCIAL MANAGEMENT ISSUES
Mr. WOLF. Will the system be able to account for full costs, support performance measurements, and provide a basis for user fee calculations?
[The information follows:]
No. FAA has acquired an off-the-shelf cost accounting package, and plans to modify this package to meet its needs. FAA is gathering its cost-accounting and performance-measurement requirements. We identified several key issues which, if not resolved, could result in incomplete cost capturing and implementation delays. These issues include determining and capturing costs related to: asset appreciation; accounting adjustments valued at hundreds of millions of dollars, air traffic services provided by other agencies, and National Airspace System project development.
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For example, the Department of Defense expends over $600 million per year as a partner to FAA's air traffic control operations. The General Accounting Office has recommended these costs be included in any new user fee calculations. Decisions are needed on how these costs will be captured and allocated within CAS.
The value of CAS is directly related to the quality of the underlying data collected by the system. CAS collects its financial data from the departmental financial system, which also supports financial statements. For FAA's FY 1997 financial statement, we were unable to validate $11.6 billion of reported property and equipment and $763 million of inventory due to inaccurate subsidiary records, documentation, and unreconciled discrepancies. Until FAA corrects these material weaknesses and, ultimately, obtains a clean opinion on its financial statement, the reliability of CAS data will be vulnerable to dispute when used as a basis for calculating user fees. Also, FAA has not begun to develop a pricing strategy for user fees.
Mr. WOLF. Would you give an FAA an ''A'' for how it has proceeded on this effort?
[The information follows:]
No. To their credit, senior FAA managers recognize they have to change the agency's management culture to embrace agencywide cost-accounting, and have employed a contractor to assist in implementing CAS. However, FAA was not able to meet initial commitments to Congress to have pilot baseline implementations in place for selected activities by the end of FY 1997. FAA also did not have a contingency plan for an adverse judicial ruling on the validity of their overflight fee structure. Additional work needs to be done to clean up longstanding problems with basic accounting data CAS will rely upon.
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Mr. WOLF. FAA was to have finished development of their new cost accounting system by October 1998. If successful, this might enable them to begin collecting overflight fees in a way acceptable to the court. As currently planned, is it likely that, by October 1998, FAA's cost accounting system will be sufficiently developed and tested to meet the requirements for user fees set forth by the court?
[The information follows:]
No. FAA clearly will not be ready to implement user fees by October 1998. FAA needs to develop a pricing schedule for its services. This effort has not started. Further, in our opinion, FAA should have at least several months of fully supported trend data from CAS before a proposed user fee schedule is published.
Mr. WOLF. The Subcommittee recently requested your office look into deficiencies in budget execution controls at FAA. I know it's early to ask you for a report, but have you found any indications so far of problems in this area which you might share today?
[The information follows:]
We are not far enough along to have even preliminary indications of problems. If we do identify problems, we will bring them to the attention of the FAA Administrator and the Subcommittee.
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Mr. WOLF. In Asiana versus Federal Aviation Administration, the D.C. court recently invalidated the FAA's overflight user fees because they were based on an economic principle known as Ramsey pricing. Briefly explain the findings of the court.
Also, the FAA's fiscal 1999 budget assumes the collection $93 million in overflight fees, which, as it currently stands, cannot be collected because the court has ruled them illegal. Doesn't that give the FAA a 93 million hole in their operating budget? Please comment and then go indepth for the record. Could you explain the court decision, and does that give them a hole of $93 million?
Mr. MEAD. Well, the answer to the first part is that Ramsey pricingwhich is what the court of appeals invalidated, and I don't know whether the government is going to appeal the decision or notessentially states that when you set a user fee, it has to be cost-based. It cannot be based on what the value of the service is to me or to you. In other words, an analogy might be that if you take a fully loaded 777, that plane is getting a more valuable service from air traffic control than a general aviation aircraft with just one person in it.
But this court seems to be saying that, no, we mean cost-based; you can't differentiate. The ruling applies to the international overflight fees. I gather, from what I understand, the law was written cleverly, and it said if your user fees don't stand, DOT still must fund the FAS program. So I don't recall whether that 90 million is coming from an FAA account or an OST account, but they have to come up with the money.
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Mr. WOLF. There will be a hole then.
Mr. DECARLI. I think about half of that is going to an OST account as essential air services.
[Additional information follows:]
On January 30, 1998, the court ruled that FAA's allocation of fixed and common costs, using a value-oriented Ramsey methodology, violated the Federal Aviation Reauthorization Act of 1996. The law requires overflight fees be directly related to the agency's cost of providing such services as air traffic control, navigation, weather, training and emergency response. According to the court, the Ramsey method distributes fixed costs among classes of users based on the elasticity of their demand for services, in an effort to minimize the effect of the regulation on user behavior. Under this method, classes of users less sensitive to changes in price are allocated a relatively greater share of fixed and common costs. The court concluded: (1) there may be methods to reasonably determine an appropriate fraction of the FAA's fixed costs to assign to each overflight, and (2) if FAA does not have information to precisely determine the burdens imposed by individual flights, it may proceed based on the best data available.
Yes, the court decision will create a ''hole'' in the essential air services and rural airport improvement program, and FAA's general operations program. The Federal Aviation Reauthorization Act of 1996 (Public Law 104264), authorizes FAA to recover $100 million in overflight fees. In the FY 1999 budget submission, $50 million is proposed for the essential air services program and $43 million in FAA's operating costs are to be supported from user fees.
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FAA officials said the ''hole'' would be mitigated by any funds that can be collected consistent with the court ruling. However, new user fee rules would take time to implement. By March 13, 1998, FAA has the option to appeal the court's decision. Absent new rules or winning a court appeal, FAA advised they will have to reduce program funding levels.
HIGHWAYSBOSTON CENTRAL ARTERY
Mr. WOLF. In a recent audit, the OIG concluded that the Federal Highway Administration has participated in costs to relocate a utility company's transformer substation which were not eligible for Federal participation. The federal share of the relocation and construction costs subsequently paid was $37 million. Furthermore, your audit work revealed the Federal Highway Administration staff did not perform their own analysis on the relocation but relied on the Massachusetts Highway Department's analysis. What action has the Federal Highway Administration taken in response to your findings, and are you satisfied that Federal highway management and oversight activities are now sufficient to provide adequate oversight?
Mr. WEINTROB. The Federal Highway Administration has yet to reply to our last correspondence on that issue. There was what is termed a ''betterment.'' We are not questioning the need to relocate the utility. The rules stated that when the government participates in those kind of costs, it should not pay for betterments. If they are moving over a 200-amp circuit breaker to a new location, you pay to move that over. If, in fact, the electric company made it 400 amps to service more people, the Federal Government shouldn't participate in that betterment.
Page 192 PREV PAGE TOP OF DOC Segment 1 Of 2 Mr. WOLF. So they should get the money back.
Mr. WEINTROB. They did recoup 2.6 of the 10. We believe they ought to recoup the rest.
Mr. WOLF. Could you follow up and let us know whether they get it?
Mr. WEINTROB. We can let you know whether they get it. We can't make sure they get it.
Mr. WOLF. We will ask somebody else, but if you could let us know.
[The information follows:]
FHWA has not changed its position on accepting only $2.6 million of the $10 million paid for substation betterments.
Mr. WOLF. The Federal Highway Administration has indicated that over the past several years, staff years dedicated to oversight of the Central Artery project have increased to over 20 staff years. In your opinion, has the staff year increase translated into more effective oversight, or has staff continued to rely upon Massachusetts Highway Department's oversight of the project?
Page 193 PREV PAGE TOP OF DOC Segment 1 Of 2 Mr. MEAD. I believe the FHWA oversight has had value added. I am not saying they don't rely a little too much on Central Artery personnel, but there has been clear value added having a presence there, just as for the Federal Transit Administration with L.A. Metro.
Mr. WOLF. The Big Dig's final design is nearly 94 percent complete and was scheduled to be substantially complete in mid-1998. Can you share with the committee your observations or concerns about Massachusetts Highway Department or contractor staff charges to the project, given the completion of the design phase?
Ms. THOMPSON. Currently the Bechtel people who are working on the projectwho were involved in the early phases of the projectare actually being reclassified. The end result is that the same number of Bechtel people on the project at the outset are currently still on the project; they have been given other of duties.
Mr. WEINTROB. At this point in the plan, there should have been significantly fewer Bechtel folks there. That hasn't materialized. The number is about the same, 961.
Mr. MEAD. The bottom line, Mr. Chairman, is I think the initiatives of this committee have made a difference at the Artery. They are on a cusp, though, of another cost increase.
Mr. WOLF. They are.
Page 194 PREV PAGE TOP OF DOC Segment 1 Of 2 Mr. MEAD. I know there is disagreement on this, but I am not prepared to say the costs are going to definitely go over 11 billion. I will be pleasantly surprised, I should say, if they do not, but if the Artery does not, one, get a handle on the cost overruns that are running actuarially now at about 14 percent, and, two, reduce the number of the support staff from Bechtel, you are going to see a cost increase. I believe the Artery is aware of that, too.
Mr. WOLF. Over the past several years your office has presented three options for controlling costs, and I appreciate your work and the GAO's work. A combined cap on the federal funding and a reduced federal participation rate have been recommended as a preferred method. Has your opinion on the need for a cap or reduced federal participation rate changed over the past year?
Mr. MEAD. My opinion on that is just what the committee report language for fiscal 1998 appropriations says. If there are further cost increases that are consequential, I think we should consider various capping formulations.
Mr. WOLF. As you know, a revised financial plan for the project was submitted this past fall. What has your review of the plan revealed, and how reliable is the financial data reported?
Ms. THOMPSON. Our preliminary review found that there were some misdirections, if you will, in the way the plan was worded; that in some respects it was a public relations document; and that in fact the numbers they used for the cost containment goals were extremely overly optimistic, to the point they would never achieve them. We and GAO met with Federal Highway to work on some of these areas, and in fact, those changes were made to the finance plan, so that the cost containment goals, for example, are more realistic, at least in Federal Highway's eyes. As for the State of Massachusetts, we believe their cost containment goals, and they are in fact still running higher than those projections, but that if they implement some of the recommendations, such as reducing the number of Bechtel employees, they should be able to come closer to what they projected would be the costs of the Artery.
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Mr. WOLF. I think if they don't, that is going to be a sign that they just don't care.
Mr. MEAD. I would say the Artery has been very responsive to our inquiries and suggestions.
Mr. WOLF. In January, the Associated Press reported when Big Dig project manager Peter Zuk learned CBS's ''60 Minutes'' was headed to Boston for an exposé, he hired a media consultant and a former CBS news producer to prep him. Taxpayers footed the $24,210 bill. Soon after that, the Boston Herald reported that Big Dig managers are seeking 2 million dollars to pay top name advertising talent for a feel-good campaign to hype the $11 billion project. While the Massachusetts Turnpike Authority will pick up a portion of the 2 million, the Herald reports that the Federal Highway Administration, or taxpayers all over the country, will pick up the rest.
What can you tell us about these reports and whether Federal Highways is participating in these costs? I mean, that would be terrible. You are talking about ABC, your money, your business. I mean, I hope that is not the case.
Mr. WEINTROB. The problem you have in determining whether Federal Highway or the State of Massachusetts itself is paying for those costs is that all the fundsthe funds they get from Federal Government as well as State fundsgo into the same account that loses the money. So when we raise these types of issues, they say, ''Oh, no, we are not paying that fee or expense or consultant out of Federal funds, that is coming out of our 15 or 20 percent that we are matching,'' and there is no way to say which dollars they are taking it from.
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We have not determined whether it exceeds their portion of matching funds or not. But that is the kind of answer you would get if you asked Federal Highways or Peter Zuk and there is really no way of differentiating.
Mr. WOLF. There is no way of finding out? For Peter Zuk to hire a guy for $24,000, if he is not competent enough to explain what he has been doing, I mean, he is in trouble.
Mr. WEINTROB. They can explain what the people do, but they can't tell you whose money paid for them.
Mr. WOLF. Why would you hire a $24,000 media consultant to tell you how to talk to ''60 Minutes'' ?
Mr. WEINTROB. Because you have a 7-mile project for $11 billion. It is almost unheard of in the cost per mile and it gets all kinds of attention, and somehow you need good public relations folks to keep the pressure down.
Mr. WOLF. That wouldn't be an eligible cost, though, would it?
Mr. MEAD. That is a key question. The first question is, is it legal?
Mr. WOLF. It is probably not, is it?
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Mr. MEAD. I wouldn't speculate on that. We will have to get you an answer. Just because we think it is philosophically inappropriate does not mean that it is unlawful. So the first question is the legality; the second question is, is it wise. We will put those questions to FHWA and we will get back to you.
[The information follows:]
The Central Artery has decided to return the Federal funds ($19,000) related to the issue.
Mr. WOLF. Do you believe it is appropriated that FHWA participate in these expenditures and to what extent has the FHWA questioned them?
[The information follows:]
Philosophically, we have long maintained that the Federal Government should not participate in expenditures that are not supported by demonstrated project requirements or are otherwise ineligible. While the services of a media consultant may be eligible for funding with Federal funds, we have seen no evidence of a demonstrated project requirement. FHWA has not questioned these expenditures. FHWA participated in the cost for the media consultant, and has accepted the concept of the advertising campaign.
Mr. WOLF. Are they going to have this $2 million program to promote the Big Dig?
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Mr. MEAD. I surely hope not.
Mr. WOLF. I think if they do that, that is going to tell the committee something. If we find out there is a $2 million program to hype it, I think that will really tell the committee that there is something wrong. And, you know, I am not going to say what we are going to be doing, because I don't think it is appropriate, and certainly we want to talk to all of the Members, but I think that would really, really be a fundamentally wrong thing. And for the taxpayers of Virginia and Minnesota and California and Arizona and Ohio and everywhere else to be paying for that, I think would be wrong. And if they do it, we are going to make it clear they ought not be doing that. They have their own PIO officers on, and I think that is the way to handle it, not to go out and hire advertising.
Mr. WEINTROB. The answer back to them might be if you have this $2 million, you are not taking it from the federal highway grant part, you have it in your own checkbook. Then maybe you need 2 million less from Uncle Sam and you take the 2 million and spend it on the highway construction.
Mr. WOLF. That is right, or the State could just authorize a new $2 million program, their State legislature could.
Mr. WEINTROB. That is where our recommendation a few years ago came in on a sliding scale. As you go over a pegged number, the Federal share goes down percentage wise because if you have enough money to do all these other things, you don't need as much in Federal funding.
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Mr. WOLF. These are the kinds of things that create a problem in the public's mind, and you obviously don't believe it would be appropriate for the Federal Government to participate in these expenditures. Do you know to what extent the Federal Highway Administration has raised these issues with them?
Mr. MEAD. I don't think they have.
Mr. WOLF. Is anybody here from the Federal Highway Administration?
I think the new Administrator really has to raise these issues, and I am going to ask him when he comes up, but for the taxpayers of America to be paying for coaching on ''60 Minutes'' would be a mistake, and for the taxpayers of Kansas to be paying for a public relations program would be wrong, and I think they ought to take it out of their own account. If they want to be appropriate, that is the only way. But under no circumstances should it be done.
Mr. DECARLI. That is similar to the issue raised about a year ago on the police flaggers.
Mr. WOLF. Yes, they worked that out.
Mr. DECARLI. They probably will on this one, too. The State ended up paying for those.
Page 200 PREV PAGE TOP OF DOC Segment 1 Of 2 Mr. WOLF. If the Federal Highway Administrator would write a letter to them and get a commitment that they would do that, that would helpful and I think the issue would be resolved.
Mr. WOLF. Your office conducted an audit of the Federal Highway Administration's emergency relief program, revealing the Federal Highway Administration had not used emergency relief funds in accordance with regulations for nearly 30 projects and squandered $104 million. What else did your audit reveal?
Mr. MEAD. Most people think emergency relief is something that occurs close in time to the emergency, and in some of these instances a number of years had passed before the emergency relief came in, and we raised a number of questions about that.
Mr. DECARLI. The biggest issue, Mr. Chairman, dealt, again, with the issue of betterments in the emergency relief legislation. The way it is worded, basically, is that if you have a problem as a result of a storm, you use emergency relief funds to put the road back in the condition it was.
Mr. WOLF. Which is a good idea, I think.
Mr. DECARLI. Absolutely. What we have found is, under certain conditions you have to go out and do an environmental study, which could tell you to do things that are beyond the current condition of the project. Then we are expanding that project without criteria to do betterments that were beyond what the original project was and then saying it was due to the environmental study and you need to have better controls on that.
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Mr. WOLF. Did you find the Emergency Relief Fund was provided on a consistent basis among the States and various projects?
Mr. DECARLI. I believe most of the money we looked at that was given out went to the West; most of it was for California, Oregon, Washington, the west coast.
Mr. WOLF. What must Federal Highways do to improve its program administration as well as its guidance and regulation on the eligible uses of federal emergency relief assistance? What do you think they should do?
Mr. DECARLI. I think the biggest thing they have to do is define what a betterment is and under what conditions you can pay for a betterment using emergency relief funds. I think that is the critical issue there.
Mr. WOLF. Your audit indicated that FHWA did not determine whether certain improvements or ''betterments'' associated with the Cypress Freeway replacement project in California were economically justified. These betterments included replacing the 1.5-mile, two-tier highway with five miles of single-tier freeway, while adding new interchanges to improve access to local streets and port facilities. Is it your opinion that certain costs associated with the Cypress Freeway replacement project are ineligible for emergency relief funds?
[The information follows:]
Yes. Betterments that are not economically justified to prevent future damage are not eligible for funding through the Emergency Relief Program, but may be funded through regular apportioned Federal aid. We are of the opinion that FHWA should have demonstrated that the betterments included in the Cypress Replacement Project were so justified, or they should have limited the use of emergency relief funds to the cost of replacing the necessary aspects of the freeway, and betterments needed to prevent future damage from natural disaster.
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Mr. WOLF. What must FHWA do to improve its program administration as well as its guidance and regulation on the eligible uses of Federal emergency relief assistance?
[The information follows:]
FHWA program guidance must clearly define what costs can be funded with emergency relief funds. Further, FHWA headquarters staff should consult regularly with field staff to ensure compliance with program guidance; develop and implement, by the end of fiscal year 1998, a training course specifically on the emergency relief program; and continue workshops to discuss regulations and guidance with FHWA, state and local agency field personnel involved in the program.
Mr. WOLF. Moving to Amtrakand there is going to be a vote fairly soon and then another vote, so we will probably have about a 20-minute break; you can go grab a sandwich or something.
Last year, this committee clarified that you had jurisidction to inspect the operations of Amtrak, and we encouraged you to become involved in reviewing their major programs. What work does your office have under way regarding Amtrak?
Mr. WOLF. Moving to Amtrakand there is going to be a vote fairly soon and then another vote, so we will probably have about a 20-minute break; you can go grab a sandwich or something.
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Last year, this committee clarified that you had jurisdiction to inspect the operations of Amtrak, and we encouraged you to become involved in reviewing their major programs. What work does your office have under way regarding Amtrak?
Mr. MEAD. Two pieces. First, the new law that was passed required that within 15 days of its passage, we let a contract to review the financial requirements of Amtrak through 2002 on the glidepath.
Well, we thought we really ought to put all of our horses into coming up with a methodology and a statement of work, which is now out on the street. We didn't do it in 15 days. I think that would have been haste makes waste. Also, it probably would have been illegal because we would have been awarding a contract without going through the competitive process. But anyway, we have been applying our energies to that.
I will ask Todd Zinser to speak to some issues that he is handling.
Mr. ZINSER. Yes, we have ongoing right now one investigation concerning Amtrak. We were requested to look at some issues by the Inspector General at Amtrak concerning compensation for some of the officers. There is an issue as to what the total compensation package is for six officers, including whether or not Amtrak was properly reporting to Congress any compensation over certain limits, and we are in the process of concluding that now and hope to report that to the Amtrak board in the near future.
Mr. MEAD. And, Pat, on the Northeast corridor.
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Ms. THOMPSON. We have done some work for the last several months on the Northeast corridor, from Washington to Boston. Primarily we have been focusing on the New York-to-Boston route. As you know, Amtrak is spending considerable funds in that area, and we have been overseeing that area to see whether or not they are on schedule and within their projections in terms of the dollars for the project. They are not currently on schedule.
The impact of that slippage we don't know over the long-term. The January report from the contractor shows them to be as much as 9 months behind schedule. They ran into some unanticipated problems in digging for the poles for the catenary wire. They have run into some problems with respect to the design and finding a contractor who can build the catenary wire. So, again, we don't know whether or not they will be on schedule. Amtrak maintains they will be able to make up the lost time, but at this point in time we are still watching it to see whether or not they can.
Mr. WOLF. The Taxpayer Relief Act of 1997 included a tax credit for Amtrak, providing approximately cash of $2.3 billion for investment in capital programs. Amtrak has long said if we could jump start their revitalization with a significant capital investment, they would be okay in the long run. Now Congress has given them that jump start. Would you agree that Amtrak should be expected to reach self-sufficiency without too much difficulty?
Mr. MEAD. Two questions there. Yes, they should be expected to reach self-sufficiency. Whether it will be without difficulty is an entirely different matter, and the answer to the two questions may well be yes to the first and no to the second.
Page 205 PREV PAGE TOP OF DOC Segment 1 Of 2 But yes, Amtrak receives $2.2 billion. I think an interesting piece of trivia, that the $2.2 billion, plus the $620 million that the administration has requested for capital equate to about $2.8 billion, which is very close to the figure you were using earlier for the F&E account at FAA.
Mr. WOLF. Well, the administration's request for Amtrak in fiscal year 1999 is a little confusing. They propose to eliminate operating assistance entirely and allow use of tax credit resources provided last year, as we talked about, for that purpose.
Have you reviewed DOT's request for Amtrak, and would you comment on the sufficiency to enable Amtrak to continue operating through the year 1999?
Mr. MEAD. Yes. The $621 million that the administration has requested is in a different format than the committee is accustomed to receiving in Amtrak budgets. Usually they come up and say, we want operating assistance, we want a capital grant, we want a Northeast corridor grant. This time, they come in and say, we want $621 million, over and above the $2.2 billion for capital assistance. That capital assistance will be for maintenance of equipment and facilities otherwise know as capital maintenance.
The Amtrak Board of Directors believes that if they get the flexibility to use that $621 million, combined with the TRA (the Taxpayer Relief Act money), they ought to be able to make ends meet. That will leave over $1 billion in revenuesnormal, nonsubsidy, nongrant revenuesto cover traditional things like salaries and other operating expenses.
Mr. WOLF. How much short-term borrowing is Amtrak doing at the present time, and where are they getting the funds?
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Mr. MEAD. Well, I think at the end of the year they had to borrow about $85 million. That is just to cover the end of the year balance sheets. There is also borrowing for capital equipment.
I can't speak to the capital equipment borrowing yet; we have that under review. The short-term creditthe $85 millionI am advised that with Chase Manhattan operating as the executive agent, that some of the other participants providing that financing were the Bank of America, Bank of Tokyo.
Mr. WOLF. Bank of Tokyo?
Mr. MEAD. Mitsubishi, NationsBank, First National of Maryland, and Industrial Bank of Japan.
Mr. WOLF. Why would they be going abroad?
Mr. MEAD. I don't know.
Mr. WOLF. So, Amtrak, Americas' railroad, is borrowing money from foreign banks.
Mr. MEAD. I don't know the terms of all the notes. I know Chase Manhattan was the agent, and we were told by Amtrak that participants are, in the short term, the institutions I named. I cannot explain at this point why they were going there and not exclusively to domestic borrowers or lenders.
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Mr. WOLF. We will ask about that. I am a little surprised they are going to foreign banks.
Mr. MEAD. It is probably a consortium of lenders of which Chase is the executive agent, but these foreign institutions are participants.
I should also add that on the capital side, for the longer-term loans, some Canadian interests are involved, but we will have to provide you with the details.
Mr. WOLF. Is that because of the current manufacturers?
Mr. MEAD. Almost certainly. I think Bombardier is up there.
Mr. WOLF. That one I would understand; the other ones I am a little confused about.
Last year, the DOT advised the authorizing committees that, in their opinion, the Federal Government would assume no financial liability if Amtrak were to go bankrupt. For many years, Amtrak has said the government would have to pay billions in losses if they entered bankruptcy.
Would you explain the DOT's position, and do you agree with it?
Mr. MEAD. I haven't reviewed their position. I will, and I know GAO will, too.
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Mr. WOLF. Excuse me, I am sorry.
Mr. MEAD. We will do that.
Mr. WOLF. If you will for the record tell us.
[The information follows:]
While Amtrak, its employees, and any of its other creditors may invoke an equitable argument as to why the Federal Government is liable to them, we agree with the October 9, 1997, DOT General Counsel and the October 20, 1997, Comptroller General opinions that the United States is not legally liable to Amtrak's employees or other creditors should it file for bankruptcy.
That conclusion is premised upon the fact that:
Amtrak's organic legislation, the Rail Passenger Service Act of 1970, provides that it is not a department, agency, or instrumentality of the United States;
The United States has neither explicitly nor implicitly guaranteed any obligations of Amtrak; and the Federal Government does not in any way control the day-to-day operations of Amtrak. This is so even though the Board of Directors is essentially controlled by the Federal government, the Federal government holds Amtrak's preferred stock, and Amtrak receives operating and capital grants administered by the Federal Railroad Administration.
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To be legally liable in bankruptcy there needs to be some contractual relationship with a creditor or, at the very least, as indicated, some implicit guarantee of the debtor's (Amtrak's) obligations. There are none. For years the Supreme Court has maintained that absent some clear indication that the legislature intends to bind itself contractually, the presumption is that a law is not intended to create private contractual or vested rights, but merely declares a policy to be pursued until the legislature ordains otherwise.
This is so because it is the function of a legislature to make laws and not make contracts. Moreover, unlike Amtrak which has no claim of sovereign immunity from suit since it is a for profit corporation, the United States has immunity under the bankruptcy laws unless by statute, it waives that immunity. In this regard, the only applicable waiver of sovereign immunity is under the Bankruptcy Act and then only to the extent that the United States is a creditor of the bankrupt. The United States is not.
The equitable argument for imposing liability, which no doubt would be raised by Amtrak's employees and other creditors, rests on an assertion that the United States is the putative parent or agent of Amtrak and that is so because Congress:
Endowed it with governmental powers;
Keeps it afloat every year by subsidizing its losses;
Page 210 PREV PAGE TOP OF DOC Segment 1 Of 2 Otherwise provides it with its funding; and
Left it insufficiently capitalized to meet its obligations.
Additionally, the Federal government owns all its voting stock and appoints or approves all board members. Hence, under principles of corporate law known as ''piercing the corporate veil,'' the Federal government and Amtrak are one. These arguments, however, have previously been rejected.
Mr. WOLF. You are currently reviewing Amtrak's progress on the high-speed rail and you covered that from New York City to Boston, but in that, if there are any delays and any penalties, andwe will just submit a whole series of these for the record.
Have you found any delays in production of the high-speed rail trainsets? If so why did these delays occur? Are the delays so significant penalties will be imposed? Are there delays in construction and electrification work? If so, how did they occur? Do you believe Amtrak will meet the October 1999 implementation date?
[The information follows:]
The trainsets are early in production but appear to be progressing on or close to schedule. Some components of the trains, including the air-conditioning system, are currently three months behind schedule, but Amtrak believes these delays will have no effect on the overall schedule for train production. As such, it would be premature to anticipate penalties based on late delivery.
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The electrification project has fallen three to four months behind schedule. These delays relate to contract management, field conditions, and safety issues. The contractor, in conjunction with Amtrak, has instituted several recovery plans which Amtrak believes will remedy the delays allowing Amtrak to begin high-speed service in October, 1999. The acting president and CEO of Amtrak has committed to starting service on that date, and it appears that Amtrak intends to take whatever steps are necessary to push its contractor to accelerate progress and meet this deadline.
We will continue to monitor the progress of both the trainset and electrification contracts and keep the Committee informed of potential schedule or cost impacts these might have on the high-speed rail program.
FEDERAL RAILROAD ADMINISTRATION SAFETY PROGRAM
Mr. WOLF. In last year's hearings, the acting IG advised us your office would be conducting an audit of FRA's new safety inspection program toward the end of fiscal year 1997 to see if the program was working.
Did you conduct that audit, and, if so, can you share the findings with us?
Ms. THOMPSON. We are in the process, perhaps at midpoint, Mr. Chairman, of conducting that audit on what is known as the FRA Safety Assurance and Compliance Program. This was developed as kind of a systems approach by the FRA to correct the problems that are occurring in the railroads.
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Preliminarily, we are finding that the implementation of the SACP program, as it is known, is perhaps not as efficient as it could be and that they have not fully addressed the training of their own people on the SACP program. The inspectors for the FRA have not fully addressed the documentation requirements for recording the SACP process as they are out there doing the inspections. We are finding that there are some holes that do need to be addressed by FRA in order to make SACP a very viable program and get it up and running properly.
Mr. MEAD. I don't want to provide a bottom line answer to that question now until it is done. I know your bottom line question goes to, is this partnership more a collegial approach and the safety program effective and yielding substantial safety results?
Mr. WOLF. Right, because we had yesterday the question with regard to the Union Pacific. There had been, I think, 10 people killed during the period of time, and we were just wondering if this has been a successful approach or an unsuccessful approach. But if you could just check that.
Mr. MEAD. That is the focus of it.
[The information follows:]
We will provide those results when the audit is completed.
FEDERAL TRANSIT ADMINISTRATION ISSUES
Page 213 PREV PAGE TOP OF DOC Segment 1 Of 2 Mr. WOLF. Your office recently concluded its audit on the FTA's Project Management Oversight Program. In your draft report, you identified 11 PMO-funded management activities for which, in your opinion, the use of PMO's was highly questionable. What were your final conclusions?
Mr. MEAD. The list initially provided, where we had reservations, was reduced in number. I take responsibility for that, and the reason was a question of whether the law allowed funds for what were basically general, broad management initiatives to be used on these projects; the law was not as clear as it could be.
Mr. WOLF. Okay.
Mr. MEAD. It was not a question, Mr. Wolf, of the expenditures not being useful, it was a legal question. I think we have gotten things straightened out now with FTA, and Larry, do you want to add anything to that?
Mr. WEINTROB. I do think we have things straightened out, both where FTA has come in as well as with the requirements that the committee has levied on them and with their annual budget request listing those monies they are going to use and where they are going to use them.
The confusion in the law and the interpretation in the law had to do with whether those funds could only be used with grantee-specific programs, as opposed to more generic FTA overall issues.
Page 214 PREV PAGE TOP OF DOC Segment 1 Of 2 Mr. WOLF. In your final report, you identified four management initiatives with links too indirect to specific projects or grantees for which Project Management Oversight funding is intended and said these activities should be funded through direct appropriations. These activities include the national transit database, turnkey demonstration oversight, drug and alcohol management information systems, and electronic grant-making activities.
Are these activities proposed to be funded in fiscal year 1999 from the PMO set-asides or from regular appropriations?
Mr. WEINTROB. We will have to check on that, sir, but in talking with the chief counsel of FTA on several issues, I find he has been on top of it. In fact, he has called us on two occasions to get our support for his rejection of some proposals that the folks at FTA wanted to make.
Mr. WOLF. Are these activities proposed to be funded in fiscal year 1999 from PMO set-asides or from regular appropriations?
[The information follows:]
FTA will use regular appropriations (e.g., Section 5314 funds), not PMO set-asides, to fund these activities.
Mr. WOLF. Oh, he wants your support to help him?
Page 215 PREV PAGE TOP OF DOC Segment 1 Of 2 Mr. WEINTROB. Yes, so I would take that as a good indication they are monitoring it much closer.
Mr. WOLF. Well, that is a compliment. We have some others on that issue, but we will submit them for the record.
Do you share FTA's opinion that 7 of the 11 management activities meet the eligibility criteria for PMO funding under a reasonable interpretation of section 23? Should funding for these management activities be funded through the PMO program, based on your interpretation of the law?
[The information follows:]
We reviewed FTA information and program documentation and found the seven management activities met the eligibility criteria for PMO funding under an expansive interpretation of sections 23 (a) and (h).
Mr. WOLF. The committee requires that the FTA submit with its annual budget submission a detailed program plan by activity and detailed justifications of its oversight function. Are there any activities proposed in fiscal year 1999 to be funded from the PMO set-aside that you believe are not consistent with section 23?
[The information follows:]
No. FTA's FY 1999 budget request identifies $300,000 for PMO related to its Rail Control Technology initiative. This initiative is grantee specific and, in our opinion, is eligible for Section 23 funding. However, FTA advises us that $300,000 was in error, and they are only requesting $150,000 in FY 1999, with the possibility of another $150,000 in FY 2000.
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Mr. WOLF. Has the FTA planned to set aside PMO funds in excess of planned requirements and obligations in fiscal year 1999?
[The information follows:]
FTA's fiscal year (FY) 1999 Oversight Program Budget Justification showed it has not planned to set aside PMO funds in excess of planned requirements and obligations. However, our review of documentation provided by FTA, disclosing obligations to date, shows FTA may not succeed in obligating available FY 1998 funds and will carryover excess set aside PMO funds to FY 1999. FTA has only obligated $20.2 million as of February 23, 1998, leaving $15.7 million to be obligated in FY 1998. In FY 1999, FTA plans to set aside an additional $27 million. If FTA carries over substantial funds from FY 1998, then the FY 1999 set aside will exceed planned requirements and obligations.
LOS ANGELES METRORAIL PROJECT
Mr. WOLF. The general manager and the board of the Los Angeles County Metropolitan Transportation Authority recently suspended work on the Eastside and Mid-City and downtown-to-Pasadena rail extensions until the agency can overcome the disarray of its finances and the costly disorganization in its construction program. In your opinion, is this the appropriate action for the general manager and the board to take, and should Congress endorse their recommendations?
Mr. MEAD. Yes, I do think so; this is truly a case where Julian Burke, the CEO, and Mayor Riordan have come together and made some important decisions and recommendations that deserve support. I do not see how the several rail extensions in the project could move forward concurrently. I don't see where the money is to pay for that scenario.
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Mr. WOLF. Last year, Congress provided a total of $61,500,000 for the Los Angeles metrorail project, of which $24 million is for the Eastside extension. None of these funds are available until after the LACMTA produces a financially constrained recovery plan which complies with the consent decree for enhanced bus service and that plan is accepted by the FTA and reviewed by the IG, the GAO, and the committee.
When do you believe the LACMTA will complete its recovery plan and forward it to the FTA?
Mr. MEAD. I am hoping within the next 2 months.
Mr. WOLF. That is important because they had a 6-month delay; right?
Mr. MEAD. Yes. In fact, next week, we are going out to Los Angeles to establish the parameters of the contents of that recovery plan. By parameters, I mean what the recovery plan will include. The parameters established will be the outline of what will be submitted to the FTA and it is important that we get a consensus on that up front.
Mr. WOLF. The next question is really a political question and an LACMTA question. But in December of 1997, the Los Angeles MTA CEO acknowledged that MTA does not have revenue sources to fund all bus and rail projects. The CEO therefore recommended suspending the Eastside and Mid-City extensions of the Red Line segment 3 and the non-federally-funded Blue Line to Pasadena. He recommended completing segment 2 in the North Hollywood extension of segment 3.
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Do you think that is the best option?
Mr. MEAD. Yes, sir. And it is going to be a close call just to cover the costs of that.
Mr. WOLF. Is the current Hollywood/North Hollywood segment within budget and on schedule?
Ms. THOMPSON. Yes, but I think that segment has a little bit of slippage, maybe as much as a couple months. However, for all intents and purposes, they are on schedule. And if LACMTA gets their funding, they are on target with the dollars as well.
Mr. WOLF. Again, this is a political issue we get into, but just to get your comments, given the recommended construction cost for the Eastside and Mid-City projects, in your opinion, should a $24 million set-aside in fiscal year 1998 appropriation for Eastside be made available for the North Hollywood project? That is policy, I understand that.
Mr. MEAD. Well, it is very clear that making that funding available for North Hollywood would make the financial recovery plan easier to meet.
However, I think the situation in Los Angeles is such that LACMTA would want a place holder for the $24 million and would also want the full funding agreement. Then, when they are ready to resume the postponed projects and have a good financial plan in order, they would not have to come back to Congress and stand in line for the money. That is how I think the issue has to be viewed.
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Mr. WOLF. We are going to take a break for about 15 minutes and go vote. But my sense is, I am sympathetic to the people on the Eastside. I think you need a full system, and I don't know how the committee would do it, but working with Mr. Pastoror with Mr. Torres and Mr. Dixon, I think they need transportation as well as the others. There may be some mechanism.
There was a bus system in Curritiba, Brazil, which is not really a bus system, because when you use buses, you think in terms of standing in line. It is a rail system on wheels, a fixed guideway. I don't know how the committee would do it, but we, I think, would be sympathetic to doing something that balanced out to make sure that every area was treated fairly.
Maybe you are saying about North Hollywood that it is all you can afford, but you might do a fixed guideway to the other area; that is really their decision. Our decision gets into costs and overruns and the problems and things like that. But I understand how you can do this in perhaps different creative ways, and I don't think our mind should be limited by what is out there today. There may be some other creative things that really help the people of all regions that help them get together and integrate a system that helps them very well.
Mr. MEAD. I think LACMTA and Mr. Burke and others should be commended, and not penalized, for making a fiscally prudent decision.
Mr. WOLF. I agree. I commend the mayor and all the city council people on all they did. I think they are being very, very realistic.
Page 220 PREV PAGE TOP OF DOC Segment 1 Of 2 Mr. WOLF. The hiatus in the rail construction program is currently slated for six months. Do you believe a lengthier delay is warranted?
[The information follows:]
OIG believes a lengthier delay is not only warranted but likely. LACMTA's Chief Executive Officer had recommended a suspension of the extensions until the North Hollywood extension of MOS 3 was completed in fiscal year 2000. However, the LACMTA Board changed the suspension period to 6 months pending a staff review of the agency's finances. Given the shortfall of funds and the requirements of the bus consent decree, it is highly unlikely the East Side and Mid-City extensions will be re-started at the end of the 6-month hiatus. Whether they can be re-started even in the next 4 years appears doubtful. LACMTA is still facing a capital shortfall of over $500 million through fiscal year 2004. FTA's Financial Management Oversight consultant concluded that meaningful advancement of the three rail lines was extremely unlikely through 2004.
Mr. WOLF. At this point in time, can the LACMTA produce such a financially constrained recovery plan which complies with the consent decree for enhanced bus service and continues either the Eastside or Mid-City rail extensions?
[The information follows:]
Given the following financial challenges and the lack of current funding sources, it is unlikely LACMTA can at this point in time produce a financially constrained plan that would continue the East Side and Mid-City extensions.
Page 221 PREV PAGE TOP OF DOC Segment 1 Of 2 LACMTA faced a $1.3 billion shortfall in its capital budget forecast through fiscal year 2004. Even after suspension of the three rail lines, the capital funding shortfall would be over $500 million. Furthermore, according to LACMTA's own projections, the ''operating'' budget would have a shortfall of nearly $200 million by fiscal year 2004 and would increase to approximately $1.5 billion in fiscal year 2013 if the agency built only one additional rail line. LACMTA needs to achieve efficiencies in the operating budget of roughly $100 million per year in order to erase the deficit. As a result, there is a high risk the agency would be financially strained to operate the rail system if the operating efficiencies were not met. In addition, LACMTA has a court-ordered consent decree to improve the city's bus service, a program which will cost the agency over $1 billion through fiscal year 2013.
FAA BUDGET EXECUTION AUDIT
Mr. WOLF. The subcommittee recently requested your office to look into deficiencies in budget execution controls at FAA. I know it is early to ask you for a report, but have you found any indications so far of problems in this area which you might share today?
[The information follows:]
We are not far enough along to have even preliminary indications of problems. If we do identify problems, we will bring them to the attention of the FAA Administrator and the subcommittee.
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Mr. WOLF. The GAO has reviewed the revised financial plan and has indicated that the remaining costs to complete the project total some $5.6 billion and that net project costs total $10.8 billion. In your opinion, have the Department and the Federal Highway Administration fully exercised their authority and ability to control costs on this federally-financed project?
[The information follows:]
No. Our ongoing audits have disclosed the need for FHWA to strengthen its control of Project costs in a number of areas. We have long maintained that Federal funds should not be used to pay for inefficiencies resulting from local Project decisions not supported for demonstrated need and not eligible for Federal participation. For example, our recent audit disclosed FHWA participated in certain costs to relocate a utility company's transformer substation. Two independent assessments identified approximately $10 million, of the $43.7 million relocation and construction costs, as ''betterments,'' not eligible for Federal participation. FHWA, however, accepted a total recovery of only $2.6 million of the $10 million. A similar situation was disclosed in our review of the State's exclusive use of police to direct motorists at construction sites. Again, this represented part of a pattern by the State of engaging in costly practices shaped by local political and economic pressures, when less expensive and more efficient means are available to accomplish requirements.
Mr. WOLF. Your audit indicated that FHWA did not determine whether certain improvements, or ''betterments,'' associated with the Cypress Freeway replacement project in California were economically justified. These betterments included replacing the 1.5-mile, 2-tier highway with 5 miles of single-tier freeway while adding new interchanges to improve access to local streets and port facilities. Is it your opinion that certain costs associated with the Cypress Freeway replacement project are ineligible for emergency relief funds?
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[The information follows:]
Yes. Betterments that are not economically justified to prevent future damage are not eligible for funding through the Emergency Relief Program, but may be funded through regular apportioned Federal-aid. We are of the opinion that FHWA should have deomonstrated that the betterments included in the Cypress Replacement Project were so justified, or they should have limited the use of emergency relief funds to the cost of replacing the necessary aspects of the freeway, and betterments needed to prevent future damage from natural disaster.
Mr. WOLF. There is a lot of talk about the FAA not having a cost accounting system which enables them to see exactly what their services cost. FAA is now developing such a system. Does Amtrak have a similar problem, or is their cost accounting good enough to help inform decision-makers on which services are the most cost effective?
[The information follows:]
As requested in the Amtrak Reform and Accountability Act of 1997, our office will oversee an independent assessment of Amtrak's financial needs and financial status. As part of this review, we have asked the contractor to look at how Amtrak allocates costs and revenues over and among its various business operations, and to determine whether these are accurate, appropriate and reasonable. If and where the contractor disagrees with Amtrak's methods of allocating costs, it will propose alternative means which it believes are more accurate.
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The independent assessment should identify weaknesses in Amtrak's cost accounting system and provide a foundation for developing a more accurate system.
Mr. WOLF. Let us take an adjournment for about 15 minutes. There will be two votes, and then I will be back and we will conclude.
JFK AIRPORT LIGHT RAIL PROJECT
Mr. WOLF. Welcome. We have just a few more questions. There is going to be another vote in a little while. Hopefully we can finish before that.
New York/JFK Airport, fixed guideway, revenue diversion. As you know, the New York-New Jersey Port Authority submitted an application to impose and use a PFC for a $1.6 billion light rail system at JFK Airport. If approved, this would be one of the largest surface transportation projects in the country. Furthermore, the approval of the application might become a precedent for an array of airport projects whose proponents will justify them as enhancing the capacity of the air transportation system. You issued a management advisory concerning the JFK application. What are your concerns?
Mr. MEAD. That this will not be the only project of its type, and that we need a policy about when we should approve passenger facility chargeswhich are, of course, imposed on people that are traveling in the aviation systemfor these land-side projects.
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Mr. WOLF. The staff tells me that it was approved this week.
Mr. MEAD. Yes, it was.
Mr. WOLF. All the money is going to come from PFCs?
Mr. MEAD. Most of it. There is no federal surface transportation money going to this project. Over $1 billion of the project will be paid for through a PFC. It is a land-side project. Part of it is a circulator at the airport itself, and there is precedent for that.
Mr. WOLF. The staff said that maybe the airport will not come in and ask for any more AIP grants, or will they come in and ask for AIP grants based on the fact of these PFCs? The documentation would indicate that the system, and I think New York makes decisions for New York, although we did go through this with Denver and with the BART system, if you recall, that it would consume all PFC-imposed revenues for LaGuardia and Newark as well as JFK through the year 2009. Is that accurate?
Mr. MEAD. That is correct. They will sustain a reduction in AIPs. The Administrator received our advisory on the 21st. On the 23rd she wrote to the port authority. Soon thereafter the port authority responded. A fair reading of the port authority's response is a commitment to fund all of the capital projects: the air-side capital projects, and safety and congestion relief project, that were in their capital plan. But it seems to us that you need a policy for this type of PFC expenditure. For example, take the Dulles access road.
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Mr. WOLF. We are next. We are going to get enough money to get the sleek system straight out to Dulles.
Mr. MEAD. After you get rid of those trams
Mr. WOLF. Hooray for LaGuardia and New York. It sets a precedent for us. I am just teasing. I am kind of joking.
I think, frankly, you have got to admit, New York has a terrific traffic problem, and to get to the airport is very, very difficult. I respect that, but we were concerned with regard to the precedent that is set, and we will take a look at what they say.
Also if it would consume all of the PFCs to the year 2009, what would the impact be on airport safety and security and also congestion? I guess that is a question that maybe you all cannot answer, but do you have any comments on it?
Mr. MEAD. I would tell you that what Port Authority officials have will essentially be nonexistent because they assure us they have enough money from other sources and commitments to fund airport safety and security and congestion. As to the question about why on a surface transportation project in the spirit of intermodalism, there is no surface transportation contribution, they said they don't have any surface transportation money.
Mr. WOLF. Well, if it is all coming out of PFCs, I guess I can see both sides of it, obviously. I can see that they do have a significant transportation problem in New York City, and that is a fact. If you have ever tried to get out to the airport at 4 o'clock in the afternoon, it is tough.
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On the other hand, what will the impact be on these other things? What you seem to be saying is that they really have to come up with a policy. The FAA needs to come up with a policy.
Mr. MEAD. Yes, sir. It is not our place to make a judgment as to what that policy ought to be, just that there ought to be one. A great deal of money is involved here.
Mr. WOLF. Because you were involved in the BART thing, or your office was involved in the BART thing. I did not know that it had been granted yesterday.
BASIS FOR TRANSIT FUNDING ALLOCATIONS
There is a great increase in interest by Members in funding fixed guideway mass transit projects. Has there been any evaluation whether funding decisions are based on accurate demographics or reliable ridership projections?
Mr. MEAD. We haven't done one.
Mr. DECARLI. There have been some in the past but nothing recent. I think the last one I saw was probably 5 or 6 years ago, and the indication at that point in time was the traffic projections were consistently grossly overstated.
Mr. WOLF. What additional process does FTA need to put in place to ensure that in such a competitive environment, funding decisions are made which are supported by the strongest economic analysis?
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Mr. DECARLI. We honestly haven't looked at that part of the decision-making process. Most of the funding that has taken place on those kinds of projects has been included and specifically identified in the appropriations request, so Congress and the administration are basically jointly agreeing that those are the chosen projects. We have not looked at the criteria.
Mr. MEAD. In other words, if most all of the pot will be earmarked, to what will you apply this type of analysis? That would be the question.
Mr. WOLF. Yes.
NEW YORK/JFK AIRPORT FIXED GUIDEWAY PROJECT
Mr. WOLF. The Port Authority's documentation indicates that the light rail system is expected to consume all PFV-imposed revenue for LaGuardia and Newark as well as JFK through at least the year 2009. Will this result in delays and postponements of airside projects which will have a direct impact on airport safety, congestion and security?
[The information follows:]
Funding for future airside projects was addressed in our January 21, 1998 management advisory to FAA on the New York and New Jersey Port Authority's application to use PFCs at JFK. We recommended FAA direct the Port Authority to address the following decisional elements:
Page 229 PREV PAGE TOP OF DOC Segment 1 Of 2 The extent to which the light rail project is likely to result in additional air transport passengers;
That sufficient funding is available to meet the capital needs of airside projects through the year 2009; and
Whether cost-sharing or the use of surface transportation funds to finance at least part of what is essentially a surface transportation project is appropriate in this instance.
In a January 23, 1998 letter to the Federal aviation administrator, the New York and New Jersey Port Authority assured the administrator that all its airside projects are fuly funded and will proceed according to its Capital Improvement Plan schedule.
Next Hearing Segment(2)