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WATER, COAST GUARD AND MARITIME ISSUES RELATED TO THE YEAR 2000 COMPUTER PROBLEM: ''Y2K: WILL WE GET THERE ON TIME?''
WEDNESDAY, OCTOBER 7, 1998
U.S. House of Representatives,
Committee on Transportation and Infrastructure,
Washington, D.C.
The committee met, pursuant to call, at 10:15 a.m., in Room 2167, Rayburn House Office Building, Hon. Wayne T. Gilchrest presiding.
Mr. GILCHREST. The committee will come to order.
I want to thank everyone for coming this morning, the witnesses, the members. We look forward to this fascinating modern subject of computer chips and what they have done to civilization and the human race. I guess if you are living in some remote area of Southeast Asia, it is not going to affect your day-to-day activities or your trade or your commerce or your education or your safety. It certainly has taken strong, unrelenting grip on the developed countries.
So we hope that we hear some good news this morning about how all of these problems have been resolved. But we want to welcome everyone to discuss the effects of this thing called Y2K, it sounds like a prescription for hair loss, and how it is going to affect the maritime industry. We have representatives from most segments of the industry on our panel today, and we look forward to your testimony.
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There are many unexpected problems that may occur because of many Y2K computer glitches, but the one we are most concerned about involves safety, especially safety of life and the environment. I am most interested today in hearing how vessel operators intend to safeguard the lives of their crews and passengers and how they intend to protect the environment from accidental spills of oil or hazardous substances.
I am also interested to hear from the Coast Guard and Maritime Administration on how they intend to address their Y2K computer problems and additional resources they need to fix their problems. Solutions to address their internal administrative problems are important, but it takes a back seat to safety concerns.
Finally, I think that the Coast Guard and the Maritime Administration must begin an aggressive outreach effort, possibly in coordination with the International Maritime Organization, to alert vessel operators worldwide of potential Y2K computer problems. Most of the vessels serving the United States are foreign flag vessels. We must ensure that they are doing what is necessary to prevent Y2K computer problems from causing maritime accidents in U.S. waters.
And we thank the panel for coming this morning. We do look forward to your testimony, and for us to become informed on the issues that you are involved in and how we also can help with those particular problems.
At this point I would like to recognize the gentleman from Tennessee, Mr. Clement.
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Mr. CLEMENT. Thank you, Mr. Chairman, for scheduling today's hearing on the Year 2000 computer data problem and the challenges it poses for the Coast Guard and the U.S. maritime industry. I might share with you and others, I have an economic summit every year in my district. I represent Nashville, Tennessee. And this year I had the economic summit on the Y2K problem, computer glitch or computer 2000 problem, however you want to describe it, and I had over 500 people that attended it.
And I do know that Diane Bunch is here, one of those that are going to testify today from Tennessee Valley Authority, and she was one of our participants. And also I had a speaker there, Peter deJager out of Canada, one of the first in the very early 1990s that announced to the world we have got a problem and we have got to solve this problem. I also had Michael Hyatt who wrote the book, if any of you hadn't read it, Millennium Bug. And I might mention to you to read that, because it is outstanding, and naturally he is from my congressional district as well, I might mention.
In the U.S. Coast Guard computers are integral to cutters and aircraft that conduct search-and-rescue missions as well as interdict drugs. In the commercial maritime industry, they provide for safe navigation of ships, control of loading and unloading of ships, and streamline the flow of cargo through our international transportation system. In short, our society has become so dependent upon computers that we cannot function without them.
If our computer systems fail, we won't be pushed back to simply the period before computers, we will be pushed back to the Stone Age, without water and electricity to our homes, cars to drive to work, ships to move our cargo or vessels to catch our fish.
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Today's hearing will allow us to help gauge the progress that the Coast Guard and the maritime industry are making towards solving their Y2K problem. It is going to be tremendously expensive for everyone and won't add a nickel to these companies' profit margins, but these computer problems must be fixed.
The committee has been holding a series of these hearings to examine the Y2K problems in our transportation industry. I look forward to hearing from today's witnesses on how these problems will affect the maritime industry and what is being done to solve these problems.
Mr. GILCHREST. Thank you, Mr. Clement.
Mr. Ehlers, any opening comments?
Mr. EHLERS. Thank you, Mr. Chairman. No particular comments on the topic for the day, other than the Y2K, one of my concerns is that we are hearing so much about Y2K at the moment. Even though everyone is interested in and alerted to it, and I think that is important, there is also a saturation factor, and I am a little concerned that, will everyone begin to take this for granted and not pay as much attention to it as it deserves?
On the other hand, you have some people, for example, those I heard about on the news this morning, who are cashing in all of their stocks, taking all their money out of the banks, buying gold, and planning on shortly before the Year 2000 starts going out in the middle of the desert in their campers and waiting a few days, and I think that is an extreme reaction. I don't think that is warranted either.
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The purpose of the hearing is to highlight the problems and to come to solutions. And I think that has to be the attitude of the Nation as well, not to regard this as the apocalypse or Armageddon, also not just the way that people often say, ''Oh, they will take care of it.'' Everyone has to be alert to the problem and deal with the problem, but deal with carefully, rationally, thoughtfully, and not panic about it.
Thank you.
Mr. GILCHREST. Thank you, Mr. Ehlers.
Mr. Boswell, no opening remarks?
Mr. BOSWELL. Thank you, Mr. Chairman. I just say this. I appreciate the comments that you, that both of you have made about the importance of this, and I know we are here to deal with this particular part of our needs today.
But I would just say to you, Mr. Chairman, that our insurance industry, and there are so many others out there that we may be waiting on to get to this settlement, because a lot of the payments that go under the HCFA and so on are through that. And I just applaud you for having these hearings and pushing forward, because we have got to move forward on this or we got a dilemma that we can't even imagine. Thank you for your efforts.
Mr. GILCHREST. Thank you, Mr. Boswell.
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I would assume that when Mr. Clement held an economic summit in Nashville, from a Maryland perspective that would be mostly country and western singers, but I guess that is—
Mr. CLEMENT. Well, no. But we would be very pleased to have you down there any time.
Mr. GILCHREST. We will have to come down there.
Mr. CLEMENT. Thank you. I don't know whether you like country music.
Mr. GILCHREST. I do. I am an Eddie Arnold fan, Chet Atkins, Buck Owens. ''Gettin in the Skillet Lickers'' is one of my best.
Mr. CLEMENT. All right, I will remember that.
Mr. GILCHREST. All right. Our panel this morning, we look forward to your testimony, and first up is Rear Admiral Naccara.
TESTIMONY OF REAR ADMIRAL GEORGE N. NACCARA, DIRECTOR, INFORMATION AND TECHNOLOGY, U.S. COAST GUARD; JOHN E. GRAYKOWSKI, ACTING DEPUTY ADMINISTRATOR, U.S. MARITIME ADMINISTRATION; KATHY J. METCALF, DIRECTOR, MARITIME AFFAIRS, CHAMBER OF SHIPPING OF AMERICA; AND C. JONATHAN BENNER, U.S. GOVERNMENTAL AND LEGAL REPRESENTATIVE, INTERNATIONAL ASSOCIATION OF INDEPENDENT TANKER OWNERS
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Admiral NACCARA. Thank you, sir. Good morning, Mr. Chairman, distinguished members of the committee. I am George Naccara, the Coast Guard's Chief Information Officer. I also have responsibility for the Coast Guard's Y2K project. I want to thank you very much for giving me the opportunity to testify before you today.
I will address four major aspects of the Coast Guard Y2K project: the repair of our own systems, our contingency planning initiatives, our outreach to the maritime industry and boating public, and our Y2K costs.
First, the Coast Guard Y2K program. We are engaged on an internal and external front in dealing with this serious international problem. We are working to ensure our information technology is ready for the millennium. We reported 75 systems as mission critical to the Office of Management and Budget. As of 30 September, the OMB renovation milestone, we have renovated 66 of the 75 systems.
Now, though we are very concerned about the delay in completing renovation work on all of the systems, we remain confident that all but one will be implemented by the final OMB milestone of March 31, 1999. That one system that will take a bit longer to renovate is the Vessel Traffic Service for Prince William Sound in Valdez, Alaska, a major component of which will be replaced at a cost of $1.2 million by summer of 1999. All told, I can say with confidence that all Coast Guard mission critical systems will be ready well before the dawn of the millennium.
On the operational front, we consider our ships and our airframes as integrated operational systems. During 1999, we expect to participate with the Navy in operational evaluations of these platforms. The Coast Guard will be ''Semper Paratus,'' just as our motto states.
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My second major point today is our work in preparing contingency plans. We are certain that errors will appear in repaired systems, both during testing and then during actual operations. Independent testing contractors have found up to 10 percent error rates in systems that have been repaired and tested by their owners. For this reason, we have directed our unit commanders and our headquarters program managers to prepare contingency plans for all systems that are important to the functioning of our units.
To prepare on a national level, the Coast Guard has launched a continuity of operations initiative. We recognize the potential for disruptions across the country, in public infrastructure, among suppliers and business partners, and in the industry we regulate. Therefore, we are convening a national planning meeting in St. Louis tomorrow just for this purpose. By mid-1999 this team will ensure that we have issued planning guidance and an operations order for this operation.
My third point today is a major focus on outreach efforts to our partners and customers in the marine industry. As you may realize, the United States economy is extraordinarily dependent upon maritime shipping. More than 50 percent of the oil consumed in this country come to us by ship. Ninety-five percent of all the cargo entering the U.S. comes via our ports and over 97 percent of that in foreign ships. Disruptions for even a few days would have a discernible effect on our economy, particularly during the winter heating season.
We should ensure that the ships and the ports are ready. I have and will continue to lead regional Y2K awareness conferences on the East, West, and Gulf Coasts, as well as in the Great Lakes region and on the inland rivers.
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We are distributing Y2K awareness brochures to merchant vessels, to shoreside facilities, cargo transfer terminals, and to the recreational boating public. We have information about Y2K on our Web sites, and information on the Global Positioning System rollover is disseminated by our Navigation Information Center. We published a notice on the Y2K problem in the Federal Register, and we have persuaded the International Maritime Organization to issue a circular on Y2K.
In cooperation with other agencies and the Department of Transportation, including MARAD within our ''one DOT'' concept, we will continue these efforts into 1999 with increased emphasis on contingency planning. I would like to emphasize that the Coast Guard will stress aggressive Y2K education and awareness with the maritime industry. By capitalizing on the powerful economic incentives the industry has to avoid delay, we can help ensure they prepare their technology for the millennium. Of course, we can also exercise our broad authority to ensure safety in our ports and on vessels, and we will ensure vessels are safe and seaworthy.
And now the cost of the Y2K efforts. Needless to say, the repair, the contingency planning and our outreach efforts have brought with them ever-increasing costs. The estimate for overall Coast Guard stands at over $35 million, including $10 million already insured through fiscal year 1998. This is an amount that raises for us the possible need to consider prioritization among operational missions.
I hope that the committee will work with us in doing all that can be done to ensure the Coast Guard, the maritime industry and the U.S. economy are not significantly disrupted by the Y2K problem beginning just 450 days from today.
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Thank you very much for this opportunity, Mr. Chairman. I would be happy to answer any questions you might have.
Mr. GILCHREST. Thank you, Admiral.
Our next witness is Mr. John Graykowski, Acting Deputy Administrator for the U.S. Maritime Administration. Good morning, sir.
Mr. GRAYKOWSKI. Thank you, Mr. Chairman, good to see you again.
This truly, this issue of Y2K, it is timely that you hold this hearing and it is something which affects all aspects of life, as a number of the members have referred to, and none more critically nor more importantly than the maritime industry. As Admiral Naccara stated, we have got 450 days between today and the start of the new millennium, which is not a cliche. I don't think we are overreacting, because of the breadth of this problem or potential problem.
I can state to you and the committee categorically that neither MARAD nor the maritime industry generally underestimates the seriousness of this issue. What we have done so far and what we will continue to do each and every day between now and the end of the century will dictate whether we enter that new millennium with confidence or with great concern.
Within MARAD as an agency, we have made great progress to meet the problems presented by Y2K, and we are confident that our internal systems will be ready by the end of next year. We have completed the assessment and renovation of all mission critical application systems in both the headquarters and the field. The validation process has begun, and we will meet the January 31, 1999 deadline set by the Office of Management and Budget.
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We have committed over the previous years and into the next year a total of $2.7 million to complete the Y2K effort. We have also done a complete assessment of the impact of Y2K on the Ready Reserve force and developed a renovation plan for the fleet. Completion of the RRF renovation is expected by 31 December of this year, however, due to the need to schedule equipment repairs based on the delivery of Y2K compliant components by vendors. We will, however, take advantage of any opportunities to accelerate the schedule wherever possible within the constraints of our budget.
With respect to the maritime industry generally, and I appreciate your remarks, Mr. Chairman, we have taken a very active and proactive leadership role in reaching out to the industry. We have a program within MARAD that has been in existence for some time called the Ship Operations Cooperative Program, and that involves most of the elements of the industry, including international maritime organizations. We have placed Y2K at the top of sort of the agenda and the working issues of the so-called SOCP.
We have an Associate Administrator by the name of Jim Zok who has been leading the efforts on Y2K, and we have gone to the industry in a very direct, consistent and persistent manner to tell them that in fact this is a problem, the clock is ticking, and we have to move now.
I would like to note the presence of Kathy Metcalf from the Chamber of Shipping of America, which has really taken up the task and gone to their membership at the next level to make sure that our message is not only being heard but it is acted on by the industry. The industry's need to prepare for Y2K as it relates to their own internal systems, just as we faced in the government, is a tremendous challenge. It is both land-based and vessel-based systems.
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Internal systems on the vessels, the vessels themselves are operated or controlled by computers today; that would be navigation, timekeeping, engine propulsion, communications, cargo operations. Essentially all aspects of ship operations are now computer dependent. Every automated or semiautomated function will need to be inspected.
Many operators have moved to the so-called unmanned engine room, which is completely dependent on the operation of a computer for the safe and efficient operations of the ship. Even something as simple as operating security gates at the ports are dependent on computers.
With respect to external systems, you have got the whole financial structure of the companies. You have got the Electronic Data Interchange which helps cargo move, and we have spoken about that earlier, throughout the world in a seamless intermodal fashion. All that is computer dependent.
Mr. Chairman, I would note that we have spoken with the Port of Baltimore, and that may be of interest to you. They indicate to us that all internal systems will be complete and Y2K compliant by August of this next year, so they are well along as one example of the port industry response to this. But I think that they are emblematic of the whole port industry's attention in regard to this problem.
I would like to also compliment the Congress and thank the Congress for passage of last year's Y2K Information and Disclosure Act. That provided a great breakthrough and removed some of the concerns that were real or perceived with respect to information sharing and collaboration. I also note that the Coast Guard and MARAD have worked together in a complementary fashion.
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The ''one DOT'' notion that you have heard a lot about is really being brought to bear as a practical means of addressing this problem to a common constituency, namely, the maritime industry. And George Naccara and myself and our agencies work closely, again, to make sure that the message is out there being heard and to work with the industry on common solutions.
In like fashion, international organizations are also tied in through the Coast Guard and through MARAD to also address this, because you have got all different levels in the global reach of the maritime industry, all of which must come into compliance or the whole system may be out of kilter.
In conclusion, I want to say that we do recognize the Y2K problem in the maritime industry. We have moved forward aggressively, led by the Secretary and the Deputy Secretary, to do that. A lot has been accomplished to date. But we have 450 days, 449 after tonight, and we at MARAD and the Coast Guard and the department are going to wake every one of those days with the knowledge that we have to make sure that when that day comes, we have the safest, most efficient maritime transportation system.
Thank you.
Mr. GILCHREST. Thank you, Mr. Graykowski.
Our next witness is Ms. Kathy Metcalf, director of Maritime Affairs, Chamber of Shipping of America.
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Ms. Metcalf?
Ms. METCALF. Thank you, Mr. Chairman. Good morning, Mr. Chairman, distinguished members of the committee. My name is Kathy Metcalf. I am the Director of Maritime Affairs at the Chamber of Shipping of America. It represents U.S.-based companies which own, operate and/or charter a variety of marine vessels, including tankers, container ships and other types of vessels.
These vessels are engaged both in the domestic and international trade, and as such my testimony would address both of the international and domestic interfaces we think are important here. Likewise, Mr. Chairman, we have submitted a written statement which we would request be entered into the record.
Mr. GILCHREST. Without objection.
Ms. METCALF. Thank you, sir. We do appreciate this opportunity to testify. And, most importantly, we appreciate the recognition of this and other congressional committees that this is an important problem and it is a problem that is only going to be solved by facilitation of active and ongoing dialogue between all the stakeholders. The solution cannot be effected in a vacuum. A microscopic analysis, system-by-system, will result in a bunch of systems that work fine but fail to talk to each other.
Today we are not testifying as information technologists. We are not the people that design the black boxes or build the black boxes. We are the people that use them. And from this perspective, it is these users of these black boxes that need to accept this as a management challenge. It is not a computer problem, it is a management issue. The technical challenge can only be begun after the management process has identified the sources of the problems.
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Obviously the marine transportation industry is international in scope, and it involves both onboard and shoreside systems relating to the navigation of vessels, cargo operations, terminal operations, shippers, the land-based transportation network, important waterways infrastructure, and the government systems operated by various agencies, which include the Coast Guard, the Customs Service, Maritime Administration and the FCC.
Also, we need to be concerned about these similar systems in foreign countries. Will our trade or maritime trade be able to operate uninterrupted because another country's custom cannot clear a vessel into its ports? There is an old marketing concept, and that is, before you design any system and send it out for final processing, you need to turn yourself into that piece of paper or that piece of data that will run through the system, and as you run yourself through the system, look at what touches you as you move through it.
The Chamber of Shipping, at the request of our members, Mr. Chairman, have done that process with respect to a single vessel voyage. We have become the ship and processed through the predeparture testing that occurs on the bridge, the lines let go, the process down the transits through the navigational channels to the sea transit to the arrival at the next port, customs clearance, cargo operations, et cetera.
And in doing so, we have found that we have come up with a 4 or 5-page inventory of some pretty important systems. That inventory is just the starting point, however, because the next phase is to look at each of those systems, assess their Y2K failure points and develop the contingency plans.
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Mr. Chairman, this has been an active issue on our members' agenda for the last 3 years. We have also participated through the IMO process in discussions there, and as the Admiral mentions, through the efforts of the United States a paper has been proposed where a circular will be issued by the Maritime Safety Committee addressing this issue.
We have also, with our members and others, provided key contacts, not only technical contacts that are the information technologists, but also colleagues in the international maritime industry, so that a ''lessons learned'' dialogue could be begun.
Marine manufacturers are not to be left out of this process as well, because they are an integral part in solving this problem aboard ships. And as Mr. Graykowski mentioned, we have met with the Maritime Administration. We have also participated initially in the International Trade Sector Working Group, the President's Council on Y2K, and also look forward to the transportation sector meetings.
Finally, we have informally polled our members, and without exception, each have plans in place and underway. Some have completed the assessment phase and are actually in the contingency planning phase, but they are all, without exception, doing something on Y2K.
We are also, the staff in the Chamber of Shipping, working on the preparation of a generic marine transportation contingency plan that will take our inventory of systems and identify potential contingencies, not to eliminate the risk but to mitigate it, to manage the risk.
As a maritime trade association, we believe there is more we can do, and we think coordinating the efforts among our colleagues in the industry with the outreach programs by the government agencies is an excellent start. We think the external interfaces are a key issue here, not only because of their sheer number, but because an entity has no control over the Y2K progress of an entity that is an external interface, whether it be a government agency or a company.
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In the case of a business transaction, customers can make business decisions based on the Y2K process, but we don't have that choice with government agencies, and we look forward to working with our colleagues in the government agencies to address this problem. We are also pleased to work with your committee, the President's Council, and any other interagency groups where you think we may be of value.
Again, we consider this a management issue, not a computer issue. And it is not the responsibility of the IT folks to solve this, but rather those of us which own, operate and manage vessels on a day-to-day basis.
Thank you for the opportunity to provide testimony, I would be happy to answer any questions.
Mr. GILCHREST. Thank you, Ms. Metcalf.
Our next witness is Mr. Jonathan Benner, U.S. Governmental and Legal Representative, Interdependent Tanker Owners, INTERTANKO. Welcome, Mr. Benner.
Mr. BENNER. Thank you very much, Mr. Chairman, and members of the committee. INTERTANKO, as you know, has appeared before this committee on a number of safety issues recently, and we very much appreciate your focusing on this particular development. It is a daunting task, for reasons that have already been stated, to try to ensure that this does not result in a major threat to marine safety and the environment. But a great part of the preparation for Year 2000 is information and communication, and this is part of that process.
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INTERTANKO consists of approximately 300 independent tanker owners. These are the owners who are not owned by governments or by oil companies. That portion of the tanker fleet has grown over the past few years, and right now we estimate that more than two-thirds of all the imported oil coming into the United States is carried on INTERTANKO ships.
There are approximately 2,000 tankers in the INTERTANKO fleet, so this is a very substantial portion of the international fleet. Our members come from over 40 nations, including the United States, and there is a considerable overlap between some of our members and some of Ms. Metcalf's members. Much of what she has said applies to INTERTANKO's approach to this problem.
We have submitted a written statement. I ask that it be included in the record of the proceedings, and I will summarize that statement.
Mr. GILCHREST. Without objection.
Mr. BENNER. I will focus on onboard issues, but it should always be understood that like any other commercial concern or company, tanker owners have the very same problems internally in the shoreside operations that are by posed Y2K to any other company. But we have made great safety strides in the tanker community in the past 15 years. We are proud of how far we have come, we are proud of the effort we have put into it, and we have to treat this particular issue as a threat to that progress.
We can't tell you with any certainty what is going to happen. We can't even tell you whether this threat is as dire as some people have painted it, but we do know that we have to treat it as if it were. The potential is there. As responsible operators, we just simply have to go through the process of trying to do our very best to ferret out the sources of the problem, identify them and remove them.
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We don't have any magic solutions to the problem. A lot of people in this country and overseas wish they did, but one of the ironies here is that it is a very high-tech problem and the solutions require a very low-tech application. This requires sheer doggedness in getting an inventory of the systems that are involved and, as Ms. Metcalf said, trying to make sure you understand the links to other systems, because if you get your head down too much inside one vessel or one company or one fleet and you miss the external links, all your work is for naught.
But the process is going on. We was trying to find where the vulnerabilities are. There is no one answer to this. Ships vary a great deal in terms of their degree of dependence on computer and microprocessor technology. It depends on the size, the age, the type of vessel, so you can't impose one solution on every owner and every fleet. You just have to walk through from the ship to the company to the links with other owners.
We can identify areas about which we are concerned. Some of them have already been mentioned: navigation systems, the telecommunications systems between ship and shore within the company itself, the real time propulsion controls in the engine room, cargo monitoring. That kind of thing has already been mentioned, I believe, by Mr. Graykowski.
We are going more and more to fairly sophisticated systems for monitoring engine performance and other systems performance. The more sophisticated those are, the more vulnerable they are to this type of problem. Alarm systems, strength and stability monitors, those are the things that we are looking at very closely.
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A lot of what we are doing, I confess, consists of just changing out the systems. Where we identify potential vulnerability, even if the software, the hardware, the equipment is potentially useful in every other respect, we are simply replacing that with equipment that we know to be Y2K compliant. So there is an enormous cost involved in that for the vessel owner. It just has to be done. That seems to be the approach that has to be used.
As mentioned before, we are concerned about links to such systems as navigational aids and loading monitors. We are concerned we can have a vessel that is totally Y2K compliant and it won't be able to operate at a terminal because there is a problem in the terminal interface. Again, this is the thinking that has to go into how we get through this.
How do we solve this? We communicate. We just have to communicate. We have to get our own house in order, and we have to be in touch with other organizations. The United States Government has provided a clearinghouse for that in many ways through the efforts of organizations like the Coast Guard and MARAD, and that is extremely helpful.
Another concern that we have, and this may be where the big crisis is awaiting us, is in the liability regimes that attach to possible outcomes from Y2K problems. The maritime industry, as you know, has developed over centuries peculiar and useful liability regimes, limits on liability, and insurance structures that meet the specific needs of operating in this environment. All of these traditional modes of protecting ourselves commercially seem to be stressed by the possibility of major damage caused by Y2K.
We have to watch those costs. And we realize that this is a problem, and it has to just be addressed at all levels, not just in the technical field, again, as has been said earlier, but in the institutional field in providing ways of dealing with possible economic outcomes.
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I would be happy to answer any questions you may have about this testimony.
Mr. GILCHREST. Thank you, Mr. Benner.
You mentioned that all of your ships could be fixed within the next year, year and a half, but they could come up to a terminal or a port that had still had not come up to solve their Y2K problems and then you would have a problem.
Are there any terminals or ports in the United States or around the world that you may have a suspicion that they are not coming up to speed on this quickly enough?
Mr. BENNER. I certainly can't name any at this time, and I don't want that to be misunderstood. In other words, we are not indicating that we suspect that the terminal industry or the port industry is behind the vessel industry. We are fairly confident that everybody is concerned about this problem, is working as hard as they can to solve it.
I use that as an example only to indicate that if there is a problem or a disparity at the links between the vessel and the terminal or the vessel and the navigation system, all the good work that has gone on on the other side may be for naught, and this is a problem that exists independent of Y2K.
INTERTANKO spent a lot of time before this committee and others lately trying to make sure that we are upgrading our navigation and infrastructure systems. The whole marine transportation system is only as good as its weakest link, and that is really the point we are trying to make there, not that there are specific areas we are concerned
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with.
Mr. GILCHREST. Would anybody on the panel recommend to this committee or to the Maritime Administration that there may be some areas that need some extra assistance? Admiral?
Admiral NACCARA. Mr. Chairman, that is a good question, which we have tried to reconcile with the ports around the country. We have an ongoing port assessment effort through all of our capital ports, and they are trying to determine how ready the ports are. As Mr. Graykowski mentioned, Baltimore expects to be prepared by August of '99; that is probably out of the ordinary from what we have seen thus far.
Mr. GILCHREST. You are saying that is out of the ordinary?
Admiral NACCARA. Yes.
Mr. GILCHREST. In what way?
Admiral NACCARA. I think they that are probably ahead of many of the ports.
Mr. GILCHREST. I was going to say August of '99 just seems to be skating on fairly thin ice.
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Admiral NACCARA. Yes, sir. We have worked with Hampton Roads recently, and they have a team established in their Port Safety Committee, for example, which is focusing on all of the elements of the ports. And they discovered, for example, in a cargo crane about 200 different embedded chips have to be replaced or repaired, and that was just one system.
So they are coming to grips with the magnitude of the problem, and I think in fact we suggested to them to establish a Web site for that port, to share it with other U.S. ports and foreign ports. They or Baltimore could perhaps become a symbol of the right way to go about that problem.
Mr. GILCHREST. So if Baltimore is August of—Baltimore is ahead of most other ports in the country, or they are the lead?
Mr. GRAYKOWSKI. Mr. Chairman, you know for some reason we just picked Baltimore as a port we wanted to check with.
Mr. GILCHREST. I don't know why you picked Baltimore.
Mr. GRAYKOWSKI. I like that port, but—
Mr. GILCHREST. It is Helen Bentley.
Mr. GRAYKOWSKI. I think we have to probably survey the AAPA. In fact, they are meeting this week, and I am wondering whether Y2K is on their agenda. The reason—
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Mr. GILCHREST. Who is meeting this week?
Mr. GRAYKOWSKI. The American Association of Port Authorities annual meeting is right now.
Mr. GILCHREST. Where are they meeting?
Mr. GRAYKOWSKI. Houston.
Mr. GILCHREST. And this is on their agenda?
Mr. GRAYKOWSKI. I am wondering. I am asking rhetorically. I don't know for a fact whether it is.
Mr. GILCHREST. It is.
Mr. GRAYKOWSKI. Ms. Metcalf indicates that it is. The August '99 date for Baltimore you mentioned is skating on thin ice. I kind of look at that as kind of a pretty good indication that they are on top of it, because it is not just that the systems will be bought or in place, I am also informed that they will be fully validated and operational by August '99. So they are on track and obviously, like with everything, it is a function of budget, procurement, things like that.
Mr. GILCHREST. So is there a fairly free flow of communication, let's say between INTERTANKO, Ms. Metcalf, your Chamber of Shipping, the Maritime Administration, and the Coast Guard, with all of the interested parties, which I would assume includes national, international shipping, the whole intermodal system, so that all of the links to the Y2K problem that deal with the maritime industry, both national and international, are being worked through?
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Admiral NACCARA. I think there is an international effort, Mr. Chairman, to sensitize all involved in the industry with respect to the Y2K. Recently the Protection and Indemnity clubs, P&I clubs, insurance underwriters for the maritime industry, held a series of six meetings around the world, and they represent the great majority of all the vessel owners in the world. And they have provided a tool kit, for example, to every vessel, every master on every vessel, to use to analyze their problem. They are very concerned about the problem, and they say it may even affect the insurance rates if people do not comply or do not attempt to comply.
Mr. GILCHREST. So the liability issue, if an individual or a ship or a port complies and completes their Y2K solution, then the liability issue shouldn't affect them?
Admiral NACCARA. A difficult question.
Mr. BENNER. It should not. The problem we have is not in the situations where we get a complete fix within a company. The problem we are concerned about is where something has been missed. The nature of this problem, because of its layers of interlinks and the imbedded nature of some of these processors, almost dictates that we are going to miss some things. It is going to happen.
Now, it may be totally unnoticeable when that happens, it may have some fairly drastic results, but what we are concerned about are those areas where we have missed something. We just have to be as thorough as possible. And that is where the liability and the insurance issues are going to arise, and it is very hard to speak hypothetically, looking forward now, about how that is going to sort out.
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Mr. GRAYKOWSKI. Mr. Chairman, if I can add two things.
Mr. GILCHREST. Yes.
Mr. GRAYKOWSKI. One, these two organizations represent sort of not only the majority of tonnage but the top tier of companies and organizations, maritime companies throughout the world, certainly INTERTANKO and the Chamber on the domestic side. There are a substantial number of ship owners, however, that don't belong to these organizations and that are running less than sort of first class, if you will, tonnage, and, again, am I going to spend the money on a 25-year old ship that I am only going to keep—so that calculus is going to operate.
And on the liability side, Protection and Indemnity, P&I clubs, are doing—are providing that incentive. As I understand, they are going to write exclusions in the policy that if you haven't done this and there is an accident which is attributed to lack of compliance, then there will be a problem gaining insurance coverage. And I think that is a good move on the P&I clause because, again, the top-tier operators cannot operate without protection and indemnity insurance.
Mr. GILCHREST. If a ship coming in—this is my last question, and I will go to Mr. Clement—if a ship is coming, let's say, that it is evident that they haven't fixed their computers, and I don't know anything about computers so I don't know what is going to happen, would or could the Coast Guard stop them from coming into a port?
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Admiral NACCARA. Absolutely, Mr. Chairman. We have broad captain and port authorities. And typically we would perform certain drills and exercises before the vessel enters port or immediately upon entering our waters. Now, we will alert all of our ports and our inspectors to that particular issue for next year.
Mr. GILCHREST. Thank you.
Mr. Clement?
Mr. CLEMENT. Admiral, what Y2K problems in the Coast Guard won't be fixed by January 1, 2000, and what problems will this create for the Coast Guard?
Admiral NACCARA. Sir, I think that we have done all that is possible within our budgetary constraints to this point in identifying the Y2K impacts on our systems. I have no doubt there will be failures due to external interfaces, due to imbedded chips, and I am very concerned about the foreign flag vessels that enter our ports which are generally beyond our control. Seven thousand five hundred to 8,000 foreign flight vessels enter our ports each year. We don't have any control, essentially, until they come into our waters.
Our external interfaces, we have literally thousands of them which affect our logistics and our supply and support functions in the Coast Guard. We have written letters to virtually all of our external interfaces, all of our suppliers. Perhaps 20 percent responded, and that is a serious cause for concern.
As part of our contingency plan, we must consider those types of failures in the chain of support. That may mean we have to increase inventories. That may mean we have to prepostion people in certain areas, in certain critical ports, and so forth. Those issues will all be taken into account as we work through our planning process.
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The imbedded chips are a very troublesome issue. We are trying to come to grips with the magnitude of that problem. Quite frankly, it is ironic that all our older platforms and older telecommunications systems are not quite as affected by the Y2K problem issue. Nevertheless, we are focusing on our platforms to ensure that they will still be operational.
Mr. CLEMENT. To follow up on what you just said, what systems on commercial ships can pose a threat to the safety of our waterways if Y2K problems on board these vessels are not fixed adequately?
Admiral NACCARA. Of particular concern, sir, would be the navigation systems on the bridge and the main propulsion systems, and we will focus on those. We have authority to require testing of actual site operations on those systems.
We have not—one last point, sir—we have not taken any definitive regulatory or legislative action, nor do we seek that at this point. The approach is make the vessel owners and operators aware of the problem, to educate them to that problem, and we feel we do have that authority already if we need it to ensure safety in the port.
Mr. CLEMENT. Well, Admiral, how does the Coast Guard define mission critical systems? For example, are telephone systems, secure communications systems, power sources and heating systems mission critical?
Admiral NACCARA. Many of those are, sir, particularly, the communications systems. We tried to use the OMB broad definition. Quite frankly, it was 75 mission critical systems back a year and a half ago. If you were to ask me that question today, I would say perhaps 500 mission critical systems, all of which are absolutely necessary for the Coast Guard to perform our missions. We have a master list which is more than 600 systems. We are paying equal attention to those systems, also.
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Mr. CLEMENT. Mr. Graykowski, to what extent are Y2K problems in our intermodal transportation system being examined as a system, and is any one looking at every stage of transport from point of origin to point of destination to determine where problems will occur?
Mr. GRAYKOWSKI. Yeah. That is—you have raised a very good question, Mr. Clement. I think each of the individual industries are addressing it in various ways. This would be rail, trucking, and we have discussed the ports and maritime. I think that over that you have got the OMB and John Koskinen effort which is trying to poll all segments of the industry.
And I think frankly, based on a meeting, senior staff meeting we had with the Secretary of Transportation a week ago, his message to all of us—he is going to be speaking, I think it is at ACTI, very soon, and Gordon Litton is going to be there on the transit side—he was saying we all know in DOT what we have to do. I think it is exactly what you are getting at, and that is start tying the entire system together.
And I guess I would have to say I am not aware of and I am not sure there exists that type of coordinated effort, sort of looking at it intermodally. But you raise a perfect sort of issue and point, that I think we need to do that to, again, make sure all the pieces fit together, just as they do in the brick and mortar side or concrete side. We have got to make sure these systems interface. And the in-transit visibility, the electronic data interchange which I have spoken about which allows us to track cargo all the way, isn't going to work unless all the pieces are working together.
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Mr. CLEMENT. Well, Mr. Graykowski, are all U.S.-flag vessel owners in our international trade going to be Y2K compliant by January 1, 2000?
Mr. GRAYKOWSKI. Well, I guess the—almost a flip answer would be, I don't think they can afford not to be, frankly. And given the fact that you have got this organization with Ms. Metcalf and INTERTANKO which are absolutely good leaders, big leaders in the industry, I think they are going to get there.
Mr. CLEMENT. What about the foreign flag vessels?
Mr. GRAYKOWSKI. As I referred, you have got, I assume, BIMCO—I am looking down to Jonathan. There are international organizations. BIMCO, I referred to, has a considerable amount of foreign tonnage under its auspices as an association, and they pride themselves on quality. They moved forward on ISM, as an example, and standards of training and certification and watch keeping, sort of pushing the bar higher and saying we have to have quality as number one.
But, Mr. Clement, there are always going to be a certain percentage of operators out there that don't have the same regard for safety, don't make the same investment in new equipment, and they are going to run their ship until the last possible day that that ship can possibly float and carry cargo. And I suspect those folks are not going to make the investment or take the effort.
Mr. CLEMENT. Well, should we deny entry to U.S. ports to those ships?
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Mr. GRAYKOWSKI. I am going to—George can take that. But he stated very emphatically we have the authority to do that if indeed it becomes required. This is a safety issue. But you are the expert, George.
Admiral NACCARA. As I said, sir, we do have that option. It is a very serious point of debate, and then we discuss it internationally at IMO. Some other flag nations around the world are taking such actions. They want to see the evidence of compliance. It is a very difficult issue to enforce, in my mind, to have inspectors come aboard perhaps they will have a piece of paper that says that piece of equipment is compliant, yet you cannot put great faith in that.
Testing does not always reveal a problem. Actual operation, as I mentioned before, 10 to 20 percent of the time has revealed problems despite all testing, despite all documentation. So we are facing a very serious problem. If these vessels under our port state control program have been highlighted as problem vessels, perhaps we will require additional tests for them. We may do that, sir.
Mr. CLEMENT. Ms. Metcalf and Mr. Benner, what are P&I clubs doing with respect to Y2K problems, and what is their liability for accidents resulting from Y2K problems?
Mr. BENNER. As was mentioned earlier by Mr. Graykowski and Admiral Naccara, the P&I clubs have been a fairly strong leader in disseminating information and sensitizing people to the need to address this. A couple of them have been very active contributors to Web sites that are very carefully watched on this issue right now. Obviously, they have a very important financial stake in this being resolved properly.
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We, our members, watch our clubs very carefully because it is an issue of coverage, and nobody can operate in this environment without adequate insurance coverage. And we are getting signals, very strong signals that our insurers expect our members to do everything they can to resolve the problems. So they have been, like MARAD, like the Coast Guard, they have been out there pushing us, sensitizing us to get the problem resolved.
And, Mr. Clement, while I have the floor for a moment, I wanted to go back to this foreign flag-U.S. flag issue, I think we will miss the issue if we start thinking of it in those terms. I think this is a responsible operator versus nonresponsible operator issue. And within our organization, we have vessels from a number of different flag states, including the United States, and I have not detected any differentiation in dedication to the resolving this between flags. That tends to be the case with most safety issues right now. So the trick is to make sure that that atmosphere is maintained there.
Mr. CLEMENT. Will insurers cover accidents from Y2K problems, since it is not considered to be an unavoidable or unpreventable fault?
Mr. BENNER. Well, again, it will depend on the circumstances, but I think that companies that are not conducting effective Y2K programs will pay for their lapses out of their own pockets. I think that is what is generally going to happen here.
And I think the real issue is where you get good faith efforts to comply and yet you have a problem. That is what we don't know the answer to. But I think insurers are sending very strong signals they will not provide coverage for people who are negligent in their approach to solving this problem.
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Ms. METCALF. Mr. Clement, one other liability issue that we have identified, and takes it a little narrower than the P&I clubs, and that is relative to specific pieces of equipment. And as you are acutely aware, Congress has taken some action recently to try and promote the exchange of information on Y2K issues related to particular pieces of equipment or systems.
But there is an issue out there and we have received mixed responses, not only from our members but from our international colleagues, BIMCO, the International Chamber of Shipping, as to the ability or the desire of other entities that supply equipment to vessels, to provide Y2K advice on particular pieces of equipment. And their concern, as related, is not only to the liability for providing advice that may not later work, but also general warranty issues relative to the performance of the equipment. I just bring that up as another tier of liability.
Mr. CLEMENT. What Y2K problems have you identified at our port facilities where you discharge cargo and unload petroleum?
Ms. METCALF. As far as cargo operations, particularly relative to petroleum products, you have a lot of automatic systems. I hate to say this, but in the days when men were men and boys were boys, and I found myself stepping on the deck of a ship, standing a deck watch, those were the old days where you could actually see the stuff come up in the tanks, where you didn't particularly sit in the cargo control room, you were out there on the deck topping tanks off, likewise on the bridge of a ship.
There are still engineers down in the engine room versus automated control on the bridge. That is not to say there are not folks down there, but they are down there for particular purposes rather than to just stare at dials.
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In the cargo operations respect, there are a lot of automated cargo operations relative to valve opening and closing, tank gauging and monitoring equipment, and uniquely enough we think of this problem as a software systems problem. But there are a lot of systems out there that aren't really these big computer systems, they are little pieces of equipment with one imbedded chip that can fail.
And the point I bring is, that tank monitoring device for oxygen and explosive limits, they can have one chip in them, and they need to be Y2K tested or they are going to get a faulty response, and that is also as miniature as our members are getting, looking at systems. Sure, there are systems out there, shore tank gauging systems, flow monitoring systems throughout refineries and terminal operations, and you can take that all the way down to the distribution line through the refineries into the terminals, into the tank trucks and the rail cars as well.
Mr. GRAYKOWSKI. I just participated in the christening of three brand-new tankers down in Newport News for the VD Corporation, and you would be amazed at how large the ship is how few people there are. And just as Ms. Metcalf said, it is worth your while to visit, and Mr. Gilchrest up at his port could arrange this. You have to—everything the ship is doing, for instance, keeping it in trim and balance as you are discharging the tank, tank overfill, all of that is run by a bunch of computers and lights, opening and closing valves, and maybe two people watching the whole operation. And so very serious things could happen very quickly if one chip fails.
Ms. METCALF. Sir, I didn't want to prolong this, sir, but the one thing I would say, and I think the Admiral will support me on this, is we are very much in touch with the human element. It is a very broad-brushed Coast Guard program in the way we are approaching this, agreeing with Mr. Graykowski.
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But also I think he just identified a solution to the Y2K problem, and that is, we still have human beings on board those vessels and those human beings are the prime decision-makers on those ships. All the electronics and all the chips and all the software systems are simply tools to help them be more efficient in what they do.
Therefore, one of the solutions or probably the most important solution to the Y2K problem is to identify the fact that we still have human beings on there, and that the backup system for some of these computer outputs is the human being watching or looking, evaluating the situation and being there ready if a chip fails at 1/1/00 or 9/9/99 or the myriad of other dates that have been identified.
Mr. CLEMENT. Thank you.
Mr. GILCHREST. Thank you, Mr. Clement.
I just have a couple of real quick questions, because I know the next panel is up. Mr. Horn is going to chair the next, I think, the next panel.
Ms. Metcalf, you made a comment in your testimony about going through the whole process, from the time you release the ropes on the ship to the time you reach the next port, to try to assess what needed to be done. Based on that analysis, do you have any or does anyone have any idea as to what the weakest link in this whole scenario is likely to be?
And I understand, Ms. Metcalf, I think you stated very well that the strength of this is it being managed properly, and realizing that you have human beings on these ships that will deal with any small little chip that happens to fail, and how they react to it. But is there any idea as to the weakest link in this whole thing?
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Ms. METCALF. Mr. Chairman, I think the weakest link in the system is not on board a ship or within a terminal or within a government agency. I think the weakest link in a system is making sure that we have built the spiderweb we need to build so that everybody is making sure that the process will flow; and that, again, we can't walk across the street and eliminate the risk of that, but to manage the risk in a manner much like we do every day when we operate vessels or do our daily activities.
Mr. GILCHREST. Thank you.
Admiral, or Mr. Graykowski, is there a consensus? Has this been, in your opinion, thoroughly aired at the IMO so that the international maritime community is really collectively together on this thing?
Admiral NACCARA. I think it has been aired satisfactorily to this point, sir. I think we have an ongoing effort at the other committee and subcommittee meetings to continually discuss it, so as to touch different elements of the industry. It should be addressed constantly. It is still the awareness education approach at IMO, similar to our approach here, and over time it will be adequate, yes, sir.
Mr. GILCHREST. Thank you very much.
We appreciate you coming here this morning. Admiral, Mr. Graykowski, Ms. Metcalf, Mr. Benner, your testimony has been very helpful. And I would hope that as the weeks progress, that some of us will have some more questions for each of you, and we would like to communicate them to you.
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Thank you very much for coming. This part of the hearing is over, and I guess I am not going to pound the gavel yet, because Mr. Horn is going to come up and introduce the next panel.
Mr. HORN. [Presiding.] The second panel joining us—why don't we just go in the order on the agenda?
Mr. Alvin Pesachowitz, Chief Information Officer, Environmental Protection Agency. I think you are accompanied by Michael Quigley and Stephen Clark. Are they right behind you?
And if you proceed, we will just go down the line.
As you know the routine here, your statements are automatically put in the record the minute you are introduced. We would like you to limit them to 5 minutes or so in terms of a summary. That gives the members and you greater chance for dialogue of questions.
TESTIMONY OF ALVIN PESACHOWITZ, CHIEF INFORMATION OFFICER, U.S. ENVIRONMENTAL PROTECTION AGENCY, ACCOMPANIED BY MICHAEL QUIGLEY, DIRECTOR, MUNICIPAL SUPPORT DIVISION, AND STEPHEN CLARK, TECHNICAL ADVISOR, OFFICE OF GROUNDWATER AND DRINKING WATER
Mr. PESACHOWITZ. Mr. Chairman and members, I am Alvin Pesachowitz, Chief Information Officer of the Environmental Protection Agency. It is a pleasure to be here today to discuss the impact of the Year 2000, or Y2K, technology problem in the area of water resources.
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I am accompanied, as you mentioned, by Mike Quigley, Director of our Municipal Support Division, and Stephen Clark, Technical Advisor, Office of Groundwater and Drinking Water for EPA's Office of Water.
If it pleases the committee, I would like to submit my written comments for the record. You already mentioned they will be included.
Mr. HORN. Right.
Mr. PESACHOWITZ. Before addressing specific drinking water and wastewater treatment Y2K issues, I would like to summarize EPA's progress toward our own internal agency Y2K compliance. I am pleased to report we have evaluated all of our mission-critical systems for vulnerability and have established system-specific compliance schedules. Forty-six of our 58 systems are now compliant, including all five of our water-related systems. Based on our progress, your Subcommittee on Government Management, Information and Technology recently gave us a B for the last quarter.
Now let me turn specifically—
Mr. HORN. That is a good grade, I might add. Most got F's and D's. You are right at the top of the chart.
Mr. PESACHOWITZ. We appreciate it, and continue to look forward to you continuing to monitor Federal Government activity in this arena.
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Now let me turn specifically to the subject of Y2K conversion in the water and wastewater areas. EPA has the lead for the drinking water and wastewater utility sector under the President's Council for Y2K Conversion. We are working hard with our Nation's public and private utilities to assure that the Nation's drinking water supplies and wastewater treatment capabilities are not impaired by the Year 2000 conversion issue.
EPA is working with the municipal and private utilities to help them address this problem, implement plans to assess and repair problems when found, make contingency plans, keep their customers and the Federal, State and local governments informed on progress. EPA's role is to actively encourage and complement these efforts to the best of our ability.
The drinking water and wastewater utilities are owned by local governments and private companies. They range in size from small, serving communities anywhere from 2,500 to 3,300 people, to large, which serve populations over 100,000.
With respect to their operations, drinking water and wastewater utilities deal with specific water quality problems in their localities. Their methods of treatment vary. As you might guess, the treatment systems also vary greatly in their degree of automation and sophistication, with the larger plants being heavily automated, while some of the smaller plants have little, if any, computerized equipment.
However, many plants, both large and small, have individual pieces of equipment that have embedded computer chips. Larger plants depend on computerized control systems that run plant operations based on information received from sensing and monitoring instruments. These systems are known as Supervisory Control and Data Acquisition or SCADA systems. It is critical that steps be taken to ensure that this equipment continues to operate properly on and after January 1, 2000.
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To gain an industry-wide understanding of Y2K preparedness, we have had a wide variety of contacts with the water industry trade associations, many of whom are here today. Based on numerous discussions and site visits, we believe that most of the large drinking water and wastewater plants are aware of the problem and are actively taking steps toward corrective action.
We continue to be concerned, however, about the readiness and the level of awareness of the small and medium-sized plants. Although they are generally less automated than the larger plants, and some of the smaller plants may have little, if any, computerized equipment, without examination and assessment it is hard to predict whether these plants are prepared. Plant managers have said that much of the equipment in these medium and small plants contain embedded chips that are not date sensitive, but, rather, are simply sensing devices. Nevertheless, we are encouraging all plants, regardless of size, to assess, correct, test and validate, implement, and plan for contingencies.
EPA has also held two water utility stakeholder meetings with representatives from some of the largest national drinking water- and wastewater-related trade associations, such as the American Water Works Association, Association of Metropolitan Sewer Agencies, Association of State Drinking Water Administrators, the American Society of Civil Engineers and the Water and Wastewater Equipment Manufacturers Association.
During our stakeholder discussions, several of the associations said they had surveyed their members. They were careful to state that the surveys did not represent a statistical sampling but, rather, served as indicators of Y2K readiness. Their representatives will undoubtedly be sharing the survey results with you here today.
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Let me now address external factors beyond the control of these utilities, most significantly the state of readiness of the electric and telecommunications utilities and our transportation system. Most drinking water and wastewater treatment systems cannot operate without an outside source of electricity. Wastewater treatment utilities have some ability to generate electric power themselves and to be able to operate in an emergency for short periods of time. However, most drinking water plants do not. Therefore, should the country experience electricity failures, some of our drinking water utilities may not be able to operate and will need to be depending on their storage reserves or on other facilities' water supplies. We should remember, however, that these facilities have experienced contingency planning to address short-term outages during natural disasters such as hurricanes, floods and ice storms. In most instances, good planning has resulted in quick recovery.
In addition, suppliers to the treatment systems, such as chemical companies supplying chlorine and fluoride, can be subject to their own Y2K problems or transportation problems, resulting in a lack of supplies needed for water treatment. We are encouraging drinking water and wastewater utilities to meet with these external suppliers such as power utilities, telecommunications utilities, chemical and other material suppliers to ensure that their contingency plans address the potential inability of these entities to deliver needed materials and services.
Given the information that EPA has received from outreach efforts to our water industry stakeholders, we are cautiously optimistic that our drinking water and wastewater utilities will be prepared to meet their water treatment responsibilities on January 1, 2000. Nonetheless, we are encouraging the water utility sector to specifically address Y2K issues in its contingency planning efforts as a common sense precaution.
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EPA, for its part, is continuing to focus on our efforts on medium and small plants to ensure continued progress in contingency planning.
In closing, I would like to say that the drinking water and wastewater utilities are making good progress in their efforts to identify and fix potential Year 2000 problems. We continue to reach out to these utilities, both large and small.
I would also like to commend the trade and professional associations for bringing this issue to the attention of their members, providing information and assistance, conducting surveys and generally supporting Federal, State and local government efforts to ensure that this problem is solved.
Thank you for this opportunity, and I look forward to your questions.
Mr. HORN. Thank you very much.
Our next witness is Mr. Glenn Harvey, Deputy Engineer/Director, Association of Metropolitan Sewerage Agencies. You are accompanied by Mr. Santos.
TESTIMONY OF GLENN HARVEY, DEPUTY ENGINEER/DIRECTOR, ASSOCIATION OF METROPOLITAN SEWERAGE AGENCIES, ACCOMPANIED BY FLORANTE SANTOS, MANAGER, INFORMATION SYSTEMS
Mr. HARVEY. Thank you.
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Mr. Chairman and members of the committee, I am Glenn Harvey of the Alexandria Sanitation Authority in Virginia, a member of AMSA. I appear before the committee today representing the Association of Metropolitan Sewerage Agencies.
AMSA appreciates the opportunity to present the results of its June 1998, survey on the issue of Year 2000 readiness to the committee.
In June of this year, AMSA conducted a survey of its members to assess the extent to which wastewater agencies have evaluated the Year 2000 problem, the estimated cost to remedy the problem, the status of implementing solutions, the impacts of potential system failures and whether plans are in place should systems fail. My testimony today will highlight the results of AMSA's survey.
Computers, microchips, electronic data logging and analysis and remote monitoring and control systems are widely used and are critical components in the overall functions of the Nation's public wastewater treatment agencies. These systems contribute to varying levels of automation. While many of the functions within wastewater agencies can be automated or computerized, they can also be performed manually.
Respondents to our survey indicated that an average level of automation of 54 percent existed.
Nearly 100 percent of agencies responding indicated that computers were used in process control, laboratory, industrial compliance, billing systems and for other administrative purposes such as finance, inventory, and maintenance management systems.
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Ninety percent of the survey's respondents have developed a plan to assess and address the Y2K problem. Of these, approximately 95 percent have begun to implement solutions, while 26 percent are complete or nearly complete.
Some agencies are running tests on software and hardware systems by making them think it is January 1, 2000, and observing the results. Because of the inability for wastewater agencies to directly test all systems which use embedded microchips, these systems remain the largest unknown, and it is—really, technically, the biggest difficulty with this is testing those embedded systems and finding them.
Costs to address the Y2K problem vary widely. Forty-five percent of the wastewater agencies estimated costs running from nothing to $100,000. Fifteen percent reported estimated costs in excess of $1 million. The two highest reported values were about $15 million. Most of the agencies reporting expenditures in excess of $1 million were relatively large systems. However, 17 percent of these were agencies serving populations less than 250,000 people. In general, most agencies reported total estimated costs to fix the Y2K problem between zero and 2 percent of their annual operating budgets.
Although most agencies believe they will be Y2K compliant in 1999, AMSA's survey requested the agencies project the resulting impact should a Y2K failure occur in any critical systems.
While a number of systems received attention in my written testimony, this morning I would like to focus on process controls.
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All responding agencies with automated process controls have the ability to switch to manual operations almost immediately or within hours of a Y2K failure. Approximately 15 percent reported potential treatment plant problems and possible compliance issues as a result of switching to manual mode.
One potential catastrophic failure issue beyond the control of the wastewater agency is the occurrence of a major regional electric power failure. Some agencies indicated that they can operate their treatment plants indefinitely through the use of diesel or natural gas powered generators, although whether they can obtain fuel during this type of emergency is in question.
Other agencies, including mine, cannot operate their plants without adequate electrical power. Obtaining this backup capability is frequently not technically feasible or economically reasonable. Even if adequate backup power is available at the treatment plant, there could still be trouble with backup power and electric power at pump stations, and failures at pump stations could lead to sewage overflows into creeks or sewage backups into our homes.
Nearly 55 percent of the agencies have a plan of action should all or a portion of their systems fail in the Year 2000. Some of the agencies with no plan in place indicated that their systems were already or soon to be Y2K compliant, and a plan was not necessary or applicable.
At my agency, we have been actively pursuing a program to ensure that the authority will be compliant by the Year 2000. We have begun extensive testing of our software and hardware. Particular attention has been paid to the difficulties of testing embedded chips in our instrumentation and control systems. We believe the major electric grid, if it stays up, we will be able to perform our primary function of treating wastewater continuously.
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While the results of the AMSA survey indicate clearly that a large segment of the wastewater industry will respond effectively to the challenges presented by the Year 2000 problem, we do have concerns in the enforcement arena. AMSA recently learned that the U.S. EPA is going to issue a policy to encourage the testing of systems for Y2K compliance. The policy would limit permittee liability for violations that occur as a result of Y2K testing.
This policy is not anticipated to cover any Y2K-related violations that occur after January 1, 2000. We are concerned that, without such a policy, it is unclear if or how POTWs will be held accountable for potential violations occurring as a result of circumstances beyond our control.
Since the time our June 1998, survey was conducted, several issues regarding contingency planning and the effects of external problems have been raised. AMSA is in the process of conducting a follow-up survey to obtain a national perspective on how these issues may affect wastewater services nationwide. The results of this follow-up survey will be provided to the committee in early November.
On behalf of AMSA, thank you for this opportunity to testify, and I welcome any questions you may have.
Mr. FOSSELLA. [Presiding.] Mr. Carman.
TESTIMONY OF JOHN ROBERT CARMAN, WATER QUALITY MANAGER, METROPOLITAN WATER DISTRICT OF SALT LAKE CITY
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Mr. CARMAN. Good morning, Mr. Chairman, members. My name is John Carman. I am Water Quality Manager for the Metropolitan Water District of Salt Lake City.
Today, I am testifying on behalf of the Association of Metropolitan Water Agencies of which my utility is a member.
The Metropolitan Water District of Salt Lake City operates and maintains raw water transmission, treatment and finished water distribution facilities in three counties in Utah. We estimate that our facilities serve a population equivalent of 325,000 people.
The Association of Metropolitan Water Agencies is comprised of the Nation's largest publicly owned water suppliers, altogether serving over 100 million people with clean and safe drinking water.
In addition to complying with dozens of State and Federal requirements mandated by the Safe Drinking Water Act, the Nation's water suppliers have been confronted with the potential hazards posed by the Year 2000 issue. Nevertheless, the majority of water systems, especially those systems that serve large concentrated populations, appear to be prepared to meet this challenge.
To evaluate Year 2000 compliance, it is important to know that 14 percent of all drinking water systems are medium to very large in size, and they serve large concentrations of consumers. Collectively, this 14 percent of systems serves nearly 222 million people, or 90 percent of the Nation.
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According to the survey conducted by the Association of Metropolitan Water Agencies, the American Water Works Association and the National Association of Water Companies, systems serving between—I should say more than 100,000 consumers, appear to be well only their way to achieving compliance. Many have already reached that point.
In this effort, most systems serving over 100,000 people will spend up to $1 million each to assure compliance, and certainly some will spend more.
The vast majority of systems serving over 100,000 people have formal Y2K compliance plans. They have completed utility-wide assessments and risk assessments to identify all critical applications. Also, these systems report that they are confident that internal Year 2000 planning, implementation and testing will be completed in time. About 90 percent of these systems are similarly confident that their work on external factors will also be completed in time.
Given this degree of preparedness, the committee should feel secure that an overwhelming majority of consumers will not be affected by internal Year 2000 compliance problems.
We are, however, concerned about reliable transportation, electric and telecommunication services. Therefore, water suppliers are encouraged to speak with these service providers to discuss preparedness and contingency plans.
On the enforcement front, it has been reported that EPA's Office of Compliance and Enforcement and the Department of Justice are developing a policy to govern enforcement of drinking water regulations if violations occur due to Y2K problems. Water suppliers have not been invited to see a draft of this policy or to offer our comments on the subject.
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AMWA hopes EPA and the Department of Justice will develop a fair process to evaluate violations related to Y2K technology problems. The process should include, at least, an investigatory phase to determine the exact nature of the violations, a due diligence standard and an opportunity for water suppliers to formally respond to enforcement actions.
Switching gears, I would like to take a moment to provide you with an example of my district's Year 2000 compliance efforts. I will tell you about the work we have been doing at the Met Water District of Salt Lake City.
Our work on the Y2K compliance issue began in February 1998. The district prepared a simple plan for finding and resolving all Year 2000 problems. This plan had five primary components: inventory, assessment and testing, external suppliers, repair and replacement, and contingency planning.
District management's goal was simple: Do whatever it takes to avoid an interruption of service. We are well along in this program. The inventory phase is now complete. We have initiated the assessment and testing phase of our program.
Concurrently with a review of external suppliers for our district, chemical supply availability is a primary concern. Some of the chemicals we depend on are shipped via the railways. Rail transportation problems could have a significant impact on our ability to operate. In a worst-case scenario, we can operate from chemical inventory for 30 days on all process chemicals except chlorine. Our chemical vendor assures us that a limited alternative supply of chlorine is available which does not utilize the railway for transportation. For contingency planning purposes, we believe we can operate for 21 days without restocking chlorine.
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In 1993, the Little Cottonwood Water Plant, our primary facility, was equipped with an automated control system. While this system has improved performance significantly, it is important to note that the plant was operated manually for 33 years prior to the automation. This manual functionality still exists and represents the backbone of our contingency plan. The overwhelming majority of water treatment plants in this country were built prior to the computer era. Design requirements for water systems and wastewater systems in Utah specify manual control capability for all new systems.
Interruption of gas and power supply is a major concern for many large water facilities. From an internal perspective, we are capable of running 17 days on backup power before the need to refuel the generator. Interruption of gas supply can be survived for approximately 30 days utilizing diesel boilers to heat our facilities. It turns out that many of the facilities we have added to prepare for earthquakes have been very useful in our Year 2000 contingency planning. We are concerned about the potential external impacts of problems with the power supply. For example, there are several sewage lift stations operating in our watershed. If the lift stations are off line for a few hours, sewage overflows can contaminate our raw water supply.
Communications are also a large concern for our district. We have multiple, redundant systems, but certainly those systems which depend on the telephone system for data telemetry have a large concern.
In conclusion, the bulk of the Nation's large water suppliers are following similar Y2K compliance plans and will spend significant funds and staff time to ensure that water consumers will continue to receive uninterrupted service and high-quality drinking water.
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I sincerely appreciate the opportunity to be here today, and I would be pleased to address any particular questions or concerns you might have.
Mr. FOSSELLA. Thank you very much, Mr. Carman.
Now Mr. Walsh.
TESTIMONY OF MICHAEL P. WALSH, PRESIDENT, SHORELANDS WATER CO
Mr. WALSH. Thank you, Mr. Chairman.
Good morning. I am Michael P. Walsh, President of the Shorelands Water Company in Hazlet, New Jersey. I am here to testify today on behalf of the American Water Works Association and the National Association of Water Companies. I am the current chairman of the Small Companies Committee of the NAWC and a member of AWWA. AWWA and NAWC appreciate the opportunity to present their views on the Year 2000 technology problem.
Founded in 1881, AWWA is the world's largest and oldest scientific and educational association representing drinking water supply professionals. The association's 55,000 members are comprised of administrators, utility operators, professional engineers, contractors, manufacturers, scientists, educators and health professionals. The association's membership includes over 3,900 utilities which provides over 80 percent of the Nation's drinking water.
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NAWC is the nonprofit trade association that exclusively represents the Nation's private and investor-owned drinking water utility industry. Its membership of over 330 companies in 42 states provides drinking water to nearly 21 million Americans every day. NAWC serves as the Ambassador for the $3 billion industry that employs 15,000 people.
Shorelands Water Company has a 20-square-mile service territory in northeast New Jersey, serving an estimated population of 33,000 people through 10,000 connections. In size, Shorelands Water Company is on the borderline between small and medium-sized public water systems. However, we deliver in excess of 1.7 billion gallons of water per year.
In an effort to satisfy itself and to be in a position to answer a multitude of inquiries regarding Year 2000 from local, county, State and Federal agencies, Shorelands has identified the following six items for investigation: production, distribution and storage, telecommunications, meter reading, billing and accounting.
Shorelands' self-assessment indicated we are internally Y2K compliant for items 1 through 5. A new accounting package has been purchased which is Y2K compliant. Shorelands is now in the process of running that new accounting system parallel with the old system and anticipates changing over to the new system on January 1, 1999.
However, Shorelands' assessment of its own capabilities regarding Y2K also considered the domino effect that may result if critical vendors and suppliers fail to provide the following major items: one, electricity; two, purchased water; three, fuel; and, four, water treatment chemicals.
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Shorelands' ability to provide safe drinking water to our service area relies on a large component of water purchased from another water supplier. This is delivered through two interconnections. Should that purchased water component fail to be delivered, Shorelands would rely on a 2-day supply of water in storage and would maximize its own production of potable water if electric power was still available.
If a power outage were to occur simultaneous with the failure of the purchased water to be delivered, Shorelands, as well as many other small to medium community public water systems, has capability to switch over to an internally generated power supply. At Shorelands, this backup supply would not power the full system and relies upon diesel fuel stored on premises.
Assuming the worst-case scenario, that the Y2K bug would have knocked out the purchased water supply, power grid and the delivery of additional fuel, Shorelands could continue to provide safe drinking water for 3 days. That, together with the stored water in early January 2000, would result in a 5-day supply.
Monitoring the transmission and distribution system relies on the abilities of Shorelands to utilize its SCADA system. This system allows us to open and close valves, start and stop pumps, as well as monitor tank levels. Should the power grid fail, those systems would also go down, regardless of the fact that it is Y2K compliant.
Shorelands' contingency planning involves such things as topping off fuel and chemical supplies near the end of 1999. Obviously, we will try to have water storage tanks full and will have tested all relevant equipment.
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While many surveys ask and/or request we secure guarantees from vendors that they will be able to provide materials and supplies, we have not found a willingness of vendors to provide those guarantees.
I will skip over the details of the survey conducted by AWWA and NAWC. I believe that has been covered.
I will conclude by thanking you for the opportunity to speak before this committee and remain available for questions. Thank you.
Mr. FOSSELLA. Thank you very much, each of you gentleman, for taking time out to join us here today. We may have a vote in a couple of minutes, so we may have to call this hearing in recess at that time.
My first question is addressed to Mr. Pesachowitz. With my name, Fossella, I can understand that.
Is the EPA willing to consider granting waivers to water utilities who made a good-faith effort to convert their systems but find themselves in violation of EPA standards?
Mr. PESACHOWITZ. I believe, as was stated by a couple of the gentleman here, we are currently in the process of developing an appropriate enforcement policy for water systems that might fail due to Year 2000. We are working right now on trying to develop a fair and balanced approach particularly related to testing in case these gentleman need to test their equipment or their computerization prior to Year 2000. We want to develop a way for them to do that and encourage that.
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One of the things that is currently under consideration is the establishment of a notice of system testing which would identify due diligence and would potentially provide the notification that we would need that this was actually a test and that, if there was a subsequent violation, we would deal with that on a kind of individual basis.
We are working with the Justice Department now to try to come up with a comprehensive policy so that we can announce it over the next couple of months so that we can make these people to my right feel a little bit more comfortable with how EPA is going to proceed on the enforcement front.
Mr. FOSSELLA. Do any of you gentleman have a response to Mr. Pesachowitz?
Mr. HARVEY. I think everyone in the regulated community would like a real chance to review this. We have not had any real details. We would like a chance to review the policy and have input to it. The details are very fuzzy right now, and what we have heard, as he said, hasn't been very comforting today.
Mr. FOSSELLA. Is there a deadline set for when the EPA and the Justice Department will work this out?
Mr. PESACHOWITZ. There is no specific deadline at this point. I will certainly go back and talk to our enforcement people and encourage them to share the development of that policy with the folks in the associations so we can get some of their educated input into that policy.
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Mr. FOSSELLA. Is there a time line which you would like? Say you need at least 6 months or 9 months? Is there some deadline that you would like to see the results of the EPA's new rules and regulations?
Mr. CARMAN. Certainly, at least from my perspective as the operator of a water plant, we are already well along on our way to meeting what we view as compliance with the Year 2000 standard. So what will the definition of due diligence be? Will I have to backtrack and do a whole bunch of modification in my paperwork to meet the EPA standard when I am already so far along? Or will there be a more generic approach to it that allows different approaches?
Many people in the industry are already well along in the process. Do we have to go back and reconstitute or repackage something to meet with that compliance standard? That is just extra work.
So input to the process is probably the most valuable thing, and we would like to discuss that up front. My concerns would be different from another large water utility based on their point in the process; where are they? If the plant comes out and haven't started their work or they are in the very preliminary phases of it, it will not be too hard for them to meet with the standards from EPA and the Department of Justice. If they are already well along, have to backtrack, that is complicated.
Mr. FOSSELLA. Do you believe that the EPA should consider granting waivers to the water suppliers who make a good-faith effort to fix their systems?
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Mr. CARMAN. Yes, I do. I would add, at least from our perspective, our biggest concern is not necessarily water quality violations but reporting violations, because much of our data that we collect is for reporting through computers. The rest of the system is easy to operate in a manual mode. To collect the data we send to EPA to demonstrate compliance is our greatest risk. We may not have a number there. For us, that is a problem.
A waiver on at least certain items, if not all issues for people who have demonstrated good-faith effort, would be very attractive.
Mr. FOSSELLA. So each of you—Mr. Walsh?
Mr. WALSH. I would second that and suggest that the time frame for reporting be extended at that point where we change it to the new millennium. I think our survey indicates we will have general compliance for the majority of the population of consumers in this country. There may be some small outages, but I think we are well on the way to providing the education and providing the mentoring that is necessary to get the smaller utilities on line. However, the reporting function is something that should be addressed.
Mr. FOSSELLA. Specifically, do you have any recommendations?
Mr. WALSH. Specifically in extending the time frame for reporting and where we do not incur technical violations for reporting a test at some date other than prescribed by code?
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Mr. FOSSELLA. A month? Six months?
Mr. WALSH. Well, if the testing is reported monthly, it may slip. If it is required quarterly, it may not slip. But I think the monthly testing requirements should certainly be given some flexibility.
Mr. FOSSELLA. As of today, what is the EPA's I guess right to enforce, given the nature of the violations? If a utility is not in compliance, you are trying to either grant a waiver or to work with the Justice Department—
Mr. PESACHOWITZ. Actually, what we are trying to do is do the right thing here and work on an individual, case-by-case basis to determine the due diligence, even though we don't have a standard in place. This is a very complicated issue because we not only have to work with the water utility industries that are here today but in terms of developing an enforcement policy that would be applicable overall to the rest of the regulated community. We would like to try to find a policy that would be easy for everyone to understand and also affect the broadest spectrum of the environmental community.
Mr. FOSSELLA. Thank you.
Shifting gears for a second to Mr. Harvey, I believe in your testimony you mentioned that automation is widely used within the Nation's public wastewater treatment agencies. However, all of these functions can be performed manually. These agencies rely upon manual operations in backup contingency plans for Y2K. Where will the manpower come from that is trained to handle these kinds of operations?
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Mr. HARVEY. Well, we as an industry range between zero percent automation and 90-plus percent. I think because of the technical difficulties of identifying all of the embedded chips you will see a lot of people around the 2000 date pulling in maintenance staff, pulling in managerial staff. I am afraid it has been 20 years since I pulled a bar rack, but I still can. We will be pulling in extra staff from our maintenance and administrative functions.
Mr. FOSSELLA. So you feel confident—
Mr. HARVEY. Yes, even if all of my plant instrumentation and control systems failed, which I am confident not all of them will, even if they all did, we could run for virtually indefinitely, though the overtime would be murder, but we could run virtually indefinitely in manual mode until we got those systems replaced.
Mr. WALSH. Generally speaking, the industry relies on shift workers, and in Shorelands' case we have three 8-hour shifts. We would take people from other shifts and combine them to get the necessary manpower. It would result in some overtime, but that is not the primary concern. It would be keeping the water flowing.
One other point that I would like to bring up is that, although I hear what EPA is suggesting and it sounds like a good way to go, there are other State agencies that do have regulatory control over at least the investor-owned segment of the business. I would ask that there be coordination between the Federal and the State level so that we do not get duplicative in adhering to different sets of rules.
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Mr. FOSSELLA. Is there coordination?
Mr. PESACHOWITZ. I believe there is at least some level of coordination between EPA and the State agencies. Whether we will get universal agreement between the States that have been delegated these programs or run these programs in our own enforcement view, that is problematic, let us say.
Mr. FOSSELLA. The word problematic is open to definition.
Mr. PESACHOWITZ. Correct. I do think, overall, we will try to set up a program that the States in most regards would try to accept in terms of a reasonable way to move forward with enforcement. It is just that I can't kind of guarantee that that is going to happen sitting here at the table today.
Mr. FOSSELLA. Is it being done State by State? For example, New York State as opposed to the City of New York, the department of environmental consultation at the State level? Are people meeting now to address whether there are redundancies and duplications and whether the State might want to impose additional burdens or standards?
Mr. PESACHOWITZ. I will probably have to address that question for the record, since I am not the head of the enforcement office. I am not sure at what level those conversations are occurring.
[The information follows:]
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[Insert here.]
Mr. FOSSELLA. This is for any of the folks on the panel. What happens if the supervisory control and data acquisition system is faulty because of Y2K complications and is reporting incorrect data?
Secondly, would this affect the operations of the pumping stations and treatment facilities?
Mr. WALSH. In our preparedness, we have evaluated that consideration, and what has happened in the past and has worked satisfactorily is we get—in the northeastern part of New Jersey, we get knocked out because of heavy storms or hurricanes; and, when that occurs, we go back to a manual mode, which really involves a back-up pulse system to record our data from remote sites. If that fails, we have gone back to sending people out in vehicles to physically visit sites and get readings.
Mr. FOSSELLA. So it is almost like the Y2K is going to be a continuation of situations you have been dealing with.
Mr. WALSH. We have dealt with it on a short-term basis in the past, and we can deal with it on a short-term basis if that situation were to occur at the turn of the century.
The critical point is that we can operate without electricity for a short duration, but that is defined as short, and we would suffer a loss in pressure at the end of that period. That results in health considerations, inability to fight fires, and that could become very critical.
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Mr. FOSSELLA. I have a few minutes left.
Mr. Carman, given the sort of interrelationships among all the other industries that you need to be involved with and specifically the electronic transmission that takes place, what would happen, in your opinion, if you were unable to submit your monitoring data to the States due to the Y2K failure with electronic transmission?
Mr. CARMAN. It is pretty hard to say what would happen. We submit to our State electronically, and I believe they submit their data to EPA electronically. It is not an instance that we have ever seen before, so I am not really certain what would happen if there were difficulties there. Certainly we go out of our way to avoid black marks just for PR purposes.
A reporting violation is different than a water quality standard violation, in my view, but they both show up the same way when we are suffering the attacks of the environmentalist groups, for instance.
Mr. FOSSELLA. Is it a concern of yours?
Mr. CARMAN. Very much. We want to keep a clean record. That is important to us. I appreciate the fact that EPA is contemplating how to handle those things. There is certainly the chance in this process, as you suggested. I will probably be at the plant on New Year's Eve, 1999, and working well into the morning. I will be focusing on keeping the system running.
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Reporting takes a secondary role in those situations. But at some point we have to come back and hit the desks and get those reports out. If it takes an extended period of time, there may just simply be delays because of priorities. Doing the paperwork and sending it, through, is, in my view, not as important as making sure the system is running properly.
Mr. FOSSELLA. Are you paying any attention or dedicating any efforts to dealing with this situation now? Just as a contingency?
Mr. CARMAN. As far as the reporting goes?
Mr. FOSSELLA. Yes.
Mr. CARMAN. No, we have not addressed that issue yet.
Mr. FOSSELLA. This is the last question, open to any of you if you want to respond, or we can recess the meeting and you gentleman are free to leave, and I want to thank you in advance. I wanted to thank you in advance for taking time out to testify today from different parts of our great country.
Is there anything else you would like to direct to the EPA, saying what really we would like to see accomplished or whether it is deadlines or in terms of rules or regulations or promulgations of some of these rules that would be beneficial and serve our national interests? For your industry specifically?
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Mr. WALSH. I think keeping the lines of communication open and the willingness to listen to what the industry representatives have to say regarding their ability to comply or not comply with current regulation.
Mr. PESACHOWITZ. And I think we are committed to keeping those lines of communication open, as we have already had, I think, two significant meetings with members of the leaders of the associations.
I would say that I do believe the Environmental Protection Agency, as the name indicates, is most interested in protecting the public health and environment, and that is clearly our primary interest here in working with the water utilities, to make sure that our water, our drinking water and our wastewater, is adequately treated to protect public health and the environment.
Mr. FOSSELLA. On that note, ''Happy New Year.'' We will be in recess until 12:30 for the next panel. Thank you very much.
I would like to welcome everyone back here this afternoon, and we will jump right into our third panel, consisting of Mr. Lacy Suiter from the Federal Emergency Management Agency, Mr. John P. D'Aniello, U.S. Corps of Engineers, and Ms. Diane J. Bunch from the Tennessee Valley Authority, and we will start with Mr. Suiter.
TESTIMONY OF LACY SUITER, EXECUTIVE ASSOCIATE DIRECTOR, RESPONSE AND RECOVERY DIRECTORATE, FEDERAL EMERGENCY MANAGEMENT AGENCY; JOHN P. D'ANIELLO, DEPUTY DIRECTOR OF CIVIL WORKS, U.S. ARMY CORPS OF ENGINEERS, ACCOMPANIED BY EDWARD HEUMPFNER, ACTING DIRECTOR OF INFORMATION MANAGEMENT AND CORPS PROGRAM MANAGER FOR Y2K COMPLIANCE; AND DIANE J. BUNCH, MANAGER, ENTERPRISE OPERATIONS, INFORMATION SERVICES, TENNESSEE VALLEY AUTHORITY
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Mr. SUITER. Well, good afternoon, Mr. Chairman. Thank you for the invitation to be here today. I am the Associate Director of FEMA for Response and Recovery. FEMA uses the FRP or the Federal Response Plan to coordinate response and recovery activities of the Federal family at the request of governors when major catastrophic disasters occur in a State, always in a supporting or a supplementary role to the State's responsibilities.
If one views government and governmental relationships as a vertical organization, then FEMA in its planning process uses a bottoms-up approach. It all starts with the families, the local community, the businesses, the local government, then works its way up to the Federal family in terms of the response. So emergency management begins in the home and extends upward to the community, to local and State government and finally to the Federal family.
The Federal role is to support the governor and his staff in managing all hazards, including the Year 2000 problem. FEMA is addressing the problem in several ways. We are one of 34 sector coordinators supporting the President's Council on Y2K Conversion. Specifically, we chair the emergency services sector, which is developing an outreach plan, monitoring the progress and preparing for disruptions. Our outreach program will include or does include awareness, assessment and preparedness.
This sector will provide reports to the President's Council in the coming weeks that, when combined with the reports of the Federal agencies that they are already submitting to the Office of Management and Budget, will give us our first and our best indication of the extent of total government preparedness at all three levels.
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Y2K will, for us, present two sets of response needs. The first is the need for technical support to the owners and operators of the disrupted systems. Information technology professionals in every organization, public and private, are working to meet this need by developing business continuity plans within their own agencies and their own areas of responsibility. FEMA's own plan will ensure that our mission critical systems will be ready, our primary systems, or that work-around operations will be in place for those systems which are not compliant.
The second response need is for emergency assistance to State and local governments to help them respond to the consequences of emergencies on infrastructure, public health and safety. We use the Federal Response Plan to deliver this assistance according to the Robert T. Stafford Disaster Relief and Emergency Assistance Act. Our planning involves 27 Federal departments and agencies, and the States through our Regional Interagency Steering Committees. Emergency response, however, begins at the local level using a bottoms-up approach that builds on intelligence, assessment, preparedness, warning, and then finally response and recovery.
It is difficult at this point in time for us to define the truth and nature of the extent of the Y2K threat to the emergency preparedness community, but we have a plan. It is called the Federal Response Plan. We use it to manage all major and catastrophic disasters in the country.
We will tailor the plan to Y2K, but to do that we need credible assessments, which is a process that is underway at this time. And those assessments will describe the specific vulnerabilities, the areas of highest risk and the possible consequences. The President's Council on Y2K Conversion will release a report later this year that will prioritize those risks and describe a realistic worst case scenario.
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I meet on a monthly basis with the others in the Federal response community to focus attention on the particular needs and options that may arise from this event. It is difficult for us at this point in time to imagine a Y2K scenario that would trigger such massive consequences that would threaten lives and property. On the other hand, it is very easy to imagine scattered disruptions in critical systems that would complicate local, State and Federal efforts to provide Federal disaster response.
For example, disruptions in traffic control, communications or power would affect response efforts at all levels of government. And we are particularly concerned about some of the rural areas in the Northern and Western states facing their normal severe winter storms in the December/January/February time frame. The efforts of emergency management and fire service organizations throughout the United States cannot be viewed as a substitute for personal responsibility in community preparedness. Again, the bottoms-up approach.
As elected leaders, you play an important role in increasing public awareness and promoting personal initiative. We in FEMA appreciate your concern and commitment to this issue, and we will continue to keep you informed on our progress as the countdown towards the new millennium begins. Thank you, sir.
Mr. FOSSELLA. Thank you very much, Mr. Suiter.
Mr. D'Aniello?
Mr. D'ANIELLO. Good afternoon, Mr. Chairman.
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Mr. FOSSELLA. Good afternoon.
Mr. D'ANIELLO. I am John D'Aniello, Deputy Director of Civil Works and accompanying today is Mr. Edward Huempfner, who is the Corps' Chief Information Officer and Program Manager for Y2K Compliance.
I would ask that my complete statement, which I have provided you, be included in the record.
Mr. FOSSELLA. Without objection, so ordered.
Mr. D'ANIELLO. Thank you. I want to first assure you that following the strong leadership of the Secretaries of Defense and Army, the Corps of Engineers is meeting the challenge posed by the Y2K problem. We are working under the Army's Y2K action plan, which requires certification of all systems and devices to ensure that we either do not have a problem, or that if there is a problem, it is fixed and tested. Senior level managers are personally involved in this effort, and appropriate resources are being applied to the problem.
For management purposes, the Corps has categorized our Y2K problems as either information systems or information technology problems. Problems are related to the Federal buildings that we hold, and problems related to our civil works projects such as our locks, dams and hydropower facilities.
We are currently assessing and renovating our systems, and our target date for completion of the renovation phase is 30 December 1998, and we are on schedule. First let me—regarding our information technology, which includes our computers and other office equipment, servers and software and the like, we do not foresee any problem that would affect our ability, affect the ability of the Corps to complete its missions.
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Issues related to the federally owned buildings under the jurisdiction of the Corps include consideration of elevators, heating, ventilating and air conditioning controllers, access control, security surveillance, fire detection and suppression systems. In these areas we have identified no threats to life or health in any Corps facility.
Our mission infrastructure includes all of the equipment directly related to the proper functioning of authorized civil works projects for navigation, flood damage reduction, hydropower, environmental protection and restoration and emergency management, as well as the support that we provide to others. Potentially vulnerable equipment in our mission infrastructure includes our boats and dredges, water control facilities, locks and dams, instrumentation controllers, power generation facilities, survey and geographic information systems equipment, laboratory instrumentation, and communication and photographic devices.
We have been paying particular interest and particular attention to our navigation, flood damage reduction, and hydropower infrastructure issues that could be mission critical.
We have determined that our navigation locks do not use imbedded processors for critical control functions. Further, communication with the tows is by radio and this system has been inspected and is Y2K compliant. All locks have emergency generators for full power operation. Established emergency operations procedures provide for contingency operations to minimize disruption in the event of natural or man-made disasters. We believe that our navigation business function is and will continue to be fully operational.
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The operation of our major lakes and reservoirs, which are primary features in our flood control projects, offers the greatest potential vulnerability to the Y2K problem. We have not, however, identified any mission critical failure modes for imbedded processors utilized in these facilities. As with our locked dams, control of these facilities is capable of manual override.
Many federally constructed flood damage reduction projects are operated and maintained by our project sponsors. Through our continuing efforts in assessing these non-Federal entities and their own Y2K technical assessments, we are maximizing readiness and continuity of our overall flood damage reduction systems.
Our hydropower projects use a wide variety of automated systems for control and instrumentation. However, all power facilities can be operated manually with minimal loss of operational efficiency. For those hydropower projects that are normally unmanned and operated by way of remote control, operator staff will be on duty January 1st, 2000 should problems arise.
The Corps is actively coordinating with power marketing administrations of DOE and the Bureau of Reclamation to assure that the Federal portion of the power grid remains viable and stable.
Regarding costs for Y2K compliance, what we need to spend approximately is $3.5 million on renovation and replacement of currently identified devices in the Corps.
In summary, the Corps takes the Year 2000 problem very seriously. We take considerable pride in successful execution of our missions in support of the Nation and assuring that that service continues. Every component of our extensive infrastructure is being carefully examined, and we expect to greet the new century easily and mission ready.
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Mr. Chairman, I would be pleased to address any questions that you have, and again, thank you for the opportunity to testify.
Mr. FOSSELLA. Thank you very much, sir.
We will hear from Ms. Bunch, and then we will open it to questions.
Ms. Bunch?
Ms. BUNCH. Thank you very much, Mr. Chairman, for the opportunity to address Year 2000 today. My name is Diane Bunch, and I am senior manager of Enterprise Operations at the Tennessee Valley Authority. I am here today representing Michael H. Davis, the Senior Vice President of Information Services.
As you know, TVA operates 225 generating units, maintains 17,000 miles of transmission line and manages the Nation's fifth largest river system. We move power through our transmission systems to 159 wholesale customers, 64 directly served customers, and 8 Federal agencies. TVA supplies the energy needs of approximately 8 million people in a service area covering 80,000 square miles in seven Southeastern States. We also exchange power with 14 neighboring utilities.
In 1996, the TVA Board asked Information Services to ensure that TVA would be able to meet its responsibilities in providing electricity to our customers on and after January 1 of 2000. Information Services embarked upon an aggressive program to address TVA Year 2000 problems.
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Our year 2000 mission has been to fix all mission critical components by December 31, 1999. We have an internal goal to complete the majority of that work by December of this year and spend calendar year 1999 in testing and contingency planning. We are using a phased approach to inventory, assess, remediate and test all of our mission critical components.
In most respects, TVA faces the same challenges that every other industry has. Of greatest concern is the pervasiveness of the use of embedded chips and the problems they present. These chips are used in communication devices and in many of the power system controllers. Fortunately, we have found through testing and assessment that less than 5 percent of these chips have a date/time function that results in a Year 2000 problem. Overall, we are tracking over 21,000 mission critical components, and as of this date have completed closure on 48 percent of those, and we fully expect to meet NERC's guideline to be ready and operational by June 1999.
TVA is actively participating with its customers to develop a comprehensive set of operating, restoration and emergency preparedness plans to mitigate the risk of service interruptions. TVA and its power distributors are exchanging information through the Tennessee Valley Public Power Association (TVPPA). The TVPPA will participate with TVA and the North American Electric Reliability Council in upcoming interconnection drills.
TVA will facilitate a drill planning session in November 1998, and NERC will facilitate two drills in April and September 1999. Our contingency planning efforts and readiness drills will include State and local governments as well as other emergency preparedness organizations.
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TVA is working with its external business partners to ensure that a Year 2000 problem in some other part of the supply chain will not impact our ability to produce and deliver power. We have reviewed and prioritized our mission critical suppliers and have asked about 2,300 different companies to certify their Year 2000 readiness.
TVA is participating at the national, regional and industry levels to prepare for a smooth transition into the 21st century. We are working with NERC and other regional utilities to share information and develop contingency plans for uninterrupted power service operations.
TVA is reporting quarterly status to the Office of Management and Budget, and has just completed an on-site assessment by the General Accounting Office. The Nuclear Regulatory Commission will be on-site next month to review our Watts Bar nuclear facility.
In addition to government oversight, TVA has initiated self-evaluation by consultants from the Gartner Group and from Booz Allen & Hamilton to identify any opportunities to improve and strengthen our program. We are participating with a number of electric utility industry groups to share information and build upon each other's experiences.
Currently we are working with the Electric Power Research Institute, the Nuclear Engineering Institute, and the Nuclear Utility Software Management Group, and we have participated in a number of distributor communication forums sponsored by our Customer Service and Marketing organization. Most recently TVA cosponsored and participated in panel discussions during the ''Countdown to 00'' summit mentioned by Congressman Bob Clement this morning.
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In summary, TVA is taking the Year 2000 problem very seriously. We have a multifaceted program. It is very proactive and supported by top management. We are aggressively coordinating and cooperating with others in the industry to identify and manage risk in order to mitigate service interruptions. TVA is doing everything within our power to ensure reliable and continuous electric service in the Tennessee Valley region.
Thank you for the opportunity to speak today. I would be happy to answer, to address any questions.
Mr. FOSSELLA. Thank you very much. And thank each of you for your fine testimony and your patience with us today.
Let me just start with Ms. Bunch. You concluded by saying you are doing everything within your power. Is there something beyond your power that really needs some attention or some additional focus to allow the TVA to become Y2K compliant?
Ms. BUNCH. As you know, we participate and put power into the grid, so there are a lot of different entities that actually deliver electricity. We are working very closely with NERC, and NERC is coordinating an overall industrywide approach that involves the generators, the transmitters of power, and the actual distributors as the last leg. We are working very closely with those folks to ensure that all of the different components are ready for Year 2000.
Mr. FOSSELLA. Along those lines, if several power suppliers go off line January 1, 2000, do you believe that the power grid will remain stable and operational?
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Ms. BUNCH. Yes, sir. And there is a lot of contingency planning going on around to make sure that that happens. It is a typical event, not unlike any other day, that we may lose a plant because of some sort of trip or problem, so we have plans that are established to handle those situations.
As part of the contingency planning effort, there will be additional reserve on line that would be ready to start up in the event that some plant should come off line. We, too, will have manual operating procedures ready to take over in case there is some loss of communication, and we will have additional plants ready to take up any loss of power.
Mr. FOSSELLA. How much have you spent so far or expect to spend?
Ms. BUNCH. In total, TVA is planning or forecasting to spend about $37 million. We have spent $7 million prior to this year, about $11 million this year, and expect to spend about $17 million next year.
Mr. FOSSELLA. What has been the most difficult aspect of fixing it?
Ms. BUNCH. I think the overall magnitude of the effort. We have 10 program areas covering our Year 2000 program, and they touch every piece of other business. So the overall magnitude has been the most difficult part, rallying that much resource around this issue for the duration and trying to get it fixed.
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Mr. FOSSELLA. Let's see a thousand years from now to get to it again.
Mr. Suiter, in your opinion, where would a Y2K problem most likely jeopardize public safety? And, secondly, what has your agency been doing to prevent such a thing from happening, if at all, if it is a concern?
Mr. SUITER. I don't know that we can prevent it from happening. Obviously the ability of local governments to operate is critical to provide their normal services that they have to to the community infrastructure, to the water systems, to whatever the requirements might be, a failure. A catastrophic failure, which I can't imagine—but a catastrophic failure at the local government level always worries us the most.
To that end, we have a series of bottom-up approaches that we are working with the local governments, through the governors in the country, to advise them of the different types of preparedness activities that they should be taking, for instance, in their 911 systems. The Department of Justice is working with the law enforcement community. The United States Fire Administration is working with the fire service. The Department of Transportation is doing the emergency medical service. And then FEMA, through its Preparedness Directate, is tying all of those things together. If there would be a failure in any one of those particular systems, how you would tie that together, what the work-around option would be, and how it would happen.
That is one effort, the outreach or the preparedness at the local government level. The second is what the States themselves are doing, and we think that the States are taking responsible approach in getting their own systems in order—their ability to communicate up, down and sideways speaks for itself, with their people and their critical systems. I know my own State of Tennessee, a great deal of work has already been accomplished there, and we feel pretty good about the State's ability to manage and respond to emergencies.
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And the third level is what the Federal family is doing, and that is through the Catastrophic Disaster Response Group and how we would manage or respond to Y2K consquences. We meet monthly with this particular group. It is 27 Federal agencies. We are assessing their ability to continue, as John has just mentioned here, their own operations, and then how their operations affect the other parts of the Federal family, and then how all that goes to the services that are required. So I think we are moving along, in terms of that activity, pretty well.
Mr. FOSSELLA. Will there be an actual Federal Response Plan to assist the States and localities?
Mr. SUITER. There will be a supplement to the Federal Response Plan. The Federal Response Plan is the President's directive on how the Federal Government operates and the response to any type of public health or safety emergency. So, yes, there will be a tested and evaluated Federal Response Plan.
Mr. FOSSELLA. When will that be released or available?
Mr. SUITER. We expect the Federal agencies, which if we hadn't been dealing with all the hurricane along the Gulf Coast and then Puerto Rico and the other problems around the country, to have had their assessments in to us on September the 30th. That has now been delayed to October the 15th. A series of meetings will follow that for the primary agencies.
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We will complete the vulnerability assessment by December, both the one that FEMA is doing and the one that the President's Council is doing. In January we will present, actually to members of your staff on this committee as well as to the President's group, what our concept paper on the Federal Response Plan supplement will look like and what the role will be in terms of the President's management.
The director intends—the director of FEMA, James Lee Witt—intends to brief all the State emergency management directors in January. In a subsequent meeting, he will be briefing the Nation's governors on the health of the emergency management system and response in the country. That will be followed by a series of tabletop exercises in our Regional Interagency Steering Committees at our 10 regional locations, which ties together the State agencies and the Federal agencies.
Hopefully, the State agencies then will get the guidance to go back and work with their local governments, and then we will have a Federal Response Plan tabletop exercise here at FEMA headquarters in May. We will complete the supplement in the June 1999 timeframe. We will have our supplement and be ready to operate July 1st.
I realize that is a long answer but you said you wanted it.
Mr. FOSSELLA. Comprehensive, but very good. I am glad that there is a game plan and I appreciate the level of detail. I think it helps not only the members of this committee but staff as well to follow it accordingly.
Mr. SUITER. Your committee, your staff has been extremely helpful in working with us prior to this hearing. We had sit-down sessions, and there has been good advice both from this body and the other body, and we thank you very much.
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Mr. FOSSELLA. You are welcome.
Mr. SUITER. A class act.
Mr. FOSSELLA. We have an excellent staff here, is right. And, lastly, if there is a computer failure, widespread, will FEMA be able to respond to an event?
Mr. SUITER. We have 49 systems, mission critical systems. Fortunately for us, we were in the process of building a new one which came on-line October 1st. Of our 49 systems, 41 are mission compliant, 5 are being replaced and 3 are being repaired. So, yes, we will be on line by December.
Mr. FOSSELA. Great.
Mr. SUITER. Of this year.
Mr. FOSSELLA. Finally, Mr. D'Aniello, in your written statement you state that the Corps' hydropower facilities can be operated manually. Do you anticipate using manual operations on January 1, 2000?
Mr. D'ANIELLO. At this point, as we have checked that, we anticipate that we are going to be tested to the point where we won't have to do that, but in the event that we do, we can use that. I think in that regard the key area is going to be in the communication area, in terms of, as Ms. Bunch has added, the communication with regard to all the folks that are on the Federal grid, provide power into the grid, to make sure that that communication moves smoothly. We have contingency plans in place to be able to deal with that, but I think the communication aspect is going to be key in that regard.
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Mr. FOSSELLA. Can you explain some of those contingency plans?
Mr. D'ANIELLO. From the standpoint of the contingencies with regard to communications, we deal with that on a case-by-case basis as we lose communication and power to do that right now, and those are being developed as we speak.
Mr. FOSSELLA. So it at this point you don't anticipate reverting back to a manual operation?
Mr. D'ANIELLO. No, we do not.
Mr. FOSSELLA. If the power does go out, any idea as to how long you can operate your locks or dams and water control systems on backup power?
Mr. D'ANIELLO. As far as the locks and dams, we have, again, generator-operated capability there. That is limited to the fuel we have, and we are certainly making contingency plans to have extra fuel available. And I can't give you a specific amount, but certainly it is going to be capable of extended operation in those facilities. Similar with those areas where we have unmanned situations, those are going to be manned and specific requirements for power generation will be fully extensive.
Mr. FOSSELLA. At those unmanned locations, how long do you expect to have personnel stationed at those unmanned locations?
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Mr. D'ANIELLO. At this point, as long as necessary, until we are assured that those facilities are operating and we don't have a problem.
Mr. FOSSELLA. Do you have any idea as to whether that is a week or a month or several months or a year?
Mr. D'ANIELLO. At this point in time, no system is being tested. We would anticipate it would be very short, if anything.
Mr. FOSSELLA. Sure. Okay. And are you confident, and I know I am asking the same question, that the power grid will remain in service during the first few days in the Year 2000?
Mr. D'ANIELLO. Yes, we are.
Mr. FOSSELLA. And how much, finally, how much have you spent on the Y2K efforts so far and what do you expect?
Mr. D'ANIELLO. Very specifically, the dollar value that I gave you is $3.5 million. However, we have been upgrading certain things over the last couple of years, since '96 when you started into this, have spent money in replacing computer systems, but we feel that many of those dollars would have been spent anyway in those—in some of those upgrades anyway. But $3.5 million is what we have noted and earmarked as specifically related to Y2K.
Mr. FOSSELLA. So there are no projections to spend any more money between now and the end of 1999?
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Mr. D'ANIELLO. About $3.5 million dollars, that is what we anticipate spending at this point, have spent and anticipate.
Mr. FOSSELA. And where did that money come from? Am I hearing that you would have spent that money anyway, so it is not dedicated solely to the Y2K effort?
Mr. D'ANIELLO. The $3.5 million has come out of our—we have taken that out of our hide and it is out of our normal operating budget. It is not a significantly large amount compared to our overall budget.
Mr. FOSSELLA. Being that there are no other Members present, I want to thank each of you for coming here today and for your complete and forthright testimony. And thank the staff for putting this hearing together. With that, adjourned.
[Whereupon, at 1:05 p.m., the committee was adjourned.]
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