Ensuring a Safe, Secure, and Competitive Future

STATEMENT OF
MARK H. BUZBY
ADMINISTRATOR
U.S. DEPARTMENT OF TRANSPORTATION

BEFORE THE COMMITTEE ON
COMMERCE, SCIENCE, AND TRANSPORTATION
SUBCOMMITTEE ON SECURITY
UNITED STATES SENATE

HEARING ON FEDERAL MARITIME AGENCIES: 
ENSURING A SAFE, SECURE, AND COMPETITVE FUTURE

April 4, 2019

Good morning, Chairman Sullivan, Ranking Member Markey, and members of the Subcommittee.  Thank you for inviting me to testify today on the Maritime Administration’s (MARAD) contribution to ensuring the safety, security, and competitiveness of our Nation. 

Congress recognized long ago that a U.S. merchant marine composed of the best-equipped, safest, and most suitable types of vessels, constructed in the United States, and crewed by trained and efficient citizen mariners is critical to national defense and robust domestic and foreign commerce.[1]  MARAD’s mission is to foster, promote, and develop our maritime industry to meet the Nation’s economic and security needs. 

The U.S. merchant marine is a fundamental component of our national defense strategy. Our strategic sealift relies on a Government-owned fleet and assured access to commercially operated U.S.-flag vessels, and the intermodal networks that these vessel operators maintain, to transport equipment and supplies to deploy and sustain our military forces anywhere in the world.  Critical to both Government-owned and commercial U.S.-flag vessels is an adequate supply of qualified U.S. mariners to crew them.  Currently, we face readiness challenges because of aging Government-owned vessels, historically low numbers of U.S.-flag vessels operating in international trade, and ensuring we have a sufficient number of qualified U.S. mariners that would be needed in the event of a long-term national emergency. 

Government-Owned Vessels

MARAD maintains vessels under agreement with the Department of Defense in the Ready Reserve Force (RRF) on-call in a state of surge sealift readiness.  In the event of a major contingency, our nation relies on the 46 RRF vessels, along with 15 Military Sealift Command vessels, to provide the initial surge of sealift capacity.  After the initial period, commercial U.S.-flag vessels join the effort to provide sustainment shipping capacity. 

The average age of RRF vessels is more than 44 years, and for the past year we have struggled to maintain readiness levels across the fleet.  Older, increasingly obsolete equipment and systems require more time and money to repair or replace, if replacement parts, equipment and systems are even available.  As a result, the escalating cost of service life extensions is an ongoing concern. In addition, resources are needed to complete necessary repairs to comply with new regulatory requirements, such as upgrading and installing covered lifeboats, addressing exhaust emissions, and treating ballast water.  To address these needs, the President’s FY 2020 Budget for the Department of Defense requests $352 million to maintain the RRF.  Long-term, MARAD supports the Navy’s surge sealift recapitalization strategy, which includes a combination of targeted service life extensions, acquiring and converting used vessels, and building new vessels in U.S. shipyards. 

U.S.-Flag Commercial Fleet

As this committee is aware, the number of U.S.-flag vessels engaged in international trade has declined over the past several decades and remains near its lowest level in history.  Of approximately 50,000 large, oceangoing commercial vessels operating around the world today, only 180 fly the U.S. flag.  Of those, 81 vessels operate exclusively in international trade. The remaining 99 operate almost exclusively in domestic (“Jones Act”) trades.  These types of vessels are critical to the employment base for mariners with the credentials and training required to crew Government ships necessary to deliver supplies and equipment to deployed forces and overseas installations around the world. 

Congress established the Maritime Security Program (MSP), cargo preference laws, and the Jones Act to foster the development and encourage the maintenance of a robust merchant marine; however, these programs now merely support a limited number of oceangoing ships in the U.S.-flag fleet.  The MSP helps maintain an active, privately-owned, U.S.-flag fleet of 60 militarily useful commercial ships operating in international trade and employing U.S. mariners fully qualified for sealift operations.  MARAD provides MSP participants an annual stipend to facilitate the financial viability of operating under the U.S.-flag, and in return, their ships and logistics networks are available through pre-negotiated contingency contracts.  The MSP facilitates employment for 2,400 U.S. merchant mariners qualified to sail on oceangoing vessels who we may call upon to crew the RRF vessels when those ships are activated. The MSP also assures DOD access to the critical multibillion-dollar global networks of intermodal facilities and transport systems maintained by MSP participants.  A continued commitment to this program is reflected in the President’s FY 2020 Budget, which requests $300 million for the Maritime Security Program.

The number one concern for any commercial vessel operator is access to cargo.  Government and commercial demand for U.S.-flag cargo transportation is the lifeblood for these operators and the mariners they employ in the U.S.-flag fleet.  Cargo preference laws require shippers of Government-impelled cargo to use U.S.-flag vessels for the ocean-borne transport of a significant portion of certain cargoes purchased or guaranteed with Federal funds.  Specifically, 100 percent of military cargo, and at least 50 percent of most non-military, Government-owned or impelled cargo transported by ocean, must be carried on U.S.-flag vessels to the extent those vessels are available.   Absent other measures, the cargo preference mandates Congress established support the sustainment and readiness of a U.S.-flagged, privately-owned, international trading commercial fleet, and the continued employment of American private sector merchant mariners.

In addition to cargo preference laws, U.S. coastwise trade laws, commonly referred to as the Jones Act, help sustain the U.S-flag domestic trading fleet.  Jones Act vessels employ U.S. mariners and ensure that vessels navigating daily among and between U.S. coastal ports and inland waterways operate with U.S. documentation and a majority American crew, rather than under a foreign flag with foreign crew.  The American mariners of the Jones Act fleet are our “eyes and ears” in domestic ports and waters and add an important layer of security for our Nation.  In addition, Jones Act requirements support U.S. shipyards and repair facilities, and sustain supply chains that produce and repair American-built ships (including Navy and Coast Guard vessels).  Maintaining a domestic base of shipbuilding and repair facilities is critical to ensuring the readiness of our strategic sealift fleet. 

U.S. Merchant Mariners

As I stated earlier, the number of vessels in the U.S.-flag, oceangoing fleet has reached a low point. I am concerned that the current fleet size could impact our ability to quickly assemble an adequate number of qualified mariners with the proficiency to operate large ships (unlimited horsepower and unlimited tonnage) needed for surge and sustainment sealift operations during a mobilization that lasts more than six months. We may be short of the number of mariners needed to meet crewing requirements beyond those first six months. While, historically, the men and women of the U.S. merchant marine have voluntarily shipped out in times of need, and even extended their time at sea beyond normal tours when called upon to do so, it is important to note that commercial mariners are under no legal obligation to do so.  MARAD is conducting a survey of mariners to ascertain with more certainty their potential availability and willingness to “answer the call.”  The results will help clarify the size of the pool of qualified mariners upon which our Nation could potentially rely in times of need.  Additionally, we are working to better track licensed mariners who may no longer be sailing, but could serve if needed, and project mariner availability to meet the Nation’s commercial and sealift requirements.

Mariner Training

To ensure that qualified mariners remain available to satisfy DOD sealift requirements, the Department of Transportation (DOT) and MARAD are firmly committed to mariner officer development at the U.S. Merchant Marine Academy (USMMA or Academy) and six State Maritime Academies (SMAs).[2]  Each year, the USMMA graduates approximately 225 new highly skilled, entry-level Merchant Marine officers who are qualified to crew large, ocean-going vessels.  Our Midshipmen must have 360 days of sea service in order to qualify for their U.S. Coast Guard credentialing exams.  This shipboard training program exposes Midshipmen to life at sea aboard commercial and military vessels.  USMMA graduates must accept active-duty or reserve officer commissions in an Armed Service or other uniformed service of the United States.  The graduates who do not pursue the active duty option (the majority of graduates) become guaranteed source of mariners who will crew Government owned surge sealift vessels.  The President’s FY 2020 Budget requests $81.9 million for the USMMA to maintain the highest standards of mariner education and training.

The Academy, MARAD, and DOT are committed to ensuring the safety of Midshipmen both on campus and during their sea year.  Since I became Maritime Administrator, we have improved Academy programs and procedures related to sexual harassment and sexual assault, and are making progress to instill a culture of zero-tolerance for such behavior.  I am pleased with the direction and momentum of change at the Academy under the leadership of our new Superintendent, RADM Jack Buono, but am also cognizant that eliminating sexual assault and sexual harassment is an issue that requires consistent attention.  As such, addressing sexual harassment and sexual assault at the Academy remains a top priority for me and DOT leadership.

The SMAs collectively graduate approximately 900 entry-level merchant marine officers annually.  Unlike the USMMA, SMA cadets receive most of their sea time while sailing on board MARAD-provided training ships, rather than on commercial or military vessels.  The SMA training ships are very old and need to be replaced.  We appreciate the support Congress has provided for the School Ship recapitalization program, by appropriating funding for one vessel each in FY 2018 and FY 2019.  Since that first appropriation in March 2018, MARAD has developed and implemented an acquisition strategy, incorporated industry feedback into the ship design, and is well along in evaluating proposals to select a Vessel Construction Manager.   The President’s FY 2020 Budget requests $242.3 million for the SMAs, which includes funding for a third training vessel, and maintaining the existing training ships.

Competitiveness

Moving freight efficiently—both domestically and globally—is critical to U.S. competitiveness.  Freight volumes in the U.S. are projected to increase by 41 percent, and U.S. foreign trade is forecast to more than double from 2015 to 2045.[3]  The ability of our ports to increase capacity and handle cargo more efficiently is vital to the health of many domestic industries and our Nation’s economy.  The newest tool available to DOT in this regard are Port Infrastructure Development grants.  The FY 2019 Consolidated Appropriations Act, P.L. 116-6, provided $292.7 million for the Port Infrastructure Development Program, which is authorized under 46 U.S.C. § 50302.  Through this program, DOT will provide grants to coastal seaports for infrastructure improvement projects that are directly related to port operations, or intermodal connections to ports that improve the safety, efficiency, or reliability of the movement of goods into, out of, or around coastal seaports. 

The FY 2019 Consolidated Appropriations Act also provided funding for other MARAD programs we will use to help increase the competitiveness of the U.S. maritime industry.   The Act provided $20 million for the Small Shipyard Grant program for shipyard modernization projects, $7 million for America’s Marine Highway projects to develop and expand services to move freight along our waterways and coastlines to relieve land-side congestion, and $3 million for the Maritime Environmental and Technical Assistance program to support research and development to facilitate environmental compliance and enhance sustainability across the maritime industry.

Conclusion

Thank you for the opportunity to highlight MARAD’s programs that support the safety, security, and competitiveness of our Nation.  I appreciate this Subcommittee’s continued support for the U.S. maritime industry and I am happy to respond to any questions you may have.

Indian Affairs

WRITTEN STATEMENT OF
TIMOTHY HESS
ASSOCIATE ADMINISTRATOR,
OFFICE OF FEDERAL LANDS HIGHWAY FEDERAL HIGHWAY ADMINISTRATION,
U.S. DEPARTMENT OF TRANSPORTATION

BEFORE THE
COMMITTEE ON INDIAN AFFAIRS,
UNITED STATES SENATE

April 3, 2019

Chairman Hoeven, Vice Chairman Udall, Members of the Committee, thank you for the opportunity to appear before you today to discuss enhancing Tribal self-governance and safety on Indian roads.  The Federal Highway Administration (FHWA) has a long history of working closely with Tribal governments, and I am proud of the relationships that we have built.  We are committed to partnering with Tribes to address their transportation needs.  I would like to update you on a number of efforts we have underway.

TRIBAL SELF-GOVERNANCE

The Department of Transportation (Department) is working to establish the Tribal Transportation Self-Governance Program created by section 1121 of the Fixing America’s Surface Transportation (FAST) Act.  This program will establish a new option for Tribes to receive transportation funding via a compact and funding agreement negotiated between the Department and an eligible Tribe that elects to participate in the self-governance program.  The Department of the Interior and the Indian Health Service already have self-governance programs.      However, because the Department does not carry out services or activities on behalf of, or for the benefit of, Indian Tribes, the focus of the rulemaking to implement the program has been on eligibility, internal Departmental operations to provide flexibility and alleviate administrative burdens, and implementing those provisions of the Indian Self-Determination and Education Assistance Act that address self-governance, while acknowledging the Department’s inherently Federal functions.

We have made significant progress in implementing this program, consistent with our goal to provide maximum participation of Tribes in the development and management of transportation programs on Tribal lands.  To date, the Department has preliminarily identified a large number of formula-funded, discretionary, and competitive grant programs that may be included in a self-governance annual funding agreement.  The Department recognizes the sovereignty of Tribal governments and respects Indian self-determination and Tribal self-governance.  The Department is committed to upholding the Federal Government’s unique trust responsibility by honoring the government-to-government relationship between the United States and federally recognized Indian Tribes.  The Department’s goal is to continue to engage Tribal leaders to develop, to the maximum extent possible, a consensus self-governance regulation that adequately addresses the concerns of the Federal government and Tribal leaders.

Negotiations 

In mid-2016, the Department began to implement the congressional directive to promulgate regulations to carry out a Tribal transportation self-governance program by convening a negotiated rulemaking committee composed of 18 Tribal and seven Federal representatives.  The rulemaking committee met five times in 2016, four times in 2018, and will meet twice in 2019 to develop recommendations and proposed regulatory text for consideration by the Secretary.

Following enactment of H.R. 6414 (Public Law 115-235), which extended the statutory deadlines for rulemaking, the Department engaged the services of facilitators from the Federal Mediation and Conciliation Service (FMCS) to assist the committee in its negotiations.  The committee agreed to focus its efforts on discussing goals, intent, and concerns related to the program and its implementation, while charging a smaller, drafting work group to develop recommended language for consideration by the full committee.  The FMCS is also facilitating the work of this drafting group.  Most recently, the drafting group met in February 2019, and the committee has empowered the drafting group to develop the remainder of the rule using this process.

The drafting group will meet three times over the next two months to develop additional recommended language for the committee’s consideration, and the proposals will be previewed for committee members following each drafting group meeting.  There will be an additional plenary meeting in June 2019 to present revised proposals for consideration by the full committee.  Pending the outcome of this meeting, the Department expects to issue a proposed rule later this summer.

The Department notes that following enactment of H.R. 6414 in August 2018, Congress extended to June 4, 2019, the statutory deadline for the Department to issue a proposed rule.  The Department anticipates that, with the consent of the rulemaking committee, it may have to invoke a 180-day extension to issue the proposed rule.  If that occurs, the Department will notify Congress.

SAFETY ON INDIAN ROADS

Safety is the Department’s top priority and I am committed to enhancing transportation safety for Tribal communities.  As stated in the August 2017 Tribal Transportation Strategic Safety Plan, prepared by the Tribal Transportation Safety Management System Steering Committee, despite known underreporting, data from the Fatality Analysis Reporting System (FARS) showed 3,278 available fatality reports in Tribal areas during the five-year period from 2010-2014.  This is not acceptable.  We must improve transportation safety in Tribal areas.  FHWA is committed to working with our Tribal partners, the Bureau of Indian Affairs (BIA) and other Federal agencies, States, and other public organizations to identify and implement solutions to address this important issue.

FHWA Programs

Tribal transportation facilities are essential to providing safe and adequate transportation to and within Tribal land.  A number of FHWA programs support Tribal transportation.  Some examples are detailed below. 

Tribal Transportation Program

The Tribal Transportation Program (TTP) provides funding for projects to provide safe and adequate transportation and public road access to and within Indian reservations, Indian lands, and Alaska Native Village communities.  The TTP provides funding to improve transportation for all 573 federally-recognized sovereign Tribal governments and is the largest Federal Lands Highway program.  The program is jointly administered by FHWA and the BIA. We work together to partner with Tribes and provide robust training and technical assistance to support Tribes in enhancing Tribal transportation. 

In addition to promoting safety, the TTP contributes to the economic development, self-determination, and employment of Indians and Native Americans.  While the vast majority of TTP funds are distributed to Tribes via Tribal shares determined by statutory formula, the program includes a set-aside for the TTP Safety Fund (TTPSF), which makes funds available to Tribes through a competitive, discretionary program.  The TTPSF supports the Department’s safety priority and emphasizes the development of Transportation Safety Plans, which play a critical role in determining how to best address transportation safety needs.   One example of the way TTPSF funds benefit Tribes is a project funded by the TTPSF and TTP Tribal shares.  Using these funds, the Citizen Potawatomi Nation in Oklahoma designed and constructed a pedestrian pathway providing safety access between the Tribal area and the nearby city of Shawnee.

In addition to the TTPSF set-aside, the TTP includes a set-aside for the TTP Bridge Program, which addresses the important issue of bridge safety by providing resources for planning, design, engineering, preconstruction, construction, and inspection of bridge projects.  Tribes apply for these bridge funds, and, after a completed application package is received and accepted by FHWA, applications programmed for funding are placed in either a preliminary engineering or construction queue.  Applications are ranked and prioritized based on established criteria and those applications not funded remain in the queue and carry over from fiscal year to fiscal year until funded.

The TTP also includes a set-aside for Transportation Planning, which funds Tribal transportation planning activities.  The stated purpose of transportation planning is to fulfill goals by developing strategies, including strategies to address public safety, to meet transportation needs. 

Not only has the TTP program improved safety, but it has also made infrastructure improvements in Tribal areas that are critical for survival.  For example, the Gwich’in people who live in the Yukon Flats area of Alaska make a living from hunting and selling handicrafts.  Their subsistence depends on these hunts, fishing, berry picking, and firewood gathering which was, just barely, facilitated by a bridge with a National Bridge Inventory (NBI) sufficiency rating of 4.8.  The bridge was closed to all traffic in 2013, greatly impacting the Gwich’in people.  However, because of an FHWA Accelerated Innovation Deployment grant and the TTP Bridge Program, it was replaced with a Geosynthetic Reinforced Soil bridge and reopened in October 2017.

Highway Safety Improvement Program

The Highway Safety Improvement Program (HSIP) is a strategic, data-driven program that improves safety on all public roads, including roads in Tribal areas.  The program’s purpose is to achieve a significant reduction in traffic fatalities and serious injuries.  HSIP funds have been used for a number of safety-related projects in Tribal areas.  For example, the Jamestown S’Klallam Tribe in Washington State made safety realignments to the intersection of US-101 and Chicken Coop-Zaccardo with a project that combined TTPSF funds and HSIP program funds. 

Nationally Significant Federal Lands and Tribal Projects Program

The Nationally Significant Federal Lands and Tribal Projects (NSFLTP) Program provides funding for the construction, reconstruction, and rehabilitation of nationally-significant projects within, adjacent to, or accessing Federal and Tribal lands.  The Department published a Notice of Funding Opportunity for this competitive program in October 2018 and is currently reviewing applications.  Consistent with the statutory selection criteria established in the FAST Act, evaluation of applications for this program includes consideration of the extent to which the project furthers the goals of the Department, including safety.

Tribal Technical Assistance Program

In addition to the programs described above, the Tribal Technical Assistance Program (TTAP) provides centralized delivery of highway-related training, technical assistance, and technology transfer to Tribes.  The TTAP operates five Virtual Centers of Excellence (CoE), each staffed with subject matter experts to provide training and technical assistance in their specialty areas.  One of the five CoEs is specifically focused on safety.  FHWA is committed to providing effective technical assistance to Tribes and is evaluating the centralized delivery model launched in 2018 over the course of a two-year pilot.  Through February 2019, a total of 2,609 training hours have been delivered under the pilot.  This is a 60 percent increase over the five-year average of training hours delivered from 2012 through 2016.

In addition to the programs described above, some Tribes have benefitted from State planning and investment decisions with a State’s Federal-aid program funding.  FHWA will continue to work with our Tribal partners as we administer these programs and work together to achieve enhanced safety for all Tribes. 

Tribal Transportation Safety Reports to Congress

Congress recognized the need to address Tribal transportation safety in the FAST Act.  Section 1117 of the FAST Act directed the Secretary to: (1) submit to Congress a report describing the quality of transportation safety data collected by States, counties, and Indian Tribes for transportation safety systems and the relevance of that data to improving the collection and sharing of data on crashes on Indian reservations, and (2) complete a study that identifies and evaluates options for improving safety on public roads on Indian reservations and submit to Congress a report describing the results of the study. 

Tribal Governments & Transportation Safety Data

In order to evaluate the quality of transportation safety data, FHWA utilized a survey developed by the Tribal Transportation Safety Management Steering Committee (SMS Committee).  FHWA has played a key leadership role in this committee, which it co-chairs with the BIA.  The goal of the SMS Committee is to prevent and reduce fatalities and injuries associated with the use of Tribal transportation facilities.  The SMS Committee members include representatives from Tribal governments and Federal agencies, including FHWA’s Tribal Transportation Program, Office of Safety, and Resource Center. 

The survey developed by the SMS Committee was made available to all federally-recognized Tribes and the States in which those Tribes are located.  The survey responses were analyzed to evaluate the quality of existing Tribal transportation safety data, opportunities for improved data collection, options for paperless reporting, and uses of crash data.  Based on that analysis, in May 2017, FHWA delivered to Congress the report required pursuant to section 1117(b) of the FAST Act:  Tribal Governments & Transportation Safety Data. 

As stated in the May 2017 report, many Tribes are not adequately represented in State and national crash databases that often drive policy, program, and project decisions because some crash data is not shared with State governments.  Additionally, some incidents are undocumented.  The report noted that Tribes and States identified several barriers inhibiting the sharing of crash data, including Tribal-State communication, resources required to collect and share crash data, and Federal policy for crash reports. 

The May 2017 report included many actions DOT agencies would take to improve the quality and availability of safety data in Tribal areas.  Consistent with these recommendations, FHWA continues to accept any form of crash data from Tribes when evaluating applications for TTPSF grants and has encouraged Tribes to conduct a self-assessment of traffic records and submit the assessment with their grant applications if formal documentation of crashes is not available.  FHWA also provides assistance as requested to encourage Tribal involvement in performance measure establishment. 

Additionally, in coordination with FHWA, NHTSA updated their Traffic Records Program Assessment Advisory to include multiple references to Tribal governments.  This Advisory provides guidance on different assessment processes States may utilize to evaluate their State’s highway safety data and traffic records system.  The inclusion of references to Tribal governments in the Advisory will encourage new conversations about partnering with Tribes as States review their safety data systems.  In addition to coordinating within the Department, FHWA is involved in ongoing coordination with the Department of the Interior (DOI) to address standardizing collection of crash data by DOI law enforcement and continues to work as part of the SMS Committee to improve Tribal transportation safety.

FHWA will continue its efforts and partnerships to improve collection and sharing of safety data so that Tribes are better able to address safety issues through strategic safety planning and implementation.  Improved data collection and sharing also has the potential to afford Tribes improved access to funding opportunities, as analysis of information available via State and national crash databases can inform project decisions, such as the selection of roadway safety improvements through the Highway Safety Improvement Program (HSIP). 

Options for Improving Transportation Safety in Tribal Areas

In August 2017, the SMS Committee published the Tribal Transportation Strategic Safety Plan (Safety Plan), addressing topics selected based on review of multiple data sources.  Based on this plan, in January 2018, FHWA delivered to Congress the report required pursuant to section 1117(c) of the FAST Act:  Options for Improving Transportation Safety in Tribal Areas.  This report summarizes the topics addressed in the Safety Plan, separated into two categories:  priority and additional topics.  The priority topics are those which data indicates are national-level issues or which help establish data driven decision-making frameworks, while additional topics may be emerging issues or may be identified by a Tribe through analysis of incident history.  The priority topics identified in the January 2018 report are:  (1) Transportation Safety Decision Making Process; (2) Crash Data Collection, Sharing, and Analysis; (3) Occupant Protection, Child Passenger Seats, and Helmets; (4) Roadway Departure; (5) Impaired Driving; (6) Pedestrians; and (7) Availability of Public Safety Services.  In addition to identifying these priority topics, the report discusses strategies identified in the Safety Plan that Tribes may utilize to improve transportation safety, and recognizes that a Tribe’s unique incident history and local knowledge may identify other priority areas for which other strategies should be considered.   

FHWA is promoting the priority topics identified in the January 2018 report at regional and national conferences and encouraging Tribes to consider these topics as they develop and update Tribal Transportation Safety Plans.  FHWA is committed to finding additional ways to encourage and assist Tribes with these topics and intends to partner through the SMS Committee to identify additional ways this can be accomplished. 

In addition to identifying priority topics and strategies to address them, the January 2018 report identifies general options for Federal agencies to improve transportation safety in Tribal areas.  FHWA is already executing many of these recommended options, for example, by accepting the best available data when evaluating applications for TTPSF grants; fostering good relations and facilitating communication between Tribes and States; providing training, technical assistance, and resources to support Tribes in addressing safety issues; and continuing to actively collaborate with Tribal and Federal agency partners, including the BIA, in the SMS Committee.  FHWA will continue to look for additional opportunities to partner with Tribes, the BIA and other Federal agencies, and other organizations to enhance Tribal transportation safety.   

CONCLUSION

Thank you again for the opportunity to appear before you today.  I would be happy to answer any questions you may have. 

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Pipeline Safety and Reauthorization

WRITTEN STATEMENT OF
THE HONORABLE HOWARD “SKIP” ELLIOTT ADMINISTRATOR
PIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION

BEFORE THE U.S. HOUSE OF REPRESENTATIVES COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE
SUBCOMMITTEE ON RAILROADS, PIPELINES, AND HAZARDOUS MATERIALS HEARING ON PIPELINE REAUTHORIZATION

April 2, 2019

I. Introduction

Chairman Lipinski, Ranking Member Crawford, members of the Subcommittee, thank you for inviting me to testify today on the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration’s (PHMSA) pipeline safety program. I appreciate this Committee’s strong support for strengthening pipeline safety across our country.

Our nation’s infrastructure keeps this great nation moving and helps to raise the standard of living for all Americans.  The natural gas and hazardous liquid pipelines PHMSA regulates are an essential component of our national infrastructure, safely transporting the energy products that are essential to our daily lives.  Like all DOT modes, PHMSA is guided by Secretary Chao’s four strategic goals of safety, infrastructure enhancements, innovation, and accountability.

A. PHMSA’s Mission

The mission of PHMSA is to protect people and the environment by advancing the safe transportation of energy products and other hazardous materials that are essential to our daily lives. The need for safe and reliable energy infrastructure is growing. Our nation is experiencing an energy renaissance, propelled largely by innovative production technologies and global demand for U.S. energy.

PHMSA’s pipeline safety program is responsible for the regulation and oversight of over 2.7 million miles of energy pipeline systems. The vision of the pipeline safety program is straightforward: update or develop new regulations, policies, and guidance; improve our oversight to hold pipeline operators accountable; find innovative solutions to promote safety; and accommodate and encourage research into new and promising technologies. Each of these goals ensure that pipeline infrastructure can continue to provide safe and reliable energy to our communities, homes, and businesses.

After working for decades in the freight rail industry, a great deal of it leading efforts to improve public safety and incident response, I have learned that safety is the result of effective, smart regulations that hold industry accountable, and reduce costs, when possible.

PHMSA’s safety goal is zero pipeline accidents and its oversight philosophy is based on three fundamental tenets:

1. Establish minimum safety standards and take enforcement actions against operators not in compliance with these standards.
2. Ensure operators understand and manage the risks associated with their pipelines, including taking actions to prevent pipeline accidents and minimizing the impact of any accidents that occur.
3. Continually encourage and expect pipeline operators to improve their performance beyond minimum compliance with the regulations and continuously build a strong safety culture.

II. Progress on Mandates

When I spoke to this Subcommittee last year, I heard clearly from its members that finalizing outstanding Congressional mandates must be a top priority. PHMSA recognizes the concerns of this Subcommittee and is continuing to make progress on critical safety mandates. Since June 2018, PHMSA completed and submitted reports to Congress on the Nationwide Integrated Pipeline Safety Regulatory Database, as well as a report on the Study on Propane Gas Pipeline Facilities. Both reports were mandated in the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011.

Over the past year, PHMSA prioritized the rules it thought it could move quickly such as those for lithium batteries, plastic pipelines, and oil spill response plans for trains carrying crude oil. These regulations are intended to advance public safety, while encouraging innovation and greater stakeholder awareness and collaboration. These key rulemakings are detailed below.

Of the mandates from the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011, PHMSA has eight of 42 mandates remaining. Additionally, of the mandates from the Protecting Our Infrastructure of Pipelines and Enhancing Safety Act of 2016, PHMSA has four of 19 mandates remaining.

Together, of the 12 remaining mandates from the 2011 and 2016 Acts, four are tied to reports and other actions, and eight are tied to rulemaking efforts that PHMSA is continuing to make progress on under its established rulemaking process.

As Administrator, I am committed to doing everything I can to complete all the remaining rulemakings that address Congressional directives related to pipeline safety. I believe completing these mandates will result in significant positive impacts to pipeline safety.

Completing rulemakings takes time simply because it is an iterative process that is designed to encourage maximum participation by all stakeholders, thus ensuring comprehensive rules that protect the public and stand up to cost/benefit scrutiny. PHMSA holds public meetings and workshops prior to rulemakings, using the information gathered to craft the most effective rules possible. Such collaboration, well in advance of the rulemaking process, allows PHMSA to identify concerns and potential solutions to allocate its scarce resources where they are needed most. 

In addition to mandates, many of PHMSA’s rulemakings underway address important recommendations from the National Transportation Safety Board (NTSB), resulting from safety issues identified during accident investigations. PHMSA’s rules also address recommendations from the U.S. Government Accountability Office (GAO) and the DOT Inspector General (IG), and the agency’s own safety findings. PHMSA must make sure that its regulations account for known safety issues, technological feasibility, and cost effectiveness.

In short, a lot of work goes on behind the scenes to get a rule ready for publication, and PHMSA is making positive movement towards completing the safety critical mandates and addressing recommendations from Congress, the NTSB, GAO, and IG, as well as our own safety findings.

A. Hazardous Liquid Rule

PHMSA understands the importance of moving forward its long-awaited Safety of Hazardous Liquid Pipelines rulemaking, which was included in the 2011 Act. This rulemaking would amend the pipeline safety regulations to improve protection of the public, property, and the environment by closing regulatory gaps where appropriate. In addition, this rule is intended to ensure that operators are increasing the detection and remediation of unsafe conditions, and mitigating the adverse effects of hazardous liquid pipeline failures. This rule is one of PHMSA’s highest priorities and is on track to be completed and published in 2019.

B. Gas Transmission Rule

PHMSA is also making significant progress toward finalizing its gas transmission and gathering pipeline rulemaking efforts. This is intended to help close two very important open mandates related to the expansion of integrity management principles and requirements for operators to confirm the maximum allowable operating pressure of certain gas pipelines. These changes are expected to allow operators to assess more pipelines and better understand their systems’ conditions.

When finalizing the “Safety of Gas Transmission and Gathering Pipelines” notice of proposed rulemaking (NPRM), the proposed rule was under review for nearly 2 years. Delays were largely due to the proposed rule being too big and unwieldy to move through the administrative process.  Accordingly, PHMSA made the strategic decision to split the initial proposed rule into smaller, more manageable rulemaking actions. The split will help PHMSA manage each individual rule more efficiently; and, most importantly, prioritize Congressional directives on gas pipelines. Additionally, while working to complete the Congressional mandates this rulemaking will address, PHMSA is also using its resources to incorporate and advance several recommendations from the NTSB and GAO as part of the rule.

PHMSA’s goal is to publish the final rule addressing Congressional directives this year, and will continue working to ensure that the other rules follow closely behind.

C. Valve and Rupture Detection Rule

PHMSA is developing an NPRM to address leak and rupture detection. The Shutoff Valve and Rupture Detection rule will meet the goals of two Congressional directives. It proposes revisions to the pipeline safety regulations for newly constructed or entirely replaced natural gas transmission and hazardous liquid pipelines.  In doing so, the rule is intended to improve rupture mitigation and shorten the time it takes to shut down a pipeline segment. The rule will also address recommendations from the NTSB and is expected to help reduce the serious consequences of large-volume releases of natural gas and hazardous liquids.

PHMSA is proposing standards for operators to utilize rupture detection metrics for valve placement to improve incident response in populated or environmentally sensitive areas. Rupture response metrics would focus on mitigating large release events that have a greater potential consequence. This rulemaking is currently under comprehensive review at the Department and we are working to move it forward as expeditiously as possible.

D. Plastic Gas Pipe Rule

This rule, published in November 2018, updated pipeline safety regulations to allow for the modernization of plastic pipe material, design, and construction standards. This final rule also responds to plastic pipe installation and operational safety concerns identified by federal and state field inspectors. With this rule, new or replaced local gas distribution systems will be built and maintained with the most advanced pipeline technology, which is expected to greatly improve public safety for local communities.

E. Hazardous Materials Transportation Directives from Congress

PHMSA also regulates the safety of hazardous materials by all modes of transportation, including by highway, railroad, vessel, and airways. Although PHMSA’s two program offices are authorized separately, we are one PHMSA. We share resources, knowledge, and most importantly, we share the same safety goals.

On February 28, 2019, PHMSA, in coordination with the Federal Railroad Administration, issued a final rule that amends the Hazardous Materials Regulations requirements for comprehensive oil spill response plans and information sharing. This rule was requested by Congress in the fiscal year 2016 Consolidated Appropriations Act. The rulemaking sets safety standards for rail operator response to incidents involving crude oil transported by rail.

Additionally, on March 6, 2019, PHMSA, in collaboration with the Federal Aviation Administration (FAA), published an interim final rule (IFR) for the safe transport of lithium batteries by aircraft. The IFR is first of PHMSA’s completed actions in addressing directives included in the FAA Reauthorization Act of 2018. This IFR prohibits the transport of lithium ion cells or batteries as cargo on passenger aircraft. In addition, the IFR requires lithium ion cells and batteries to be shipped at not more than a 30 percent state of charge aboard cargo-only aircraft. The IFR is intended to strengthen safety for the traveling public by addressing the unique challenges lithium batteries pose in transportation.

F.Regulatory Reform

While PHMSA works to complete its regulatory agenda, the agency is also committed to improving the effectiveness of our regulatory program by conducting a comprehensive evaluation of current, in-progress, and planned regulations.

PHMSA’s rulemaking efforts are driven by the belief, consistent with Executive Orders 13771, 13777, and 13783 and other legal authorities, that there should be no more regulations than necessary, and those regulations should be straightforward, clear, and designed to minimize burdens, consistent with safety. We also believe that public input is a critical part of the rulemaking process and have proactively sought public comments on our regulatory review and rulemaking efforts. PHMSA is using public input to decide on the best approach, consistent with our regulatory philosophy, to meeting the Department’s statutory obligations.

PHMSA’s review will help to ensure that its regulations are right-sized – which can allow operators to put additional resources where they will have the maximum safety impact, such as greater investment in safety research and development and technology-based safety enhancements.

As always, our focus is ultimately on safety performance. It is the responsibility of the oil and gas industry to understand and manage the risks of their systems. The current regulatory climate gives us all a unique opportunity to work together to optimize our regulations for safety. The pipeline industry should continue to invest in and accelerate their pipeline safety efforts and make substantive safety improvements best suited to their systems and without specific direction from regulations.

III. Other Actions

In addition to completing the important mandates given to it by the Congress, PHMSA continues to aggressively pursue its core safety mission through grants to states and communities, research and development initiatives, and additional safety programs.

A. Support for States

PHMSA’s state pipeline safety partners oversee more than 80 percent of the nation’s pipeline infrastructure – much of it gas distribution pipelines – through annual certification with PHMSA.

An important part of these partnerships is that PHMSA stands ready to support states in times of crisis. In the wake of hurricanes Harvey, Florence, Irma, Maria, and Michael, PHMSA worked with impacted states and pipeline operators to remove obstacles that could delay safe and rapid recovery efforts. PHMSA coordinated and provided periodic updates to Federal partners during the response and recovery phases of each natural disaster to assist with the movement of hazardous materials and energy products. For pipelines, PHMSA issued emergency stays of enforcement for affected operators, temporarily halting its enforcement of compliance with operator qualification and pre-employment and random drug testing requirements to allow affected interstate gas and hazardous liquid pipeline operators to use personnel for urgent response and recovery activities. PHMSA also notified impacted state pipeline safety partners that PHMSA would not object to them issuing similar temporary waivers for affected intrastate pipeline operators, in the interest of prompt and efficient pipeline safety activities related to response and recovery efforts. Expediting pipeline repairs and restoration of service to those areas was our top priority.

In addition, PHMSA provides help to facilitate investigation and recovery following major incidents. In the wake of the tragic September 13, 2018 natural gas accident involving Columbia Gas of Massachusetts, PHMSA quickly dispatched a team of inspectors to Massachusetts to provide technical assistance to the Massachusetts Department of Public Utilities (MA DPU) and the NTSB.

PHMSA’s pipeline inspectors played an instrumental role in the investigation, helping to determine the cause of the incident, and explaining the mechanics of how such an accident could occur. The Governor of Massachusetts, the mayors of the three affected towns, the NTSB, the incident commander, our state partners in the MA DPU, and members of the Massachusetts Emergency Management Agency all expressed their appreciation of the help provided by PHMSA’s pipeline safety team and cited their professionalism, experience, and knowledge as being crucial to the success of the overall response to the incident.

PHMSA also supports state programs by providing essential technical training. Our state-of- the-art Training and Qualifications (T&Q) program has full accreditation from the International Association for Continuing Education and Training (IACET). The T&Q Center trains an average of 900 state and federal inspectors annually, ensuring that all are current on updated regulations, technology, and best practices.

PHMSA’s T&Q Center is committed to developing innovative ways to be more accessible and effective, including the exploration of long-distance proctored classes, curriculum improvements, and more efficient delivery to ensure relevancy. The T&Q Center is also working to develop an effective and efficient distance delivery system that does not sacrifice the high quality of PHMSA’s training curricula. PHMSA’s goal is to make it easier for state and federal inspectors to access the courses they need quickly and at a lower cost.

B. Grants

The financial support PHMSA provides to its state partners through grants is another vital part of its partnerships. In total, PHMSA provided over $63 million in grant funding in fiscal year 2018 for pipeline inspection, enforcement, and safety awareness activities.

PHMSA’s State Base Grant program reimburses a portion of each partner state’s program expenses. The grants partially cover the cost of any personnel, equipment, and activities reasonably required for the conduct of the pipeline safety program. Most importantly, PHMSA’s grants provide state programs a consistent source of funding to hire and maintain adequate pipeline safety inspectors. For fiscal year 2018, PHMSA awarded $56 million to participating state programs. As the number of miles of pipeline infrastructure continues to grow and as the older pipes age, this grant program is critical to the oversight of the nation’s distribution pipeline systems.

PHMSA’s Technical Assistance Grants (TAGs) provide funding for technical assistance related to pipeline safety issues to local communities and non-profit organizations, where they make direct impacts to pipeline safety at the grassroots level. The TAGs can be used for engineering or other scientific analysis of pipeline safety issues and are also used to promote public participation in official proceedings. Since the program’s inception in 2009, PHMSA has awarded over $10 million for 200 individual technical assistance projects. PHMSA issued a Notice of Funding Opportunity for its fiscal year 2019 TAG grants in March and expects to award $1.5 million in grant funds to several recipients (up to $100,000 each) by September 2019.

PHMSA’s 811 One Call Grant Program provides funding to state agencies for promoting damage prevention awareness, including changes with their state underground damage prevention laws, related compliance activities, training and public education. This grant program is for states that have a certification or agreement with PHMSA to perform pipeline safety inspections. Last year, PHMSA awarded $1.1 million across 31 state agencies to assist in these efforts.

Finally, I am pleased to say that in 2018 PHMSA awarded its first ever round of Underground Natural Gas Storage Grants – first authorized in 2016 – in support of states’ inspection and enforcement of underground natural gas storage facilities. The grants are used to reimburse up to 80 percent of the costs a state incurs for inspectors, equipment, and safety activities for the oversight of underground storage facilities.

C. Damage Prevention

Excavation damage continues to be a leading cause of pipeline incidents. This year, PHMSA began issuing enforcement actions against excavators who damage pipelines in states that do not adequately enforce their own excavation damage prevention laws. PHMSA continues to support states with efforts to improve their own enforcement programs. PHMSA has seen marked improvements since 2016 in 14 states that have changed from inadequate to adequate programs per the PIPES Act of 2006 and our regulatory criteria. PHMSA continues to work with the 13 remaining states with inadequate programs to bring all programs up to an adequate level.

I would also like to thank all PHMSA stakeholders – especially the public – for the continued success of the national Call-Before-You-Dig number, 811. Over the past 10 years, since 811 was established, pipeline incidents caused by excavation damage have fallen 40 percent. This decline would not have been possible without strong collaboration from all stakeholders.

D. Advancing Domestic Energy

In August 2018, PHMSA established a new Memorandum of Understanding (MOU) with the Federal Energy Regulatory Commission (FERC) that eliminates unnecessary and duplicative regulatory reviews by both agencies when permitting new Liquefied Natural Gas (LNG) export facilities. Going forward, PHMSA will operate as the Federal Government’s LNG safety expert for Federal regulations covering the safety of LNG facilities and will be solely responsible for conducting the necessary safety analysis for new LNG facilities that may be permitted by FERC.

PHMSA assesses each LNG facility application for FERC on a case-by-case basis to determine whether the application meets the minimum Federal Pipeline Safety Standards for the location of a new LNG facility. So far, PHMSA has issued eight Letters of Determination to FERC under the MOU. This agreement may help reduce the time it takes to obtain a new LNG export permit by as much as one year.

E. Integrity Management

PHMSA continues to require integrity management programs that ensure operators are adequately identifying and addressing the greatest risks. Under integrity management, operators are required to conduct integrity assessments of gas transmission and hazardous liquid pipeline systems in high consequence areas and apply lessons learned across their entire system. Thanks to integrity management, gas transmission and hazardous liquid pipeline operators have identified and conducted over 90,700 repairs in high consequence areas between 2004 and 2017.

F. Research and Development

PHMSA’s Research and Development (R&D) program supports new technology to further improve pipeline safety. The R&D program sponsors research on projects that can provide near-term solutions to improve safety, reduce environmental impacts, and enhance the reliability of the Nation’s pipeline transportation system.

Since 2002, PHMSA has invested nearly $125 million dollars in 304 R&D projects and, in the past six months, two new technologies for methane leak detection and one to prevent excavation damage threats have been commercialized. Since the program’s inception, 31 patent applications and 31 new pipeline technologies have hit the market, including above-ground, radar-based pipeline mapping and a robotic nondestructive testing method for pipelines that cannot accommodate traditional in-line inspection tools.

PHMSA’s pipeline safety program also takes a far-reaching view with its Competitive Academic Agreement Program (CAAP), which funds academic research to provide tomorrow's pipeline safety workforce with an early opportunity to contribute safety solutions. The CAAP program, launched in 2013, helps validate proof of concept for theories and theses that can be developed and further investigated. The program also serves to expose the next generation of engineers to pipeline challenges and solutions. In September 2018, PHMSA awarded more than $3.8 million to 11 universities via the CAAP.

IV. Conclusion

Safety remains the highest priority for the U.S. Department of Transportation and for PHMSA. The agency is continuing to work hard to publish the rules and reports that will close Congressional mandates, and is also committed to addressing safety matters on all fronts.

As pipeline mileage across our country continues to grow, the need for strong pipeline safety standards and programs is ever more important.

Thank you again for inviting me to today’s hearing. I look forward to your questions.

Appropriations Subcommittee on Transportation, Housing, and Urban Development and Related Agencies

STATEMENT OF
THE HONORABLE ELAINE L. CHAO
SECRETARY OF TRANSPORTATION

BEFORE THE
APPROPRIATIONS SUBCOMMITTEE ON
TRANSPORTATION, HOUSING, AND URBAN DEVELOPMENT AND RELATED AGENCIES
UNITED STATES SENATE

March 27, 2019

Introduction

Chairman Collins, Ranking Member Reed, and members of the Subcommittee, thank you for the opportunity to meet today to discuss the President’s Fiscal Year 2020 Budget request for the Department of Transportation (DOT).  The President’s budget proposal – A Budget for A Better America -- continues to emphasize the importance of addressing our Nation’s infrastructure needs using smart, effective and modern methods that provide results and maximize our resources.

The President’s Budget requests a total of $84 billion to support transportation programs in FY 2020.  About 75% of this request fully funds surface transportation for the “fifth” and final year of the Fixing America’s Surface Transportation (FAST) Act and the Federal Aviation Administration’s authorized funding levels for the Grants-in-Aid for Airports program.  These programs support infrastructure improvements that are critical to maintaining dependable transportation systems that support our growing economy.

The remaining 25% of this request, or $21.4 billion, funds several high priority investments and important reforms that will strengthen our programs while making them more efficient.  This portion of the budget is a $5.1 billion reduction from FY 2019 enacted levels, because of the additional infrastructure investments the Congress committed to in the two-year Government-wide discretionary funding caps deal.  When you deduct those temporary increases, this request provides a robust level for many of the Department’s programs and tracks very closely to the FY 2019 enacted appropriations.   

Comparing DOT Resources Across Years

Some have noted that the President’s FY 2020 Budget request is about 20% less than the FY 2019 enacted appropriations for discretionary programs.  While this is technically true for a relatively small subset of the budget, it is misleading and does not tell the whole story.   There are two important points to consider. 

First, unlike most domestic programs, DOT’s mandatory programs are not traditional entitlements.  Instead, they result from contract authority that is provided for infrastructure transportation programs.  However, these levels are not a given.  Every year the Executive Branch and this subcommittee determine what the annual obligation limit should be that ultimately controls the level of investment.  With this in mind, a comparison of the Department’s overall funding of $84 million provides a more representative measure for comparison and reflects only a 4% reduction.

Timing also plays a critical role in developing budgets.  When the President’s FY 2020 Budget was being developed, we did not have a final FY 2019 Appropriation and were operating under a long-term Continuing Resolution.  In the absence of a FY 2019 Enacted Appropriation, the Administration relied on its own FY 2019 President’s Budget request as the basis for the FY 2020 President’s Budget decisions.  When we compare the President’s Budget request for FY 2019 and FY 2020, the FY 2020 budget provides an overall 8.9% increase.  Further, compared to the FY 2017 enacted level, prior to the budget cap deal increases, the overall increase for FY 2020 is almost 8%.  This reflects the Administration’s strong support for funding transportation infrastructure investments even as other portions of the President’s Budget were targeted for reductions.

Modernizing our Nation’s Airspace

The President’s Budget requests $17.1 billion to support the important work of the Federal Aviation Administration (FAA). The FAA manages our Nation’s airspace and directs the safe transportation of 1 billion passengers and 25 million tons of cargo each year.  At the same time, the FAA is continually advancing new technologies and innovations that improve its operations and help the Agency keep pace with increasing demand for reliable air services.  The FAA’s signature NextGen program is focused on integrating these critical safety and innovation technologies into the National Airspace System using the resources across its accounts. 

The President’s request acknowledges the importance of this program by providing $1.4 billion in resources specifically dedicated to NextGen initiatives.  This is the highest request for NextGen in the Department’s history.  The President’s Budget funds the FAA’s overall Operations at $10.3 billion.  While this level is $70 million below FY 2019 enacted levels, this is only a slight reduction overall and certainly sufficient to meet the Agency’s needs.  At the same time, the FAA’s Facilities and Equipment program received $3.3 billion -- a nearly $300 million increase.  These funds will be focused on modernizing FAA’s infrastructure to improve safety and reduce flight delays.

Improving Surface Transportation Infrastructure

Consistent with previous years and the Administration’s infrastructure improvement priorities, the President’s Budget funds the Federal Highway Administration at the level authorized by the FAST Act to support highway infrastructure improvements and highway safety programs.  The President’s request does not continue the $3.3 billion in funding for the discretionary Highway Infrastructure Program, which was new in FY 2018.  Instead, it provides substantial additional resources to successful competitive programs.  These include $1 billion to the Infrastructure for Rebuilding America (INFRA) Grant program to supplement the $1 billion provided by the FAST Act for a total of $2 billion in INFRA Grants; and $1 billion to the Better Utilizing Investments to Leverage Development (BUILD) Grant program.  The INFRA and BUILD programs have been effective in delivering high returns on investment by encouraging local contributions and partnerships with the private sector.  Another $300 million is provided for the innovative Competitive Bridge Program which encourages States to replace and repair deteriorating bridges cost effectively through project bundling.  In addition, the FY 2020 request includes $500 million to improve the Nation’s aging transit assets and infrastructure.

Transit’s Capital Investment Grant Program

The Federal Transit Administration’s Capital Investment Grant Program supports the construction of new transit, commuter rail, light rail, and bus rapid transit projects.  The Administration continues to encourage increased local contributions in the funding of transit projects.  The President’s Budget provides $1.0 billion to fund the current portfolio of capital investment projects with signed full funding grant agreements at the time the Budget was developed.  In addition, another $500 million is provided for new projects in the program pipeline as they become ready.  

Investing in Emerging Technologies and Innovation

Every day, Americans wake up to new and advanced technological improvements that are changing the way we live, work and enjoy life.  Technology is also rapidly changing transportation.  The Department has a responsibility to ensure that new transportation systems are integrated into the overall transportation network in a safe and prudent way.

The President’s Budget request includes nearly $300 million to address emerging technologies and innovation.  This includes $203 million for unmanned aircraft systems which will be integrated into the National Airspace, and a new Office of Innovation within the FAA to focus on integration issues resulting from the latest emerging technologies.  Another $25.6 million is requested to protect the public during take-off and reentry of Commercial Space launches.

A total of $19.2 million is also requested in the National Highway Traffic Safety Administration’s budget to oversee the introduction of automated driving systems on our Nation’s highways as this technology continues to mature.

Amtrak Reforms

The President’s Budget request proposes reforms to Amtrak that would provide efficiencies and reduce costs.  Amtrak’s new leadership team has been making strides in implementing practical and effective cost saving measures while maintaining quality service.  The President’s Budget funds Amtrak at nearly $1.5 billion in total.  The Northeast Corridor is funded at $325 million which funds Amtrak’s needs based on traditional spending patterns.  Further, the President’s Budget includes funding available for rail infrastructure and safety grants – a new approach from previous requests.

The President’s Budget includes a proposal to reform the way Amtrak’s long-distance routes are managed.  These routes are currently fully funded by Federal dollars and account for the majority of the railroad’s operating losses.  DOT will help lead the way on a new vision, working with stakeholders to develop a rationalized network to provide better, more cost-efficient service.   This modernized network will focus trains on shorter distance routes between promising city pairs, while providing robust intercity bus service to currently underserved rural areas via partnership between Amtrak and bus operators.

At the same time, the Department understands that many States and communities may not have the resources to assume immediate financial responsibility for these services.  With this in mind, the President’s Budget includes $550 million in transitional grants that would assist States in taking on the management of these newly created State-supported routes. The grants would support the costs of these routes in FY 2020 and would phase down and out over a five-year period.

Supporting the Training Needs of the State Maritime Academies

Along with the U.S. Merchant Marine Academy, the State Maritime Academies provide the education and training needed to successfully support the Nation’s needs for qualified and experienced merchant mariners.   The Academies are currently operating with a fleet of training ships that are either at, or approaching, the end of their useful service life.  Funding for the two oldest vessels is already secured and plans are underway to build replacements.  The President’s Budget includes $205 million for a third training ship to further this effort.

Thank you again, for the opportunity to appear before you today to discuss the President’s Fiscal Year 2020 Budget.  I will be happy to answer your questions.

*****

The State of Airline Safety: Federal Oversight of Commercial Aviation

STATEMENT OF DANIEL K. ELWELL, ACTING ADMINISTRATOR
FEDERAL AVIATION ADMINISTRATION

BEFORE THE
SENATE COMMITTEE ON COMMERCE, SCIENCE, & TRANSPORTATION
SUBCOMMITTEE ON AVIATION AND SPACE ON THE STATE OF AIRLINE SAFETY: FEDERAL OVERSIGHT OF COMMERCIAL AVIATION

MARCH 27, 2019

Chairman Cruz, Ranking Member Sinema, Members of the Subcommittee:

Thank you for the opportunity to appear before you today to discuss the current state of aviation safety.  On behalf of the United States Department of Transportation and the Federal Aviation Administration, we extend our deepest sympathy to the families of the victims of the recent Ethiopian Airlines accident, as well as the Lion Air accident. 

Safety is the core of the Federal Aviation Administration’s mission and our top priority.  With the support of this Committee, we have worked tirelessly to take a more proactive, data-driven approach to oversight that instills a safety above all approach inside the FAA and within the aviation community that we regulate.  The result of this approach is that the United States has the safest air transportation system in the world.  Since 1997, the risk of a fatal commercial aviation accident in the United States has been cut by 95 percent.  And in the past ten years, there has only been one commercial airline passenger fatality in the United States in over 90 million flights.  But a healthy safety culture requires commitment to continuous improvement.

Our commitment to safety and fact-based, data-driven decision making has been the guiding principle in the FAA’s response to the two fatal accidents involving the Boeing 737 MAX airplane outside the United States.  Today, I would like to provide you with an overview of the FAA’s certification and oversight processes, our current actions with respect to the 737 MAX, and the next steps that the FAA will take to foster safety enhancements here and abroad.

The FAA is a Data-Driven Agency Focused on Safety

As the aerospace system and its components become increasingly more complex, we know that our oversight approach needs to evolve to ensure that the FAA remains the global leader in achieving aviation safety.  In order to maintain the safest air transportation system in the world, during the past two decades the FAA has been evolving from a prescriptive and more reactive approach for its safety oversight responsibilities to one that is performance-based, proactive, centered on managing risk, and focused on continuous improvement.  A key part of this transition has been the adoption of safety management systems, or SMS, within the FAA.  The evolution toward SMS began internally at the FAA more than 15 years ago, starting with the FAA’s Air Traffic Organization and expanding across the FAA to include all of our lines of business.  Consistent with recommendations of the International Civil Aviation Organization (ICAO), we have been working with industry towards implementation of SMS in various sectors.  For example, as of March 9, 2018, scheduled commercial air carriers, regulated under 14 CFR part 121, are required to have an SMS.

Safety is not just a set of programs that can be “established” or “implemented.”  It is a way of living and working, and it requires the open and transparent exchange of information.  We know that it takes collaboration, communication, and common safety objectives to allow the FAA and the aviation community to come together, to identify system hazards, and to implement safety solutions.  This approach gives us knowledge that we would not otherwise have about events and risks.  Sharing safety issues, trends, and lessons learned is critical to recognizing whatever might be emerging as a risk in the system.  The more data we have, the more we can learn about the system, which in turn allows us to better manage and improve the system.  

To be clear, the SMS approach does not diminish the FAA’s role as a safety regulator.  Any party that the FAA regulates remains responsible for compliance with the FAA’s regulatory standards, and the FAA does not hesitate to take enforcement action when it is warranted.

Aircraft Certification

One of the FAA’s core functions, aircraft certification, has always relied on the exchange of information and technical data.  The FAA certifies the design of aircraft and components that are used in civil aviation operations.  Some version of our certification process has been in place and served us well for over 60 years.  This does not mean the process has remained static.  To the contrary, since 1964, the regulations covering certification processes have been under constant review.  As a result, the general regulations have been modified over 90 times, and the rules applicable to large transport aircraft, like the Boeing 737 MAX, have been amended over 130 times.  The regulations and our policies have evolved in order to adapt to an ever-changing industry that uses global partnerships to develop new, more efficient, and safer aviation products and technologies.

The FAA focuses its efforts on areas that present the highest risk within the system.  The FAA reviews the applicant’s design descriptions and project plans, determines where FAA involvement will derive the most safety benefit, and coordinates its intentions with the applicant.  When a particular decision or event is critical to the safety of the product or to the determination of compliance, the FAA is involved either directly or through the use of our designee system.  

The designee program was originally authorized by Congress in 1958 and is critical to the success and effectiveness of the certification process.  Under this program, the FAA may delegate a matter related to aircraft certification to a qualified private person.  This is not self-certification; the FAA retains strict oversight authority.  The program allows the FAA to leverage its resources through delegation.  Last fall, Congress specifically directed the FAA to make full use of this authority in the FAA Reauthorization Act of 2018.  In aircraft certification, both individual and organizational designees support the FAA.  The FAA determines the level of involvement of the designees and the level of FAA participation needed based on many variables.  These variables include the designee's understanding of the compliance policy; consideration of any novel or unusual certification areas; or instances where adequate standards may not be in place.  

The Organization Designation Authorization (ODA) program is the means by which the FAA may authorize an organization to act as a representative of the FAA, allowing that organization to conduct inspections and tests and issue certificates on behalf of the FAA.  Currently, there are 79 ODA holders.  ODA certification processes allow an applicant greater flexibility and control over schedules than applicants whose projects are directly managed by the FAA.  The FAA has a rigorous process for issuing an ODA.  ODA holders must have demonstrated experience and expertise in FAA certification processes, a qualified staff, and an FAA-approved procedures manual before they are appointed.  The procedures manual defines an ODA holder’s authority and limitations, and identifies the functions it may perform. 

The FAA determines its level of involvement on a project-by-project basis.  There are many issues that will always require direct FAA involvement, including equivalent level of safety determinations, and rulemakings required to approve special conditions.  The FAA may choose to be involved in other project areas after considering factors such as our confidence in the applicant, the applicant’s experience, the applicant’s internal processes, and confidence in the designees. 

Something that is not well understood about the certification process is that it is the applicant’s responsibility to ensure that an aircraft conforms to FAA safety regulations.  It is the applicant who is required to develop aircraft design plans and specifications, and perform the appropriate inspections and tests necessary to establish that an aircraft design complies with the regulations.  The FAA is responsible for determining that the applicant has shown that the overall design meets the safety standards.  We do that by reviewing data and by conducting risk-based evaluations of the applicant's work. 

The FAA is directly involved in the testing and certification of new and novel features and technologies.  When a new design, or a change to an existing design, of aircraft is being proposed, the designer must apply to the FAA for a design approval.  While an applicant usually works on its design before discussing it with the FAA, we encourage collaborative discussions well in advance of presenting a formal application.  Once an applicant approaches us, a series of meetings are held both to familiarize the FAA with the proposed design, and to familiarize the applicant with the certification requirements.  A number of formal and informal meetings are held on issues ranging from technical to procedural.  Once the application is made, issue papers are developed to provide a structured way of documenting the resolution of technical, regulatory, and administrative issues that are identified during the process. 

Once the certification basis is established for a proposed design, the FAA and the applicant develop and agree to a certification plan and initial schedule.  In order to receive a type certificate, the applicant must conduct an extensive series of tests and reviews to show that the product is compliant with existing standards and any special conditions, including lab tests, flight tests, and conformity inspections.  These analyses, tests, and inspections happen at a component-level and an airplane-level, all of which are subject to FAA oversight.  If the FAA finds that a proposed new type of aircraft complies with safety standards, it issues a type certificate.  Or, in the case of a change to an existing aircraft design, the FAA issues an amended type certificate.

Facts Concerning the Boeing 737 MAX

The certification processes described above are extensive, well-established, and have consistently produced safe aircraft designs for decades.  The Boeing Company has designed and built 14 variations of its original model 737 since the FAA issued the original type certificate in 1967.  The FAA followed its standard procedures in determining that the 737 MAX project would qualify as an amended type certificate project, and identifying what items would be delegated to the Boeing ODA to approve and which would be retained by the FAA for approval.  Boeing first applied for an amended type certificate for this aircraft in January 2012.  As a result of regular meetings between the FAA and Boeing teams, the FAA determined in February 2012 that the project qualified as an amended type certificate project eligible for management by the Boeing ODA.  The FAA was directly involved in the System Safety Review of the Maneuvering Characteristics Augmentation System (MCAS). 

The process from initial application to final certification took five years; the FAA added the 737 MAX to the 737 type certificate in March 2017.  The process included 297 certification flight tests, some of which encompassed tests of the MCAS functions.  FAA engineers and flight test pilots were involved in the MCAS operational evaluation flight test.  The certification process was detailed and thorough, but, as is the case with newly certified products, time yields more data to be applied for continued analysis and improvement.  As we obtain pertinent information, identify potential risk, or learn of a system failure, we analyze it, we find ways to mitigate the risk, and we require operators to implement the mitigation.  And that is what has happened in the case of the 737 MAX.

737 MAX Accidents and the Decision to Ground the Fleet

On October 29, 2018, a Boeing 737 MAX operated by Lion Air as flight JT610 crashed after taking off from Soekarno-Hatta Airport in Jakarta, Indonesia.  Flight JT610 departed from Jakarta with an intended destination of Pangkal Pinang, Indonesia.  It departed Jakarta at 6:20 a.m. (local time), and crashed into the Java Sea approximately 13 minutes later.  One hundred and eighty-four passengers and five crewmembers were on board.  There were no survivors.  An Indonesian-led investigation into the cause of this accident is ongoing, supported by the National Transportation Safety Board (NTSB), FAA, and Boeing.

On November 7, 2018, based on all available and relevant information, including evidence from the Lion Air accident investigation and analysis performed by Boeing, the FAA issued an Emergency Airworthiness Directive.  The airworthiness directive requires operators of the 737 MAX to revise their flight manuals to reinforce to flight crews how to recognize and respond to uncommanded stabilizer trim movement and MCAS events.  The FAA continued to evaluate the need for software and/or other design changes to the aircraft including operating procedures and training as additional information was received from the ongoing Lion Air accident investigation.  On January 21, 2019, Boeing submitted a proposed MCAS software enhancement to the FAA for certification.  To date, the FAA has tested this enhancement to the 737 MAX flight control system in both the simulator and the aircraft.  The testing, which was conducted by FAA flight test engineers and flight test pilots, included aerodynamic stall situations and recovery procedures.  The FAA’s ongoing review of this software installation and training is an agency priority, as will be the roll-out of any software, training, or other measures to operators of the 737 MAX.

On March 10, 2019, Ethiopian Airlines flight ET302, also a Boeing 737 MAX, crashed at 8:44 a.m. (local time), six minutes after takeoff.  The flight departed from Bole International Airport in Addis Ababa, Ethiopia with an intended destination of Nairobi, Kenya.  The accident site is near Bishoftu, Ethiopia.  One hundred and forty-nine passengers and eight crewmembers were on board.  None survived.  An Ethiopian-led investigation into the cause of this accident is ongoing, supported by the NTSB, FAA, and Boeing.

Following the second accident, the FAA gathered all of the data it had and continued to review information from the investigation as it became available.  On March 11, 2019, the FAA issued a Continuous Airworthiness Notification to the International Community (CANIC) for 737 MAX operators.  The CANIC included a list of all of the activities the FAA had completed in support of the continued operational safety of the 737 MAX fleet.  These activities included the airworthiness directive issued on November 7, 2018, ongoing oversight of Boeing’s flight control system enhancements, and updated training requirements and flight crew manuals.

After issuing the CANIC, the FAA continued to evaluate all available data and aggregate safety performance from operators and pilots of the 737 MAX, none of which provided any data to support grounding the aircraft.  The FAA’s initial review of flight safety data for U.S. operators showed no systemic performance issues and provided no basis to order grounding the aircraft.  This review included analysis of recent Aviation Safety Reporting System reports that reference MCAS and/or controllability issues with the Boeing 737 MAX.  In no case did the reporting party state that the problems experienced were due to the MCAS system.  Also, at that time, other civil aviation authorities had not provided any data to the FAA that warranted action. 

On March 13, 2019, however, the Ethiopian Airlines investigation developed new information from the wreckage concerning the aircraft’s configuration just after takeoff that, taken together with newly refined data from satellite-based tracking of the aircraft’s flight path, indicated some similarities between the Ethiopian Airlines and Lion Air accidents that warranted further investigation of the possibility of a shared cause that needed to be better understood and addressed.  Accordingly, the FAA made the decision to ground all 737 MAX airplanes operated by U.S. airlines or in U.S. territory pending further investigation, including examination of information from the aircraft’s flight data recorders and cockpit voice recorders.

Next Steps

The FAA will continue to support the ongoing Lion Air and Ethiopian Airlines accident investigations, review the evidence and data obtained, and take immediate and appropriate action based on the facts.  U.S. and international operators of the 737 MAX are relying on the FAA to get it right.  I want to assure this Committee and everyone else concerned that the FAA will go wherever the facts lead us, in the interest of safety.  The 737 MAX will return to service for U.S. carriers and in U.S. airspace only when the FAA’s analysis of the facts and technical data indicate that it is appropriate.  In our quest for continuous safety improvement, the FAA welcomes external review of our systems, processes, and recommendations.  We will work with the new Special Committee established to examine the 737 MAX certification process, cooperate fully with the Inspector General’s review, and continue our work with the congressionally-mandated Safety Oversight and Certification Advisory Committee and ODA Expert Review Panel.

As recent events have reminded us, aviation does not have borders or boundaries.  The FAA is focused on continuous safety improvement here at home and internationally through our ongoing engagement with other civil aviation authorities and industry stakeholders throughout the world.  Aviation remains the safest mode of transportation globally, and we promote this level of safety by sharing issues, trends, and lessons learned throughout the world. The United States is the gold standard in aviation safety.  The FAA is resolute in its commitment to maintaining that standard.

This concludes my prepared statement.  I will be happy to answer your questions.

State of the Mobility Enterprise

STATEMENT OF
MARK H. BUZBY
ADMINISTRATOR
MARITIME ADMINISTRATION
U.S. DEPARTMENT OF TRANSPORTATION

BEFORE THE
COMMITTEE ON ARMED SERVICES
SUBCOMMITTEE ON SEAPOWER AND PROJECTION FORCES
AND SUBCOMMITTEE ON READINESS
U.S. HOUSE OF REPRESENTATIVES

HEARING ON

March 7, 2019

Good afternoon, Chairman Courtney, Chairman Garamendi, Ranking Members Wittman and Lamborn, and members of the Subcommittee.  I appreciate the opportunity to join our partner, U.S. Transportation Command (USTRANSCOM), to discuss the “State of the Mobility Enterprise” and the Maritime Administration’s (MARAD) role in supporting the Department of Defense’s (DOD) strategic sealift capabilities.  U.S. strategic sealift consists of Government-owned vessels and assured access to a fleet of privately-owned, commercially operated, U.S.-flag vessels and intermodal systems, and the private sector mariners who operate them.  Together, these vessels, mariners, and networks transport equipment and supplies to deploy and sustain our military forces anywhere in the world.  Our sealift enterprise faces critical challenges to provide the readiness assurances needed to meet the global threats we now face.

Ready Reserve Force

MARAD’s Ready Reserve Force (RRF) is comprised of Government-owned ships within the National Defense Reserve Fleet (NDRF). We maintain the RRF in an advance state of surge sealift readiness.  The fleet stands on-call to transport critical cargo during major contingencies.  In the event of a contingency, the 46 RRF vessels, along with 15 Military Sealift Command vessels, provide the initial surge of sealift capacity.   These vessels would then be joined by commercial U.S.-flag vessels to provide sustainment shipping capacity.   

Vessels in the RRF fleet are very old.  In fact, the average age of RRF vessels is over 44 years, and for the past year the vessels have struggled to maintain an 85 percent readiness level across the fleet.  As a result, MARAD faces ongoing readiness challenges that will continue to impact our capabilities until we are able to complete much needed service life extensions and the fleet is recapitalized with newer ships.  MARAD supports the Navy’s surge sealift recapitalization strategy, which includes a combination of targeted service life extensions, acquiring and converting used vessels, and building new vessels in U.S. shipyards.  All of these efforts require key industrial capabilities: A sustainable ship construction industrial base and available and sufficient marine repair facilities.

The escalating costs of service life extensions of the existing fleet is an ongoing concern.  Older  increasingly obsolete equipment and systems require more time and money to repair or replace, if replacement parts, equipment and systems are even available.  MARAD uses available resources to complete necessary repairs to comply with new regulatory requirements, such as upgrading and installing lifeboats, comprehensively addressing exhaust emissions, and treating ballast water. 

The growing maintenance needs required to sustain this elderly fleet’s readiness relies upon a distributed repair industrial base that has seen significant contraction due to market forces.  Old ships require longer and more costly shipyard periods, but the shrinking base limits drydocks available to U.S vessels—Navy, Coast Guard, NOAA, and the commercial fleet.  The resulting maintenance backlog negatively impacts fleet-wide sealift readiness.  MARAD and the USTRANSCOM are working with the U.S. Navy to plan for resourcing readiness, including extending the service life of nearly the entire RRF fleet, out to 60 years.  With increasingly expensive, age-related repairs, parts unavailability, and the declining availability the qualified steam-ship engineers needed to work on vessels from this era, we anticipate that programming sufficient resources will remain a challenge through the recapitalization period to 2048. 

We are taking steps toward the acquisition and conversion of used ships, including the purchase of two vessels as authorized by the Fiscal Year (FY) 2018 National Defense Authorization Act (NDAA).  In mid-January, Navy and DOD gave MARAD their requirements for used sealift ships to be acquired from the commercial market.  On February 14, 2019, MARAD released a Request for Information to identify suitable ships.  Responses are expected by March 19th. The information gained will help us coordinate with the Navy to ensure resources are available to acquire and convert replacement vessels.  Also in January, we provided Navy with input to develop their business case analysis for sealift recapitalization.  MARAD will continue to collaborate with our DOD partners to address RRF vessel maintenance, repair, and modernization shortfalls to keep the capability viable until commercial acquisitions or new construction can meet projected service life end dates.

National Defense Reserve Fleet

In addition to the RRF, MARAD manages the other vessels in the NDRF, which are used for merchant mariner training, natural disaster response, and supporting our national security, defense, and law enforcement partners.  For example, two NDRF ships were converted for use by the Missile Defense Agency to support ballistic missile defense system testing.

MARAD is also working to replace aging NDRF training vessels that we provide to the six state maritime academies to train entry-level merchant marine officers needed to crew Government and U.S.-flag commercial ships.  We appreciate the support Congress provided for the School Ship recapitalization program, by appropriating funding for one vessel each in FY 2018 and FY 2019.  Since first receiving funding in March 2018, MARAD has been implementing the approved acquisition strategy, incorporated industry feedback into the ship design, and is in the final stages of selecting a Vessel Construction Manager.  The first training ship is expected to be delivered to DOT/MARAD first quarter 2023 and the second by the end of the third quarter of FY 2023.

U.S.-Flag Commercial Fleet

Our Nation’s strategic sealift fleet is augmented by U.S.-flag commercial vessels. Commercial mariners play an essential role, during steady state and contingency operations, by delivering supplies and equipment to deployed forces and overseas installations around the world.  As this committee is aware, the number of U.S.-flag vessels engaged in international trade has declined over the past several decades and has remained near its lowest level in history for several years.  Of approximately 50,000 large, oceangoing commercial vessels in the world today, fewer than 200 sail under the U.S. flag, including 82 vessels operating exclusively in international trade. The remaining 99 operate almost exclusively in Jones Act trades.  These types of vessels are critical to the employment base for mariners with the credentials and training required to crew Government ships when needed.  The decline of the commercial U.S.-flag fleet has been a perennial and intensifying challenge, and any further decline of the actively-trading U.S.-flag fleet reduces our Nation’s ability to unilaterally project and sustain our forces during war.[1] 

Congress established the Maritime Security Program (MSP), cargo preference laws, and the Jones Act to foster the development and encourage the maintenance of a robust merchant marine; however, these programs now merely maintain a limited number of oceangoing ships in the U.S.-flag fleet.  The MSP helps maintain an active, privately-owned, U.S.-flag fleet of 60 militarily useful commercial ships operating in international trade and employing U.S. mariners fully qualified for sealift operations.  MARAD provides MSP participants an annual stipend to facilitate the financial viability of operating under the U.S.-flag, and in return, their ships and logistics networks are available through pre-negotiated contingency contracts and “on-call” to support DOD’s global transportation needs when activated.  The MSP facilitates employment for 2,400 U.S. merchant mariners qualified to sail on oceangoing vessels who we can call upon to crew the RRF vessels when activated. The MSP also assures DOD access to the critical multibillion-dollar global network of intermodal facilities and transport systems maintained by MSP participants. 

In the commercial maritime industry, cargo is king.  Government and commercial demand for U.S.-flag cargo transportation is essential to sustain the vessels and jobs in the U.S.-flag fleet.  Cargo preference laws require shippers of Government-impelled cargo to use U.S.-flag vessels for the ocean-borne transport of a significant portion of certain cargoes purchased or guaranteed with Federal funds.  Specifically, 100 percent of military cargo, and at least 50 percent of most non-military Government-owned or impelled cargo transported by ocean, must be carried on U.S.-flag vessels subject to a MARAD determination of vessel availability. Absent other measures, these cargo preference mandates support the sustainment and readiness of a U.S.-flagged, privately-owned, international trading commercial fleet, and  the continued employment of the associated American private sector merchant mariners.

In addition to cargo preference laws, U.S. coastwise trade laws, commonly referred to as the Jones Act, contribute to sealift capability and capacity and help sustain the U.S-flag domestic trading fleet.  Jones Act requirements support U.S. shipyards and repair facilities, and sustain supply chains that produce and repair American-built ships (including Navy and Coast Guard vessels).  As noted earlier in this testimony, maintaining a domestic base of shipbuilding and repair facilities is critical to ensuring the readiness of our strategic sealift fleet.  In addition, Jones Act vessels employ U.S. mariners and ensure that vessels navigating daily among and between U.S. coastal ports and inland waterways operate with U.S. documentation and a majority American crew, rather than under a foreign flag with foreign crew.  The American mariners of the Jones Act fleet are our “eyes and ears” in domestic ports and waters and add an important layer of security to our Nation.

U.S. Merchant Mariners

The use of Reduced Operating Status (ROS) crews onboard RRF ships keeps a core crew ready to activate Government-owned vessels in a very short period of time. This core of nine or ten crewmembers maintains the ships and systems ready to get underway within five days of notification, but they must be quickly augmented with a full crew complement to set sail. Access to a pool of qualified mariners from a robust, commercial maritime fleet is an essential multiplier to maintaining enough sealift readiness capacity for contingencies.

As I stated previously, the number of ships in the U.S.-flag, oceangoing fleet has declined for many decades and has now reached a historic low.  As a result, I am concerned about our ability to quickly assemble an adequate number of qualified mariners to operate large ships (unlimited horsepower and unlimited tonnage) needed for surge and sustainment sealift operations during a mobilization lasting more than six months. We may be short of what is needed to meet crewing requirements after the first six months of a full military mobilization. While, historically, the men and women of the merchant marine typically shipped out in times of need and would likely voluntarily extend their time at sea beyond normal tours if called upon to do so, it is important to note that commercial mariners are under no legal obligation to report when called.  MARAD is conducting surveys to ascertain with more certainty the potential availability and potential willingness of mariners to “answer the call.”  The results will help clarify the size of the pool of qualified mariners upon which our Nation could potentially rely in times of need.  Additionally, we are working to better track licensed mariners who may no longer be sailing, but could serve if needed, and to develop tools to understand and analyze changes in the numbers of fully qualified mariners trained to meet the Nation’s commercial and sealift requirements when needed.

MARAD also continues to support mariner training through the U.S. Merchant Marine Academy (USMMA) and the six state maritime academies, which produce highly skilled and licensed officers for the U.S. Merchant Marine.  These institutions graduate most of the U.S. Coast Guard credentialed officers who are qualified to crew U.S.-flag ocean-going ships including RRF vessels.  In addition, all USMMA Midshipmen and certain state maritime academy students who receive Federal financial assistance to attend an academy incur obligations to sail for a specific time  or to otherwise serve in the U.S. maritime-related industry, as well as to serve in an active or reserve component of the U.S. Armed Forces.  For example, USMMA graduates incur an obligation to maintain their license as an officer of the merchant marine for six years following graduation and to serve five years as a merchant marine officer aboard U.S. documented vessels if such employment is available or on active duty with the U.S. Armed Forces or uniformed services.  If not on active duty, they must serve as a reserve commissioned officer for eight years. The USMMA is the single largest annual contributor to the U.S. Navy’s Strategic Sealift Officer community, sponsored by the Commander of the Military Sealift Command.  These officers form a critical part of the sealift manning equation because of their service obligation to maintain their license and crew the RRF in emergencies.

Conclusion

I believe that MARAD can support DOD sealift requirements today, but we are facing readiness challenges that require careful planning and action now.  MARAD remains committed to working with our Navy and USTRANSCOM partners to meet these challenges and to continue providing the sealift capabilities needed to meet our national security requirements.

Thank you for the opportunity to testify today.  I appreciate your support for the Merchant Marine and I look forward to your questions.

U.S. Maritime and Shipbuilding Industries: Strategies to Improve Regulation, Economic Opportunities and Competitiveness

STATEMENT OF
MARK H. BUZBY
ADMINISTRATOR
MARITIME ADMINISTRATION
U.S. DEPARTMENT OF TRANSPORTATION

BEFORE THE
COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE
SUBCOMMITTEE ON COAST GUARD AND MARITIME TRANSPORTATION
U.S. HOUSE OF REPRESENTATIVES

HEARING ON
U.S. MARITIME AND SHIPBUILDING INDUSTRIES:
STRATEGIES TO IMPROVE
REGULATION, ECONOMIC OPPORTUNITIES AND COMPETITIVENESS

MARCH 6, 2019

Good morning, Chairman Maloney, Ranking Member Gibbs, and members of the Subcommittee.  I appreciate the opportunity to discuss strategies to improve economic opportunities and the competitiveness in the U.S. maritime and shipbuilding industries.

The U.S. Merchant Marine, U.S. shipbuilding and repair facilities, the Nation’s port system, and supporting industries (collectively referred to as the U.S. maritime industry) integrates our economy with a vast global system that moves more than 90 percent of the world’s trade by tonnage, including energy, consumer goods, agricultural products, and raw materials.  Of the goods that the U.S. imports and exports, approximately 69 percent by weight and 40 percent by value move by water and through our national port system.  These industries, vessels, infrastructure, and personnel also play critical roles in national security, supporting our Nation’s ability to provide sealift for the Department of Defense (DOD) during times of war and national emergency. 

The mission Congress gave the Maritime Administration (MARAD) is to foster, promote, and develop the maritime industry of the United States to meet the Nation’s economic and security needs. Unfortunately, over the last few decades, the U.S. maritime industry has suffered losses as companies, ships, and jobs moved overseas. To reverse this multi-decade trend, MARAD is continuing to work with its industry stakeholders to identify ways our U.S.-flag commercial fleet can better compete for international cargoes and our U.S. shipbuilding and repair industry can grow and continue to meet commercial and military shipbuilding needs.  In addition, MARAD continues to leverage its existing congressionally authorized programs to support mariner training, improve port infrastructure, and assist industry to address environmental challenges.

U.S.-flag Fleet

U.S. strategic sealift consists of 61 Government-owned vessels maintained in reduced operating status, augmented by the U.S.-flag commercial fleet.  Commercial vessels crewed with civilian mariners transport equipment and supplies around the world and provide the pool of mariners with the unlimited tonnage/horsepower qualifications needed to provide the additional crew for Government ships when they are activated.  Our Nation relies on the fleet of large oceangoing self-propelled commercial vessels operating in the domestic (Jones Act) and international trades to provide employment for these highly qualified mariners and auxiliary sealift capacity when needed.

U.S.-flag Vessels in U.S. Domestic Trades

U.S.-flag vessels operating in domestic trades sail on U.S. inland and intracoastal waterways, lakes, oceans along the coasts of the United States, and between non‑contiguous States and U.S. territories.  The domestic water transportation market is served by a diverse array of approximately 41,000 vessels owned, operated, and largely built by U.S. citizens.   The majority of vessels in the domestic trades consist of tugs and barges, with a smaller number of work and supply vessels used in the offshore oil industry, and specialty vessels such as dredges.  As of February 4, 2019, 99 of the vessels operating in the domestic market were large cargo-carrying, merchant-type vessels capable of self-propelled operation in the deep oceans.  These are the types of vessels needed to provide an employment base for mariners with the unlimited credentials and training required to also crew Government ships when needed to meet DOD sealift requirements.

U.S.-flag Ships in International Trades

Cargo preference laws require shippers of Government-impelled cargo to use U.S.-flag vessels for the ocean-borne transport of a significant portion of certain cargoes purchased or guaranteed with Federal funds.  Specifically, 100 percent of military cargo, and at least 50 percent of most non-military Government-owned or impelled cargo transported by ocean, must be carried on U.S.-flag vessels subject to a MARAD determination of vessel availability. U.S.-flag carriers engaged in international trading believe that shipping required by cargo preference laws provides critical revenue that significantly contributes to the economic viability of this portion of the  U.S.-flag fleet.

As of February 4, 2019, there were 82 large, U.S.-flag merchant-type vessels operating in international trades.  Estimates using 2016 U.S. Census foreign trade data indicate that just 1.5 percent of U.S. waterborne imports and exports by tonnage move on oceangoing commercial vessels registered in the U.S.  The last year in which the U.S.-flag fleet carried at least ten percent of our trade by tonnage was 1960 when the U.S.-flag commercial fleet consisted of well over 1,000 ships; the share remained close to four percent from 1977 until 1993, and fell to two percent as of 2003. 

U.S.-flag ships must compete against foreign-flag carriers that benefit from major subsidies or state ownership.  For example, one large Chinese-flag carrier that is wholly state-owned has received at least $1.95 billion in state assistance over the last several years, and will soon carry the single largest share of containerized imports to the United States.  Other foreign-flag carriers also receive state support through various means.[1]  Absent other measures, cargo preference helps support the sustainment of a minimal U.S.-flagged, privately-owned internationally-trading commercial fleet and the continued employment of the associated American merchant mariners.

Supply of Qualified Mariners

To ensure that qualified mariners remain available to satisfy DoD sealift requirements, the Department of Transportation (DOT) and MARAD are firmly committed to mariner officer development at the U.S. Merchant Marine Academy (USMMA) and six State Maritime Academies.[2]  Together, these academies graduate more than 1,000 entry-level new officers each year.

Hiring veterans makes good business sense, and in the case of the maritime industry, skills and experience from the sea services translate directly into qualifications needed in the U.S. Merchant Marine and maritime sector.  In 2014, at MARAD’s request, the U.S. Committee on the Marine Transportation System (CMTS) formed the Military to Mariner Task Force to help coordinate Federal efforts to facilitate the transition from military service to civilian employment in the U.S. Merchant Marine and other positions within the U.S. Marine Transportation System.  The Maritime Administrator and the Executive Director of the Military Sealift Command lead this Task Force, with participation from all the sea services.  As a direct result of this partnership, Federal agencies have committed time and resources to:

• crosswalk military ship-board training and qualifications to civilian mariner credential requirements,
• assign permanent staff to the Navy and USCG Credentialing Opportunity Online (COOL) projects,
• enable USCG Academy graduates to receive a 100 Ton Master-Near Coastal Credential upon graduation,
• increase the number of service training courses approved for Merchant Mariner Credentials, and
• identify ways to recruit, train, and retain Merchant Mariners to support both national Defense and Federal mission accomplishment.

I am extremely proud of the Executive Order the President signed this week to address long-standing challenges to the transition of active-duty uniformed service mariners into civilian merchant mariners crewing U.S.-flag commercial vessels. The Military to Mariner Executive Order also directs the CMTS to pursue innovative ways to support merchant mariner credentialing through the existing Military to Mariner (M2M) Task Force and to provide a yearly status report on its efforts.

Ensuring the availability of sufficient qualified contract and obligated mariners for a prolonged activation of U.S. reserve sealift capacity is a continuing concern.  In 2017, Congress directed MARAD to convene a Maritime Workforce Working Group (MWWG) to assess the size of the pool of U.S. citizen-mariners necessary to crew the sealift fleet in times of national emergency. At that time, U.S. Coast Guard data indicated that 33,125 U.S. mariners held unlimited credentials, however the MWWG estimated a value of 11,768. The MWWG determined that the disparity between these values will remain unresolved until more research is completed.   

U.S. Shipbuilding

Among the foremost challenges to the U.S. Merchant Marine and shipbuilding industry are low-cost foreign competitors (including heavily subsidized, state-owned fleet operators), diminishing government cargoes, and reduced commercial ship orders.  Over the last several decades, large U.S. shipyards and their skilled labor forces have atrophied due to the uneven playing field of low-cost, highly-subsidized international shipbuilding competition among other factors, resulting in shipyard closures and reductions in the U.S. vendor base. 

The few remaining large U.S. commercial shipyards rely on the small U.S. domestic market. The successful, multi-decade industrial policies of the principal shipbuilding nations have virtually eliminated the ability for U.S. shipyards to compete in the global market.  Over 90% of global shipbuilding occurs in three countries; China, Korea, and Japan. While the United States remains a global leader in naval shipbuilding, which represents the majority of the Nation’s shipbuilding revenue, our large commercial shipyards are struggling to remain afloat. U.S. commercial shipbuilding of large merchant-type ships has been locked into a downward spiral of decreasing demand and an increased divergence between domestic and foreign shipbuilding productivity and pricing. 

In the case of large self-propelled oceangoing vessels, U.S. shipyards still lack the scale, technology, and the large volume “series building” order books needed to compete effectively with shipyards in other countries.[3]  The five largest U.S. commercial shipyards construct limited numbers of large cargo vessels for domestic use, averaging five such vessels per year over the last five years, with a peak of ten such vessels in 2016.  This production is small, however, relative to the worldwide production of 1,408 such ships in 2016. 

U.S. shipyards have opportunities for growth.  The expanding energy sector, and the Liquefied Natural Gas (LNG) market in particular, presents a unique opportunity to grow the U.S. shipping and shipbuilding industry, provided domestic LNG import demand can be grown to the needed levels. The global LNG market, however, is anticipated to expand over the next 20 years and it is estimated that the number of LNG ships necessary to service the market will nearly double by 2040.   The U.S. could capitalize on this growing industry.  Ship owners are more likely to be able to secure financing and invest in the construction of LNG vessels in the U.S. if there are long-term contracts for coastwise transportation for LNG that would provide a reliable flow of cargo for new vessels to carry at the necessary price levels once completed.  Therefore, encouraging demand for U.S.-flag coastwise vessels in the domestic LNG market could foster an improved prospect for domestic construction of LNG tankers, and more LNG bunkering vessels.   

The Jones Act requirement that vessels serving domestic markets must generally be built in the U.S, the Capital Construction Fund (CCF), and Construction Reserve Fund (CRF) programs are all tools Congress established to sustain U.S. shipyards.  In addition, the Small Shipyard Grant Program is an important program for shipyard modernization.  Since 2008, this program has provided grants totaling $203.79 million to 216 shipyards. 

Port Infrastructure/Freight Movement

Another challenge the U.S. maritime industry faces is the state of our Nation’s gateway port infrastructure.  The ability of our ports to increase capacity and handle cargo more efficiently is vital to the health of many domestic industries.  Freight volumes are projected to increase by 31 percent, and U.S. foreign trade will more than double between 2015 and 2045. 

There is great potential to improve this system by increasing the efficiency of our ports.  The newest tool available for DOT to improve efficiency is Port Infrastructure Development grants.  The FY 2019 Consolidated Appropriations Act, Pub. L. 115–141, appropriated a total of $292.7 million for the Port Infrastructure Development Program, which is authorized under 46 U.S.C. § 50302.  Through this program, MARAD will provide grants for coastal seaports for infrastructure improvement projects that are directly related to port operations, or intermodal connections to a port that improve the safety, efficiency, or reliability of the movement of goods into, out of, or around coastal seaports.  Funds for the FY 2019 grants will be awarded on a competitive basis. 

MARAD is also working through its America’s Marine Highway Program to develop and expand services to move freight along our waterways and coastlines and to relieve land-side congestion.  Given the immense economic and environmental benefits of increased waterborne transportation, this program represents an opportunity to enhance American supply-chain competitiveness.  Working with local sponsors, this program is gaining support and making a difference for regional economies and transportation infrastructure.  For example, a new Baton Rouge-to-New Orleans, LA, barge service was recently established to transport heavy weight export containers.  In the past 90 days, more than 11,000 truckloads have moved via the Marine Highway, reducing highway congestion by one million vehicle miles traveled.  The FY 2019 Consolidated Appropriations Act included $7 million in grant funding for the program. 

Environmental Issues

Finally, there is opportunity to foster the competitiveness of the U.S. maritime industry through MARAD’s Maritime Environmental and Technical Assistance (META) program.  Since maritime transportation is, by its nature, a global industry in most cases, U.S. vessel compliance with international environmental standards is required to compete in this realm. This program supports applied research and development to facilitate environmental compliance and enhance sustainability across the marine industry.  Leveraging resources with the private sector and other government agencies, META’s goal is to identify economically sustainable solutions to emerging maritime environmental challenges.  The FY 2019 Consolidated Appropriations Act includes $3 million for the META program. Following on the META model, MARAD is also exploring other areas in which partnerships with the private sector and other government agencies can be leveraged to further research, development, and technology transfer to make our fleets and ports safer, more efficient, and more competitive.

Thank you for the opportunity to highlight MARAD’s programs that support the strength and competitiveness our U.S. maritime industry.  I appreciate this Subcommittee’s continued support for the U.S. Merchant Marine and look forward to working with you to address the challenges facing the U.S. maritime industry and take advantage of opportunities to enhance and improve the U.S. maritime transportation system. I am happy to respond to any questions you may have.

Review of Recent Gao Reports on Icebreaker Acquisition and the Need for a National Maritime Strategy

Hearing To Discuss Columbia Gas Incident Lawrence, MA

Written Statement of
Paul Roberti
Chief Counsel
Pipeline And Hazardous Materials Safety Administration

Before The
Committee on Small Business and Entrepreneurship
United States Senate

Hearing To Discuss Columbia Gas Incident
Lawrence, MA

NOVEMBER 16, 2018

I. INTRODUCTION

Senator Markey and Senator Warren, thank you for inviting me to testify today as part of the Senate Commerce, Science and Transportation Committee’s field hearing to discuss the September 13, 2018 natural gas accident involving Columbia Gas of Massachusetts and the oversight and effectiveness of state pipeline safety programs. 

Safety is the number one priority for U.S. Secretary of Transportation Elaine L. Chao and PHMSA Administrator Howard “Skip” Elliott. The recent tragic events in your state can only intensify the Pipeline and Hazardous Materials Safety Administration’s (PHMSA) commitment to its goal of zero pipeline incidents.

The mission of the PHMSA is to protect people and the environment by advancing the safe transportation of energy and other hazardous materials that are essential to our daily lives. The natural gas explosions and fires in Lawrence, Andover, and North Andover, Massachusetts, were tragic and all of us at PHMSA sympathize with the family of Leonel Rondon, the young man who lost his life, and all those who suffered injuries, or have property that was adversely impacted.

In response to the accident, PHMSA quickly dispatched multiple inspectors to Massachusetts to provide technical assistance to the National Transportation Safety Board (NTSB) and to the Massachusetts Department of Public Utilities (MA DPU). To date, PHMSA staff have provided more than 600 work-hours of technical engineering expertise, emergency response, and support. PHMSA will continue to assist the NTSB and the MA DPU as long as needed.

In addition, PHMSA Administrator Elliott has made it a priority to make himself available for discussions with the Congressional Delegation and the Governor of Massachusetts.  PHMSA will also continue to prioritize answering your questions relating to this incident and working with all Massachusetts officials.

II. ROLES

Under PHMSA’s oversight, pipelines have continued to remain one of the safest ways to transport hazardous energy products in the U.S., This safety record has been demonstrated with over 99.99 percent barrel equivalent of liquid hydrocarbons reaching their onshore destinations safely and through consistent declines in casualties and major injuries attributed to pipeline incidents.  In fact, pipeline incidents resulting in death or major injury have declined 64 percent in the past 20 years, despite increases in risk exposure measures like population, pipeline mileage, aging infrastructure and volume of product delivered.

Pipeline safety is a shared responsibility for all public and private sector stakeholders. Of the nearly 2.8 million miles of pipeline infrastructure in the U.S., more than 80 percent of the lines belong to local distribution companies that transport natural gas to American homes and businesses. PHMSA’s state certification program expands the federal government’s capacity to oversee these lines.

A. Role of States

Since 1971, when a national, uniform standard of pipeline safety regulations was implemented, states have had the authority, through PHMSA, to regulate the safety of intrastate pipelines.  Sections 60105 and 60106 of title 49 U.S. Code, continue to allow states to assume safety authority through PHMSA for the inspection and enforcement of intrastate pipelines. While states may act as interstate agents for interstate gas transmission and hazardous liquid pipelines, the vast majority of their responsibility is to oversee local distribution gas systems, including the system we are here to discuss today.

PHMSA sets the minimum federal standards for pipeline safety, which the participating states then adopt into their state code and enforce.  States are allowed, under Section 60104(c) of title 49 U.S. Code, to adopt more stringent safety standards than the minimum standards PHMSA sets.  This allows states to codify and enforce regulations that deal with specific, regional (or local) risks that might not be feasible or cost-beneficial to regulate on the National level.  Many states have established safety regulations that are more stringent than the federal regulations.

The MA DPU is PHMSA’s certified state partner in the Commonwealth of Massachusetts. Under this certification, the MA DPU is responsible for the inspection and enforcement for all intrastate natural gas distribution and transmission pipelines.

Across our country, PHMSA partners with pipeline safety programs in 48 states (in addition to the District of Columbia and Puerto Rico), which employs approximately 380 full-time inspectors, through certification and agreements for the inspection of the Nation’s intrastate gas and hazardous liquid pipelines.  PHMSA also has interstate agent agreements with nine states to perform interstate pipeline inspections.  State pipeline safety agencies are the first line of defense in protecting much of the American public from pipeline risks on lines that exist primarily where people live and work.  State pipeline safety agencies have authority over approximately 80 percent of the total pipeline infrastructure under PHMSA’s oversight and have always been a critical component of a sound pipeline oversight program.

In addition to working with individual states, PHMSA works closely with the National Association of Pipeline Safety Representatives (NAPSR), an organization representing state government pipeline safety programs, towards our joint safety mission. PHMSA supports annual and regional NAPSR meetings and members of NAPSR frequently serve on PHMSA’s Advisory Committees.

PHMSA has worked with the MA DPU for over 35 years as they have overseen pipeline safety in Massachusetts. PHMSA will continue to provide technical support to the MA DPU through this investigation and with any other technical assistance they may need in the future.

B. Role of PHMSA

There is an inherent risk associated with transporting energy.  PHMSA’s job is to lessen the risk  of energy transportation by pipelines by setting and enforcing federal minimum safety standards for pipeline companies. The agency also promotes safety through education, research, and our partnerships with 48 states, who inspect and enforce regulations for pipelines and underground natural gas storage facilities.

PHMSA is committed to making sure these organizations have the resources and expertise they need to keep our nation’s pipelines safe.  Jointly with our partner states, PHMSA continuously strives to strengthen oversight, inspection, and enforcement of pipeline transportation through technical assistance programs, grants, training, and outreach.

1.Grants

The financial support that we provide to our state partners through grants is a vital part of our partnerships.

Based on the appropriation level set by Congress, our State Base Grant program reimburses a portion of each of our partner state’s program expenses. The grants partially cover the cost of any personnel, equipment, and activities reasonably required for the conduct of the pipeline safety program. Most importantly, PHMSA’s grants provide state programs a consistent source of funding to hire and maintain adequate pipeline safety inspectors. PHMSA reviews state performance and conducts grant monitoring to ensure that the funds are used efficiently and effectively.

The statute allows PHMSA to reimburse states at a level set by statute and Congressional appropriation—PHMSA can pay no more than 80 percent of a state’s total cost during a given calendar year and we prorate the total appropriation when necessary. For FY 2018, PHMSA awarded $56 million to participating state programs,  including over $1 million to Massachusetts, which will cover almost 60 percent of their estimated program costs this year.

As the number of miles of pipeline infrastructure continues to grow and as the older pipes age, this grant program is critical to our oversight of our nation’s pipeline systems.

2. Training

PHMSA also supports state programs by providing essential technical training. Our state-of-the-art Training and Qualifications (T&Q) program has full accreditation from the International Association for Continuing Education and Training (IACET).

The T&Q trains an average of 890 state and federal inspectors annually, ensuring that all are current on updated regulations, technology, and best practices. PHMSA offers 58 online computer-based training and on-site courses, including classroom training and hands-on labs, that teach federal and state inspectors how to understand and apply federal regulations and incorporated industry standards. In addition, the Training Center offers technical assistance and nationwide seminars for companies to educate them on the consistent application of the regulations, inspection techniques, and compliance and enforcement procedures.

The core courses that inspectors must take cover topics including PHMSA regulations, overpressure protection, corrosion control, plastic pipe joining, and welding. Five of the seven inspectors in Massachusetts have completed their core training. The remaining two inspectors are new hires and will also take these core classes. In FY 2018, inspectors in Massachusetts completed 32 courses at the T&Q Center, and PHMSA looks forward to continuing to work with the state.

Training is critical to state inspectors.  A significant increase in the total number of state and federal inspection personnel, along with the many new employees who replace retirees, have led to increased training needs. Our Training Center is working hard to increase capacity in order to handle these needs.  PHMSA has begun to hold “boot camps” to train new inspectors with the basic skills that allow them to begin their work quickly.

Looking ahead, PHMSA’s T&Q Center is committed to developing innovative ways to be more accessible and effective, including the exploration of long-distance proctored classes, curriculum improvements, and more efficient delivery to ensure relevancy.

3. Program Evaluations

Each year, PHMSA evaluates every partner’s compliance with our safety program requirements. Our representatives work with the state officials to review their inspection procedures, records, inspection activities, and enforcement actions. These reviews provide an opportunity for dialogue between PHMSA and the states during which we emphasize the imperative to continually improve pipeline safety, public safety, and the protection of the environment.

This evaluation assesses whether the state is maintaining an effective pipeline safety program in line with federal regulations and provides the basis for determining the state’s total point award for the PHMSA pipeline safety grant for the upcoming year.

The assessments consist of two parts. PHMSA first reviews each state’s Progress Report to validate that their pipeline safety program is supported by the people, training and other resources necessary to ensure pipeline safety. The progress report also summarizes their annual inspection activities conducted on the regulated companies within each state for the previous year. 

Second, PHMSA reviews the annual Progress Report documents submitted by the state for accuracy, reviews the pipeline program inspection procedures and records, and observes an on-site inspection of a pipeline company conducted by state staff.

As part of this annual program evaluation process, PHMSA discusses state metrics developed by PHMSA and the National Association of Pipeline Safety Representatives. These metrics track the state’s damage prevention program, inspection activity, inspector qualification, leak management, enforcement, and incident investigation.

These evaluations and the review of metrics are an opportunity for discussion between PHMSA and state pipeline safety program managers about potential safety program improvements. PHMSA also publishes each state’s progress on these metrics online so that the state programs can proactively review their metrics and act to ensure positive performance trends.

The strength of state pipeline safety programs directly impacts the integrity of our nation's pipelines, especially the local distribution systems.

At the recent 2018 NAPSR National Meeting, PHMSA senior leadership spoke to all state pipeline safety programs and challenged the states to strive for excellence.  Specifically, PHMSA encouraged state leaders to be diligent in their oversight, especially in light of the Massachusetts accident.  State pipeline safety authorities, just as we at PHMSA, must vigorously inspect and enforce against the pipeline safety regulations and take prompt action where needed. 

C. Role of Gas Companies

While PHMSA and our state partners are dedicated to a goal of zero incidents, a safe pipeline system requires the active participation of all stakeholders.  Thus, the onus of maintaining a safe pipeline system is on the companies that own and operate the systems.

PHMSA expects companies to know their systems’ risks and needs, including the risks of the systems’ design, environment, and operations. Companies must address these risks promptly.  Accidents like what occurred here in Massachusetts are unacceptable.

I want to recognize and thank the NTSB for their outstanding professionalism and dedication while leading the tragic Columbia Gas of Massachusetts accident investigation. In its preliminary report, the NTSB noted that the overpressurization that caused the explosions and fires occurred during a pipeline replacement project. While we applaud the company’s intent to replace aged and vulnerable cast iron lines, the project’s work plan did not account for sensing lines of gas regulators in that part of the system.

This tragedy and its aftermath have demonstrated how critical it is for companies to thoroughly plan and safely execute all their work involving design, construction, operation and maintenance of any replacement activity. Pipeline operators must understand that they have a responsibility to demand excellence from the contractors and subcontractors they hire to work on their systems.

We will support the MA DPU and the citizens of Massachusetts as they work to recover from this tragedy. At this point, it also appears that this accident was not caused by a gap in either federal or state pipeline safety regulations—this was an issue of company quality control. While we might wish it otherwise, regulations alone will not prevent pipeline incidents and accidents. To prevent future accidents like this one, companies must focus on continuous improvement and nurturing a good safety culture. Such aggressiveness is essential if we – all of us, together – hope to create a pervasive culture of safety – one that looks upon even near-misses as unacceptable failures, like air traffic controllers have done for a very long time.  And I choose that occupation because they are one of few endeavors with a smaller incident rate than pipeline operations.

III. CONTINUOUS IMPROVEMENT/SAFETY MANAGEMENT AND CULTURE

Pipeline operators must continue to use risk-informed approaches, such as integrity management, to ensure they are adequately identifying and addressing the greatest risks to their systems. This includes efforts to conduct integrity assessments and apply lessons learned across an entire system.  But regulations are not the only resource PHMSA can use to improve pipeline safety.

The common thread that runs throughout every aspect of PHMSA’s safety mission is a Safety Management Systems (or SMS) approach. SMS looks to find gaps, address them promptly, and prevent pipeline accidents and incidents from ever occurring as opposed to reacting. To be effective, SMS requires PHMSA to move beyond the role of being just a regulator – to encourage operators to identify and target their system risks, address those risks, and encourage a company-wide culture that makes safety the number one priority, always.

Pipeline operators are only as good as their worst contractor.  For SMS to permeate through all levels and areas of the pipeline industry, we need ways to share and analyze data, allowing all of us to see emerging trends and addressing problems before they result in accidents. We all share the same goal of zero pipeline incidents, and I believe that the more we collaborate, the safer our nation’s pipelines will be.

PHMSA’s expectation of companies, and the industries that support them, is for them to know their systems’ risks and needs. Periodic inspections by PHMSA or its state partners will not yield the kind of intimate knowledge required to anticipate all of a system’s vulnerabilities.

PHMSA challenges companies by encouraging them to not wait for inspections, or for new regulations, to make safety improvements. It is folly to think that further improvement will occur if companies are either passive or complacent. Companies work with these systems every day and they must be more aggressive than to wait for PHMSA or states to identify potential problems.

Under a well-designed SMS, companies can address an issue or gap before it becomes a problem, because some problems become accidents, and some accidents become tragedies.

An aggressive approach is essential if we collectively advance to create a pervasive culture of safety – one that looks upon even the smallest issue or near-miss as unacceptable.

Our commitment to SMS goes beyond asking companies to make cultural changes; we are implementing SMS throughout PHMSA as well. PHMSA is incorporating a focus on safety into our everyday operations, refocusing on our communications across the agency, and reexamining how we can do business even better.

An element of the PHMSA SMS is our work with our state partners to improve our training support. As I said before, PHMSA’s T&Q Center is working to provide an effective and efficient distance delivery system that does not sacrifice the high quality of our training curricula. PHMSA’s goal is to make it easier for state inspectors to access the courses they need quickly and at a lower cost

PHMSA has an active mentoring program for state inspectors, and we continue to encourage states to participate in the program to improve inspector skillsets and benefit from feedback from experienced inspectors. In addition, last year PHMSA employees spent well over 7,600 hours working directly with state pipeline safety programs supporting pipeline safety.

IV. PHMSA SUPPORTS MODERNIZATION

Our Nation is growing rapidly. Increases in domestic energy production are placing more demand on all of the nation’s transportation modes and poising America to become the world’s largest energy producer. Technology advancements quickly change how the industry uses the transportation system. In addition, it is projected that another 70 million more people will live in America in 2050, placing even more demand on the transportation network. All of these changes present new safety challenges, as well as new opportunities to improve the safety and efficiency of our Nation’s hazmat transportation system for today and the future.

PHMSA believes that many of the next steps in safety will come from encouraging new technologies and prioritizing innovative solutions to safety challenges. We support modernization in multiple ways, including funding research and looking at new ways to conduct business.

If done correctly, upgrading our Nation’s pipeline infrastructure is one of the surest ways to foster even higher levels of pipeline safety. That is why DOT and PHMSA issued a Call to Action in 2011 to accelerate the repair, rehabilitation, and replacement of the aged and outmoded pipeline that pose the highest risk across the country.

Thanks to increased state and federal safety initiatives and pipeline companies’ replacement efforts, the miles of active cast or wrought iron pipelines has declined significantly in recent years. To date, 21 states and one territory have completely eliminated their inventory of cast or wrought iron natural gas distribution lines. In fact, cast or wrought iron gas distribution pipelines make up only 2 percent of distribution mains in our country today, and 41 states, including the District of Columbia, have specific rate mechanisms that foster accelerated replacement of pipelines no longer fit for service.

PHMSA considers it our responsibility to provide technical support to state and federal agencies that have siting or route designation authority, to prioritize inspections related to the engineering and construction of major new pipeline projects, and to the support of projects that are designed to repair, rebuild, and expand infrastructure.

We’re also committed to undertake the research that will develop new technologies and new solutions to pipeline safety challenges. Our R&D program works to apply research, strengthen consensus standards, and inform regulatory activities. Our research is focused on solving discrete, current problems that have an immediate effect on overall safety.

Since 2002, PHMSA has funded 270 projects designed to prevent excavation damage to pipelines, identify and minimize leaks, and detect defects in pipelines well before they fail. In September, PHMSA awarded more than $3.8 million to 11 universities via our Competitive Academic Agreement Program (CAAP). The 13 research projects funded by CAAP this year address a number of consensus standards, rulemakings, mandates, and recommendations. 

The PIPES Act of 2016 required the Secretary to establish a Voluntary Information-sharing System (VIS) Workgroup (WG) to study information-sharing systems for the pipeline industry. This group will provide recommendations to the Secretary regarding whether a sharing system is needed, ways to encourage the exchange of inspection information, and best practices for the protection of proprietary and security-sensitive information. The VIS WG’s membership includes representatives from PHMSA, industry stakeholders, safety advocacy groups, research institutions, state public utility commissions, state pipeline safety inspectors, labor representatives, and other entities.  The Workgroup is on schedule to present their recommendations to Secretary Chao before the end of the year. 

V. CONCLUSION

Safety is the highest priority for the U.S. Department of Transportation and for PHMSA and we look forward to continuing to work with Congress to prevent future natural gas distribution pipeline accidents like what recently occurred in Massachusetts.  Pipeline companies must apply lessons learned from this accident to their own programs and future operations. PHMSA holds companies accountable for the safe operation of their pipelines, and will continue its efforts to ensure that all stakeholders uphold the highest possible safety standards.

As the number of miles of new pipe being buried across the country continues to grow, the need for strong state pipeline safety programs is ever more critical to promote transportation system safety in every corner of our great nation. States’ input and experience is critical in this effort as PHMSA sets public policy, strategically allocates resources, and moves forward with effective new regulations.

Thank you again for inviting me to today’s field hearing.  I look forward to your questions.

How Small Businesses Benefit From Smart Rail Shipping Regulations New Orleans, La

Written Statement of
Paul Roberti
Chief Counsel
Pipeline And Hazardous Materials Safety Administration

Before The
Committee on Small Business and Entrepreneurship
United States Senate

How Small Businesses Benefit from Smart Rail Shipping Regulations
New Orleans, LA

NOVEMBER 16, 2018

Senator Kennedy, thank you for the opportunity to testify today on the Pipeline and Hazardous Materials Safety Administration’s (PHMSA) efforts to advance the safety of rail tank cars carrying hazardous materials. I would also like to thank you for your leadership in bringing attention to the need to advance the nation’s rail safety efforts.  As you know, tragic high-profile train accidents involving hazardous materials, such as those that occurred in Lac-Mégantic, Quebec, Canada (2013); Graniteville, South Carolina (2005); and Minot, North Dakota (2002), underscore how important it is to be ever vigilant in protecting local communities and the environment as it relates to the safety of our nation’s railroad system. The U.S. Department of Transportation (DOT) and PHMSA work thoroughly to bolster compliance with federal hazardous materials laws and regulations to minimize accidents and impacts to people, communities, and the environment. 

Safety is the number one priority for U.S. Secretary of Transportation Elaine L. Chao, PHMSA Administrator “Skip” Elliott and our modal partners across the Department. In particular, PHMSA’s mission is to work to protect the American people and the environment from the risks of hazardous materials transportation by all modes, including rail, highway, waterways, air, and pipeline. 

PHMSA achieves its safety mission by establishing a national policy of setting forth standards and a comprehensive enforcement regime. PHMSA also advances education, as well as research and development efforts, all with aim to prevent incidents and enhance safety. Additionally, PHMSA provides funding and training to prepare first responders to reduce consequences in the event that an incident does occur. PHMSA’s ultimate goal is to pursue all avenues to reduce risk toward zero deaths, zero injuries, and to minimize environmental and property damage, and transportation disruptions. 

This testimony will provide a summary of PHMSA’s hazardous materials safety program and its role in advancing rail safety.  It will also discuss ways in which PHMSA is attempting to modernize standards and reduce regulatory burdens on small businesses.  And finally, it will provide an update on PHMSA’s efforts to finalize standards for rail cars that carry hazardous materials with toxic inhalation hazards and share with you how PHMSA is working to build consensus among stakeholders in the regulated industry.

I. Statutory Authority and PHMSA’s Responsibilities in Developing Hazardous Materials Regulations

Federal hazardous materials transportation law authorizes the Secretary of Transportation to “prescribe regulations for the safe transportation, including security, of hazardous material in intrastate, interstate, and foreign commerce.” The Secretary has delegated this authority to PHMSA, which is responsible for administering a safety and enforcement program that minimizes the inherent transportation risks to life, property, and the environment inherent in transportation in commerce.  Each year, the collective efforts of PHMSA and other DOT modal administrations facilitate the safe and secure transit of more than 2.5 billion tons of hazardous materials, valued at more than $2 trillion.

II. Comprehensive Approach to Prevent and Mitigate Rail Hazardous Materials Accidents and Incidents

Regulations governing the transport of hazardous materials include operational requirements that are applicable to each mode of transportation.  To achieve safety, PHMSA sets standards to ensure that hazardous materials are properly classified, appropriately packaged or safely contained in vessels, such as rail tank cars, and finally, that the risks are properly communicated to transportation workers and emergency responders through markings, labels, placards, and shipping documents.  This approach is designed to prevent hazardous materials releases in the course of rail transportation, and to mitigate damages in the unlikely event of a release.  With specific regard to rail safety, PHMSA and the Federal Railroad Administration (FRA) take a system-wide, comprehensive approach for addressing the risks posed by the bulk transport of hazardous materials by rail.  This includes working closely together when considering regulatory changes. 

III. PHMSA Considers Impacts on Businesses When Determining Regulations

When considering rules and regulations, PHMSA carefully weighs safety benefits against the economic impact to businesses and consumers.  PHMSA discharges its responsibilities in accordance with principles of good government by embracing a regulatory philosophy that promotes transparency, stakeholder engagement, and regulatory restraint. The Department’s Regulatory Reform Task Force plays a significant role in helping PHMSA to assess the efficacy of existing regulations, guided by three principles: (1) to reduce the regulatory burden on the public without compromising safety; (2) to streamline permitting; and lastly (3) to enable innovation.

Consistent with existing law and the Administration’s priorities, the agency seeks to tailor its regulations to impose the least burden on society while achieving its regulatory objectives. PHMSA’s economic assessments follow the best practices as outlined by the Office of Management and Budget. Each regulation is also accompanied by a regulatory flexibility assessment, which considers the rule’s impact on small businesses and explores ways regulatory burdens could be reduced, as required by the Regulatory Flexibility Act. PHMSA provides the American public, including small businesses, the opportunity to review and comment on rules through notice-and-comment procedures, and works closely with the Small Business Administration’s Office of Advocacy to address disproportionate impacts on small entities in an effort to reduce their regulatory burden.  Additionally, PHMSA’s Hazardous Materials Safety Assistance Team (HMSAT) conducts face-to-face outreach throughout the country to ensure accessibility and transparency to small businesses and other stakeholders.

IV. Current Efforts to Finalize Standards on TIH

PHMSA works closely with multiple DOT operating administrations to ensure consistency in administering hazardous materials transportation safety programs across all modes. We are currently actively working with our counterparts at FRA to address many issues relevant to the safe transportation of hazmat by rail, including the transportation of materials that pose a toxic inhalation hazard (TIH).  These TIH materials, which include essential products, such as anhydrous ammonia and chlorine, are vital not only to our nation’s infrastructure, but also to our health and safety since our water and food supplies depend on their safe movement.  PHMSA recognizes its critical role as an agency that must ensure the safety of a vast transportation network that supports our economy and our national way of life.

As an example of our close collaboration with FRA and our industry stakeholders, PHMSA has reviewed, analyzed, and accepted several petitions for consideration in upcoming rulemakings that address the safe transportation of materials that are toxic when inhaled.  These petitions cover a range of issues, including: finalizing specifications codified in 2009 to provide certainty to industry regarding tank car design and construction standards; extending the authorized service life for tank cars that meet improved standards from 20 to 50 years; and determining an appropriate timeline for phasing out rail tank cars that do not meet the final standard.  PHMSA appreciates the wealth of expertise that the shippers and carriers provide to the regulatory process, as well as their continued commitment to build consensus on necessary safety standards.

We are pleased to note that the Association of American Railroads (AAR) and several associations representing TIH shippers, including the American Chemistry Council (ACC), the Chlorine Institute (CI), and the Fertilizer Institute (TFI), have reached a general consensus with respect to one of the more challenging determinations proposing to develop a timeline for compliance with the final TIH tank car standard. On June 19, 2018, AAR, ACC, CI, and TFI, submitted joint comments to PHMSA advocating for a mutually agreed-upon phase out date of December 31, 2027.  Just three weeks ago, on September 6, 2018, leadership of each of these organizations came together to meet with PHMSA’s senior leadership team to affirm their support for this new approach.  These organizations jointly urged PHMSA to accelerate the timeframe for completing rules to provide certainty for the strategic investment decisions that stakeholders must make to advance safety. This collaborative effort by our industry partners has greatly facilitated our efforts to finalize a draft rule that can be issued for public notice and comment and finalized as expeditiously as possible.

Looking ahead, we know that additional challenges remain as we work together with all stakeholders to build on our existing safety framework.  In addition, we must work together to facilitate the adoption of innovative technologies and solutions to advance safe transportation for the benefit of the public. We remain confident that our shared goals of safely delivering vital commodities throughout our nation will help overcome these challenges and we look forward to working with all concerned.

V. Closing Remarks 

In closing, DOT and PHMSA are committed to improving the safety of the transportation of hazardous materials across all modes.  It is important that DOT provide certainty to the regulated community to facilitate the transportation of hazardous materials, which are vital to our national economy and to the local economies of the State of Louisiana and the Port of New Orleans.  Furthermore, hazardous materials shippers and carriers are integral partners for improving transportation safety and their collaboration with PHMSA is essential if we are to meet our shared goal of zero incidents.  With strong commitment, leadership, and robust stakeholder collaboration, we can ultimately achieve this goal.

We look forward to continuing to work with Congress to strengthen hazardous materials rail safety policy.  Together, we can protect America’s people and its environment by advancing the safe transportation of hazardous materials.  The hardworking staff of PHMSA is dedicated and committed to fulfilling our safety responsibility to the American people.  Thank you again for the opportunity to testify today.  I would be pleased to answer any questions you may have.