Testimony

In This Section

PTC Update: Are Railroads on Track to Meet the Impending Deadline?

WRITTEN STATEMENT OF RONALD L. BATORY
ADMINISTRATOR
FEDERAL RAILROAD ADMINISTRATION
U.S. DEPARTMENT OF TRANSPORTATION

Before the
U.S. Senate Committee on Commerce, Science, & Transportation
United States Senate

“PTC Update: Are Railroads on Track to Meet the Impending Deadline?”

October 3, 2018

Chairman Thune, Ranking Member Nelson, and Members of the Committee:

Thank you for the opportunity to testify today and provide the committee with an update on railroads’ implementation of positive train control (PTC) systems.

As we approach critical deadlines for railroads’ implementation of PTC systems, myself, and the men and women that serve at FRA remain committed to working with the railroads and its supply industry to ensure the full implementation of this important rail-safety technology in a timely manner.

I. PTC Mandate

Railroads’ implementation of PTC systems has been, and remains, at the top of our agenda. PTC systems represent the most fundamental change in rail safety technology since the introduction of Automatic Train Control in the 1920s. As mandated by the Rail Safety Improvement Act of 2008 (RSIA), each Class I railroad and entity providing regularly scheduled intercity or commuter rail passenger service must implement an FRA-certified PTC system on (1) its main lines over which 5 million or more gross tons of annual traffic are transported if the main line carries poison- or toxic-by-inhalation hazardous materials, and (2) its main lines over which intercity or commuter rail passenger transportation is regularly provided. Under RSIA, railroads were originally required to complete implementation by December 31, 2015. Approximately two months before that deadline, the House and Senate overwhelmingly passed, and the President signed, the Positive Train Control Enforcement and Implementation Act of 2015 (PTCEI Act), extending the deadline for full PTC system implementation to December 31, 2018.

In addition, under the PTCEI Act, Congress permits a railroad to request FRA’s approval of an “alternative schedule” with a deadline extending beyond December 31, 2018, but no later than December 31, 2020, for full PTC system implementation. The law requires FRA to approve a railroad’s alternative schedule with a deadline that is as soon as practicable, but not later than December 31, 2020, if a railroad submits a written request to FRA that demonstrates it has met the statutory criteria to qualify for such an alternative schedule. Currently, 41 railroads are required by statute to implement PTC systems: all 7 Class I freight railroads; 30 commuter and intercity passenger railroads, including the National Railroad Passenger Corporation (Amtrak); and 4 short line and terminal railroads. The technology is required to be implemented on approximately 58,000 route miles of the 140,000-mile railroad network.

While railroads are making progress, FRA expects that most railroads will need to request an alternative schedule to complete testing, obtain PTC System Certification, meet the statutory interoperability requirements, and fully implement PTC systems on all main lines required to be governed by PTC systems. FRA continues to take a proactive approach to help railroads acquire, install, test, and fully implement certified PTC systems as soon as possible.

At the direction of Secretary Elaine L. Chao, FRA senior leadership met individually with executives from each of the 41 railroads in January and February of this year. In May and June, we also held follow-up meetings with the twelve railroads identified as at risk, as of Quarter 1 of 2018, of not meeting the statutory criteria necessary to qualify for FRA’s approval of an alternative schedule. Railroads have generally been candid in detailing the challenges and obstacles confronting their properties. During the meetings, we sought to objectively evaluate each railroad’s PTC deployment status, and learn what remaining steps each railroad needs to take to meet the deadline or satisfy the statutory criteria necessary to qualify for an alternative schedule.

During these meetings and throughout our conversations with the railroads, they commonly conveyed the following ongoing challenges:

There is a competitive yet limited number of PTC system vendors and suppliers. Unusually weighted demand and supply has constrained the timely serving of all 41 railroads and their tenant railroads;
As reliability and stability of PTC systems is still immature, railroads are experiencing significant technical issues with both PTC system hardware and PTC system software that often take considerable time to diagnose and resolve, impacting current operations;
Host railroads (totaling 36) noted that many tenant railroads (estimated at 250+) that operate on main lines requiring PTC system implementation have made variable, and often unknown, progress equipping locomotives with operational PTC technology, while some tenant railroads report that their host railroads are not providing opportunity for testing. FRA is initiating efforts to synchronize the coordination among the host and tenant railroads;
Railroads have only recently begun testing PTC systems for interoperability;
Many commuter railroads stated that negotiating legal agreements with certain vendors and suppliers often took time to complete, given various insurance, liability, and State law issues;
Absence of consistent leadership at several railroads, regardless of leadership quality, weakened the “sense of urgency” and the focus on PTC system implementation at some entities subject to the statutory mandate; and
Railroads noted concern about FRA’s review and approval cycle, given the surge in submissions requiring FRA approval in 2018–2020.

By law, it is the railroads’ responsibility to implement PTC systems, but FRA is facilitating railroad and supplier collaboration to hasten, and urge, implementation. We have also met individually with PTC system component suppliers to learn more about their capacity to meet the high demand of railroads to achieve timely implementation.

This summer FRA hosted three PTC symposia for the 41 railroads mandated to implement PTC systems. Each of the day-long sessions brought together railroad safety officials and FRA’s PTC experts to ensure that each and every railroad subject to the mandate is aware of its obligations and is equipped to meet the Congressionally mandated deadline. The first symposium discussed industry questions and focused on requirements for the December 31, 2018 statutory deadline. The second focused on best practices for testing PTC systems on the general rail system, including field testing, revenue service demonstration (RSD), and interoperability testing. The third focused on lessons learned and best practices for PTC Safety Plans, which are required for host railroads to obtain PTC System Certification and achieve full system implementation. As FRA tracks railroads’ progress, additional symposia on PTC may be offered, as new challenges arise.

II. PTC Status Update

Since April 1, 2016, FRA has been closely tracking and displaying on its website individual railroads’ self-reported PTC system implementation status. FRA’s PTC Dashboard tracks railroads’ progress toward full implementation on a quarterly basis, including the number and percentage of locomotives equipped and PTC operable, track segments completed, radio towers installed, training completed, spectrum acquisition, route miles in RSD, whether the railroad has obtained PTC System Certification, route miles in PTC operation, and more recently, interoperability between host railroads and tenant railroads. In addition, FRA tracks, on a quarterly basis, the progress each railroad has made toward meeting the statutory criteria necessary to qualify for FRA’s approval of an alternative schedule.

Based on railroads’ most recent Quarter 2 reports (with data current as of June 30, 2018), PTC systems are in operation on 35,487 route miles, which is approximately 66 percent of the freight railroads’ route miles that are required to be governed by a PTC system. Passenger railroads have made less progress, with PTC systems in operation on 975 route miles, which is approximately 24 percent of the required route miles. Notably, PTC systems are being operated in RSD on an additional 1,103 freight railroad route miles and an additional 140 commuter railroad route miles, as of Quarter 2. Fifteen railroads report they have completed installation of all hardware necessary for PTC system implementation, and twelve other railroads have installed between 95 and 99 percent of the PTC system hardware identified in their PTC Implementation Plans, as of June 30, 2018. All but one railroad, whose PTC systems use spectrum, reported they have acquired sufficient spectrum. In addition, 14 railroads have initiated sufficient RSD or met substitute criteria, which is also one of the six statutory criteria needed to qualify for an alternative schedule.

The most recent data also shows a reduction in the number of railroads at risk of not qualifying for an alternative schedule, from twelve railroads as of Quarter 1 of 2018, to nine railroads as of Quarter 2. FRA generally considers any railroad that had installed less than 90 percent of its PTC system hardware as of June 30, 2018, to be most at risk of failing to qualify for an alternative schedule. Installation of all PTC system hardware is only an initial phase of implementing a PTC system and only one of the six statutory criteria required to qualify for an alternative schedule to complete full PTC system implementation after December 31, 2018.

In addition to the letters of concern from April and June 2018, on approximately August 24th, I sent letters to the following nine railroads that were at risk, as of Quarter 2 of 2018, of both missing the statutory implementation deadline, and failing to qualify for an alternative schedule: Altamont Corridor Express, Capital Metropolitan Transportation Authority, Central Florida Rail Corridor (SunRail), Maryland Area Regional Commuter (MARC), New Jersey Transit, New Mexico Rail Runner Express, Peninsula Corridor Joint Powers Board (Caltrain), South Florida Regional Transportation Authority (Tri-Rail), and Trinity Railway Express. This assessment was based on railroads’ self-reported progress as of June 30, 2018 (Quarterly PTC Progress Reports for Quarter 2 of 2018). In September, I also sent similar letters expressing concern to the relevant state departments of transportation and governors.

FRA is working closely with all 41 railroads subject to the PTC mandate, and FRA is actively engaging in frequent communication and providing additional on-site technical assistance to the at-risk railroads. Of course, all railroads subject to the mandate must pay careful attention to the requirements for an alternative schedule if they will not achieve full PTC system implementation by December 31, 2018, and must continue vigilantly working toward prompt PTC system implementation.

As of September 25, 2018, three Class I railroads and one commuter railroad have submitted formal written notifications requesting FRA’s approval of an alternative schedule, pursuant to the PTCEI Act’s procedural requirements. On September 5, 2018, FRA approved BNSF Railway’s request for an alternative schedule, based on its supporting documentation related to the six statutory criteria necessary to qualify for an alternative schedule. FRA is committed to complying with the PTCEI Act’s mandated review and decision period, requiring FRA to issue a decision not later than 90 days from receipt of a railroad’s written request for FRA’s approval of an alternative schedule. In addition, in the interim, within 45 days of receipt of a railroad’s written request, the PTCEI Act requires FRA to provide the railroad, if applicable, with: (1) a written notification of any deficiencies that would prevent approval of the railroad’s alternative schedule and (2) an opportunity to correct the deficiencies before the 90-day period expires. If a railroad demonstrates it has met all six applicable statutory criteria, under the PTCEI Act, FRA shall approve the railroad’s alternative schedule for fully implementing a PTC system as soon as practicable, but no later than December 31, 2020.

FRA has encouraged railroads to submit any formal requests for FRA’s approval of an alternative schedule, with the required supporting documentation, as soon as they meet the six statutory criteria and are eligible to submit the formal request required under the PTCEI Act.

III. Grant Funding and Financial Assistance

PTC technology is designed to provide important safety improvements, but these systems come with significant costs, both in terms of immediate acquisition and increased operations and maintenance costs. Industry estimates PTC acquisition will exceed $14 billion, and maintenance will cost 10 to 20 percent of annual capital costs. Since 2008, FRA has awarded approximately $961 million in grant funding to support railroads’ implementation of PTC systems. FRA also supported the Federal Transit Administration (FTA) with its evaluation and selection of approximately $197 million in grant funding awarded to 17 commuter and intercity passenger railroads and state and local governments for installation of PTC systems, which were announced on May 31, 2017. More recently, on August 24, FRA selected 28 PTC projects, including 13 commuter rail projects not usually eligible for FRA funding, to receive $203.7 million under the Fiscal Year 2018 Consolidated Rail Infrastructure and Safety Improvements (CRISI) grant program. Given that applications for this funding were due July 2, I would note that FRA worked tremendously hard to evaluate the applications and make selections. Our hard work allowed us to make the grant announcements two months after receipt of the applications. This process can typically take up to six months or longer to complete.

Currently, FRA has two open funding opportunities that can further aid railroads, states, and other stakeholders with implementing PTC as well as other important safety and infrastructure needs: $318.4 million under the broader Fiscal Year 2018 CRISI program, and $46.3 million for the remaining funding under the PTC-specific Fiscal Year 2018 CRISI program, applications for both funding opportunities are due October 12, 2018. And finally, FRA is evaluating applications submitted under the $65.2 million Fiscal Year 2017 CRISI and $4.8 million Fiscal Year 2017 Restoration & Enhancements grant programs, and will be making selection announcements in the near future.

In total, the sources of the approximately $1.16 billion in FRA and FTA grant funding for PTC are:

$475 million from FRA’s High-Speed Intercity Passenger Rail Grant Program;
$197 million in Section 3028 of the Fixing America’s Surface Transportation Act (FAST Act) funding;
$204 million in CRISI grant funding;
$0.3 million in a Special Transportation Circumstances Grant;
$142 million in annual capital grant funding to Amtrak;
$86 million from FRA’s Railroad Safety Technology Grant Program;
$52 million in American Recovery and Reinvestment Act grant funding to Amtrak; and
$2 million in Research and Development grants.

Additionally, in May 2015, FRA issued a $967.1 million loan to Metropolitan Transportation Authority for Long Island Rail Road’s and Metro-North Railroad’s implementation of PTC systems. And on December 8, 2017, the Build America Bureau closed on a $162 million Transportation and Infrastructure Finance and Innovation Act loan and a $220 million Railroad Rehabilitation and Improvement Financing loan to be issued to the Massachusetts Bay Transportation Authority for PTC system implementation.

In sum, thanks to the funding provided by Congress, the Department has made available over $2.5 billion in grants and loans since 2008. This amounts to nearly 20 percent of industry estimates for PTC implementation costs.

IV. Enforcement of the PTC Implementation Mandate

FRA is committed to helping ensure that railroads implement PTC systems as safely and expeditiously as possible, in accordance with the congressional mandate. FRA is authorized to assess monetary civil penalties against any railroad that fails to implement a PTC system by the applicable statutory deadline (either December 31, 2018, or, if a railroad has an approved alternative schedule, the applicable date not later than December 31, 2020). FRA’s civil penalty schedule recommends, as guidance, a $16,000 civil penalty for a failure to timely complete PTC implementation on a track segment where it is required. For any violation of a Federal rail safety statute, regulation, or order, however, the current statutory minimum civil penalty FRA may assess is $853, and the ordinary statutory maximum is $27,904. FRA may assess a civil penalty for each day the non-compliance continues, but FRA may elect to take enforcement action on a one-time basis or each month, quarter, year, or other interval of time during which the noncompliance continues. FRA is currently considering all options, within the framework established by law, to determine what type of enforcement action will be most effective and appropriate under the circumstances. Our goal is to ensure any enforcement action compels a railroad to fully implement its PTC system as efficiently and safely as possible.

Also, I would like to note that in June and July 2018, FRA initiated enforcement action against each of the 13 railroads that failed to complete one or more of the end-of-2017 hardware installation milestones and/or spectrum acquisition milestones the railroad established in its PTC Implementation Plan. Consistent with FRA’s commitment to ensuring railroads comply with the statutory mandate, including interim requirements, FRA’s Notice of Probable Violation to each of the 13 railroads proposed the maximum civil penalty for this type of interim violation—i.e., a one-time civil penalty of $27,904.

As of June 30, 2018, PTC systems are either in RSD or in operation on approximately 37,705 route miles (i.e., 65 percent) of the nearly 58,000 route miles that are subject to the statutory mandate.

Moving forward, FRA will continue to support and facilitate railroads’ implementation of PTC technology by utilizing the tools afforded by Congress and providing extensive technical assistance and guidance to railroads and suppliers. We remain vigilant in harnessing and leveraging all the personnel, financial, and other resources available to help expedite railroads’ implementation efforts. We appreciate the Committee’s support for our critical programs, and we welcome your continued partnership to advance rail safety and service. I look forward to your questions.

The State of Positive Train Control Implementation in the United States

WRITTEN STATEMENT OF RONALD L. BATORY

ADMINISTRATOR

FEDERAL RAILROAD ADMINISTRATION

U.S. DEPARTMENT OF TRANSPORTATION

Before the

House Committee on Transportation and Infrastructure

Subcommittee on Railroads, Pipelines, and Hazardous Materials

United States House of Representatives

“The State of Positive Train Control Implementation in the United States”

September 13, 2018

Chairman Denham, Ranking Member Capuano, and Members of the Subcommittee:

Thank you for the opportunity to testify today to discuss positive train control (PTC). I come to my position as Administrator of the Federal Railroad Administration (FRA) with 45 years of experience in the railroad industry, rising to become the President and Chief Operating Officer of a significant freight rail carrier in the United States. Throughout my career, I have been focused on continually improving safety performance, and I bring this same commitment to my current position as Administrator of the FRA.

PTC Mandate

During these meetings and throughout our conversations with the railroads, they commonly conveyed the following ongoing challenges:

• There is a competitive yet limited number of PTC system vendors and suppliers. Unusually weighted demand and supply has constrained the timely serving of all 41 railroads and their tenant railroads;

• As reliability and stability of PTC systems is still immature, railroads are experiencing significant technical issues with both PTC system hardware and PTC system software that often take considerable time to diagnose and resolve, impacting current operations;

• Host railroads (totaling 36) noted that many tenant railroads (estimated at 250+) that operate on main lines requiring PTC system implementation have made variable, and often unknown, progress equipping locomotives with operational PTC technology, while some tenant railroads report that their host railroads are not providing opportunity for testing. FRA is initiating efforts to synchronize the coordination among the host and tenant railroads;

• Railroads have only recently begun testing PTC systems for interoperability;

• Many commuter railroads stated that negotiating legal agreements with certain vendors and suppliers often took time to complete, given various insurance, liability, and State law issues;

• Absence of consistent leadership at several railroads, regardless of leadership quality, weakened the “sense of urgency” and the focus on PTC system implementation at some entities subject to the statutory mandate; and

• Railroads noted concern about FRA’s review and approval cycle, given the surge in submissions requiring FRA approval in 2018–2020.

PTC Status Update

The most recent data also showed a reduction in the number of railroads at risk of not qualifying for an alternative schedule, from twelve railroads as of Quarter 1 of 2018, to nine railroads as Quarter 2. FRA currently considers any railroad that had installed less than 90 percent of its PTC system hardware as of June 30, 2018, to be most at risk of failing to qualify for an alternative schedule. Installation of all PTC system hardware is only an initial phase of implementing a PTC system and only one of the six statutory criteria required to qualify for an alternative schedule to complete full PTC system implementation after December 31, 2018. The nine at-risk railroads are: New Mexico Rail Runner Express (Rio Metro), Capital Metropolitan Transportation Authority (CapMetro), New Jersey Transit (NJT), Altamont Corridor Express (ACE), Maryland Area Regional Commuter (MARC), Trinity Railway Express (TRE), South Florida Regional Transportation Authority (Tri-Rail), Peninsula Corridor Joint Powers Board (Caltrain) and Central Florida Rail Corridor (SunRail).

In addition to the letters of concern from April and June 2018, on August 24^th, I sent letters to the nine railroads that FRA remains concerned are at risk of both missing the statutory implementation deadline, and failing to qualify for an alternative schedule. This assessment was based on railroads’ self-reported progress as of June 30, 2018 (Quarterly PTC Progress Reports for Quarter 2 of 2018). I also sent similar letters expressing concern to the relevant state departments of transportation and Governors. FRA is working closely with all 41 railroads subject to the PTC mandate; for the nine at-risk railroads, FRA is actively engaging in frequent communication and providing additional on-site technical assistance. Of course, all railroads subject to the mandate must pay careful attention to the requirements for an alternative schedule if they will not achieve full PTC system implementation by December 31, 2018, and must continue vigilantly working toward prompt PTC system implementation.

Grant Funding and Financial Assistance

Currently, FRA has two open funding opportunities that can further aid railroads, states, and other stakeholders with implementing PTC as well as other important safety and infrastructure needs: $318.4 million under the broader Fiscal Year 2018 CRISI program, and $46.3 million for the remaining funding under the PTC-specific Fiscal Year 2018 CRISI program. And finally, FRA is evaluating applications submitted under the $65.2 million Fiscal Year 2017 CRISI and $4.8 million Fiscal Year 2017 Restoration & Enhancements grant programs, and will be making selection announcements in the near future.

In total, the sources of the approximately $1.16 billion in FRA and FTA grant funding for PTC are:

$475 million from FRA’s High-Speed Intercity Passenger Rail Grant Program;
$197 million in Section 3028 of the Fixing America’s Surface Transportation Act (FAST Act) funding;
$204 million in CRISI grant funding;
$0.3 million in a Special Transportation Circumstances Grant;
$142 million in annual capital grant funding to Amtrak;
$86 million from FRA’s Railroad Safety Technology Grant Program;
$52 million in American Recovery and Reinvestment Act grant funding to Amtrak; and
$2 million in Research and Development grants.

Enforcement of the PTC Implementation Mandate

Since this Administration took office, railroads have made significant progress toward installing and implementing PTC systems. From Quarter 1 of 2017 to Quarter 2 of 2018, railroads increased the total amount of installed PTC system hardware from 77 percent to 97 percent. As of June 30, 2018, PTC systems are either in RSD or in operation on approximately 37,705 route miles (i.e., 65 percent) of the nearly 58,000 route miles that are subject to the statutory mandate.

Moving forward, FRA will continue to support and facilitate railroads’ implementation of PTC technology by utilizing the tools afforded by Congress and providing extensive technical assistance and guidance to railroads and suppliers. We remain vigilant in harnessing and leveraging all the personnel, financial, and other resources available to help expedite railroads’ implementation efforts. We appreciate the Subcommittee’s support for our critical programs, and we welcome your continued partnership to advance rail safety and service. I look forward to your questions.

Pipeline Safety in the Great Lakes: Incident Prevention and Response Efforts at the Straits of Mackinac

The Honorable Howard “Skip” Elliott, Administrator, Pipeline and Hazardous Materials Safety Administration

Statement before the Committee on Commerce, Science and Transportation

Subcommittee on Surface Transportation and Merchant Marine Infrastructure, Safety and Security

United States Senate

“Pipeline Safety in the Great Lakes: Incident Prevention and Response Efforts at the Straits of Mackinac”

Traverse City, Michigan

August 20, 2018

I. Introduction

Senator Peters, thank you for having me to your beautiful state to testify before the Senate Subcommittee on Surface Transportation and Merchant Marine Infrastructure, Safety, and Security on the safety of Enbridge’s Lakehead System pipelines.

The mission of the Pipeline and Hazardous Materials Safety Administration – PHMSA – is to protect people and the environment by advancing the safe transportation of energy and other products that are essential to our daily lives. After working for decades in the freight rail industry, a great deal of it working to improve public safety, I believe that safety is the result of effective, smart regulations that hold operators accountable for their systems – but I also know that it takes more than just regulations to improve safety performance.

PHMSA’s team for pipeline safety oversees more than 2.7 million miles of our Nation’s energy pipeline systems, including 3,437 miles of Hazardous Materials pipelines in Michigan alone.

Our goal – which I believe is attainable – is zero pipeline incidents, and I know that when regulators, industry, and the public collaborate, we can find new paths forward to achieve that goal.

Our pipeline oversight program is based on three fundamental tenets:

PHMSA's primary roles are to establish minimum safety standards and take enforcement actions against operators if they are not in compliance with these standards.
PHMSA can impact safety culture and operator performance beyond minimum compliance with the regulations. PHMSA concurs with the National Transportation Safety Board (NTSB) that Safety Management Systems are the next big step toward broad safety improvement.
Pipeline operators must understand and manage the risks associated with their pipelines, including taking actions to prevent pipeline spills and minimizing the impact of any spills should they occur.

II. PHMSA Response to Enbridge Incidents

The spills that occurred on the Enbridge Lakehead System lines in Michigan were a failure in Enbridge’s risk management and incident response procedures.[1] While the pipeline failures, including those in Marshall, Michigan, and Grand Marsh, Wisconsin, caused damage to the area, PHMSA has worked with Enbridge and our partner federal agencies to improve our prevention, emergency response practices, and future strategies to learn the lessons of these incidents.

PHMSA’s immediate response to the Enbridge Line 6B spill in 2010 was to dispatch two investigators to the release site and one additional investigator to the Enbridge control center in Edmonton, Alberta, Canada. Several more inspectors worked on-site to address both PHMSA and NTSB’s investigative responsibilities. Our inspectors investigated Enbridge’s compliance with regulations related to maintaining the integrity of the line and control room procedures, and examined Enbridge's response to the incident, including its leak detection capabilities, emergency shut-down systems, and its notification procedures and practices. PHMSA also investigated Enbridge’s conduct and compliance with pipeline safety laws, including whether Enbridge promptly notified the National Response Center of the spill, had an adequate leak detection system and related control room procedures, and whether its pipeline integrity program met PHMSA’s safety standards.

PHMSA quickly coordinated with community leaders and first responders, as well as with members of the NTSB, Region 5 representatives of the Environmental Protection Agency, congressional staff, and emergency personnel engaged in the response efforts. The Department and PHMSA also attended and spoke at community meetings, met directly with community leaders, and participated in briefings for local officials.

In response to the findings, PHMSA took swift action to ensure the safety of the area. Within three days of the Marshall spill, PHMSA issued a Corrective Action Order (CAO) to Enbridge requiring specific steps to ensure the safety of the pipeline before they would be allowed to restart the line. The steps included a requirement to develop and submit for PHMSA approval a written gradual step-by-step restart plan for Line 6B, and develop and submit for approval an integrity verification and remedial work plan for Line 6B.

PHMSA continued to monitor the situation and later updated the CAO with additional integrity information and repair expectations. As inspections and repairs progressed, PHMSA continued to seek additional information and hold Enbridge to the necessary high standards before the line restart. During remediation, PHMSA oversaw the pipe removal, the repairs, and all testing.

Due to the widespread extent of the failures, PHMSA went beyond the standard incident response to inspect, investigate, review, and respond in a way that would ensure that any issues that contributed to failures would be remedied. PHMSA took a holistic approach to responding to and investigating these failures, and looked beyond the failed lines to examine Enbridge’s entire Lakehead system.

PHMSA reviewed the whole Lakehead System in the Great Lakes Region and addressed safety issues on a company-wide basis, making a broader safety commitment for the entire region. In addition to a Notice of Probable Violation with proposed penalties of $3.7 million,[2] PHMSA issued a Consent Order to Enbridge in 2012 that focused on specific safety measures that would ensure the short- and long-term safety of the system.[3]

PHMSA’s Consent Order required Enbridge to review its integrity management system for the entire U.S. portion of its Lakehead pipeline system, including the two pipelines running beneath the Straits of Mackinac. Specifically, PHMSA required Enbridge to analyze the health of its entire pipeline system, using in-line inspections and hydrostatic pressure testing, and to address any problems found.

The Consent Order also required Enbridge to establish a safety improvement plan for the Lakehead Pipeline system. As part of the Consent Order, Enbridge and its contractors reviewed and significantly improved its Facility Response Plans, including the one applicable to the Straits of Mackinac, developed the initiatives to improve its safety management system culture and training, revise emergency procedures, and step up the integrity management program for all 1,900 miles of the Lakehead system. Enbridge reported it spent $2.5 billion in complying with PHMSA’s Corrective Action Orders.

III. Prevention

Enbridge’s mandated system-wide testing discovered and repaired numerous areas of concern before these faults caused the pipeline to leak or rupture. Though Pipeline 6B only failed in one location, Enbridge replaced the entire line based on the results of in-line inspections and verification digs. Enbridge completed the final replacement construction of Line 6B in 2014. Enbridge has committed to replacing Line 3 as well, and while this replacement was not specifically required by PHMSA’s Lakehead Plan Consent Order, PHMSA supports Enbridge’s proposal to replace the line.

Before closing the Consent Order against Enbridge, PHMSA took additional steps to validate the safety of the Lakehead System. PHMSA contracted with Oak Ridge National Laboratory (ORNL), an independent third-party expert, in 2015 to review the latest Enbridge internal inspections of the Straits of Mackinac pipeline crossings to determine whether they indicated the presence of any potentially injurious defects. The ORNL report was completed in May 2016 and did not indicate any conditions of immediate concern, confirming PHMSA’s decision not to require further corrective actions at that time. The experts also looked at in-line results from previous inspections to support that validation.

While PHMSA terminated the Consent Order in 2016, PHMSA continues to monitor the implementation of the Enbridge’s Lakehead Plan. The plan’s comprehensive approach continues to produce significant safety improvements to the overall system that include additional remotely-operated valves, enhanced control room operations and leak detection, increased internal inspections, confirmatory hydrostatic pressure testing on specific pipelines, and pipe replacement, along with enhancements to the operator’s organizational safety culture.

Line 5

While Enbridge’s previous spills have led to widespread concern over the safety of Line 5, I want to take a moment to emphasize that Line 5 was designed and constructed to significantly higher safety standards than the lines that had failed. Typically, our regulations allow a pipeline to be operated at a pressure that produces a hoop stress of 72 percent of the specified minimum yield strength of the steel pipe. In the case of the Line 5 crossings at the Straits of Mackinac, the twin pipelines were designed and have been operated at a maximum pressure that produces a hoop stress of only 25 percent of the specified minimum yield strength of the steel pipe. This is primarily due to the thickness of the wall of the pipeline, which is more than three times the thickness of the failed Line 6B. Because of these differences, PHMSA believes Line 5 has a much lower risk of failure.

PHMSA continues to require Line 5 to meet or exceed our pipeline safety regulation, policies, and procedures. As part of our actions related to the Lakehead Plan, PHMSA conducted reviews of Enbridge’s internal inspections, maximum operating pressure determinations, and capacity increase modifications for Line 5 and did not identify any compliance issues. Enbridge has publicly committed to additional activities to monitor and inspect the pipeline segments crossing the Straits of Mackinac. PHMSA will continue to track Enbridge’s progress on these commitments.

PHMSA engineers are attending, in person, Enbridge’s hydrostatic pressure tests of the crossings, and PHMSA is monitoring Enbridge’s compliance with the Congressional mandate for annual inspections of pipeline water crossings over 150 feet deep. We will take appropriate action should Enbridge not comply or the additional inspections identify a safety issue. Enbridge continues to inspect Line 5 biannually, using a remotely operated vehicle with cameras to view the bottom conditions and determine whether maintenance work is required on structural supports. This includes replacement and additions as necessary, to meet the requirements of the State of Michigan permit granting Enbridge the right to install the pipelines across the lake bottom.

We have a strong partnership with Michigan’s Public Service Commission and include State inspectors in our integrated inspections of any interstate natural gas transmission operators that operate in Michigan. In November 2017, we held a meeting with interstate agents, including Michigan, to review our interactions and develop plans and methodologies for working together in the future. We anticipate continuing that with annual meetings. In addition, we have enhanced communications with the Michigan Public Service Commission regarding activities associated with Enbridge and the Line 5 crossings.

Finally, PHMSA is in the process of completing a major integrated inspection of the Lakehead System. Inspectors are looking at all aspects of the system’s operation, including integrity management, control room management, design and construction, and corrosion. So far,[4] PHMSA inspectors have spent a total of 286 combined days on this inspection, with 200 of those days in the field. These integrated inspections are risk-based and data-driven – each inspection is designed to look at the risk profile of the individual pipeline operator and focus on the greatest risks to safety.

These inspections give us yet another way to ensure that Enbridge is always pursuing necessary safety improvements. Our inspectors provide timely inspection feedback to Enbridge, keeping them informed of any potential safety issues that they find, and giving them the safety information they need as quickly as possible.

IV. Response Readiness

My goal as Administrator is to keep moving the pipeline industry towards the goal of zero incidents – but I know that it’s also vital to be prepared to mitigate the effects of failure.

Emergency response readiness and planning is already a large part of what PHMSA does. Our Oil Spill Preparedness and Emergency Support Division reviews oil spill response plans[5] and helps plan for, participates in, and observes and evaluates pipeline oil spill exercises for operators such as Enbridge, Buckeye, Mark West and others – in cooperation with the Coast Guard, EPA and Michigan DEQ.

PHMSA has strong relationships with other organizations involved in responding to pipeline incidents and emergencies. When PHMSA responds to an incident, its primary concerns are public safety and determining an operator’s compliance with PHMSA’s regulations. However, when a spill occurs in a body of water, the Coast Guard and EPA are responsible for ensuring that the responsible party cleans it up.

PHMSA has a long history of working closely with local emergency officials in response to pipeline emergencies and its staff effectively participates in incidents where there is an Integrated Command System and is often requested to share information and support the investigations of other agencies. Additionally, PHMSA works to actively participate in training and drills held by other agencies to ensure seamless emergency response coordination.

In 2014 and 2016, the U.S. Coast Guard held full-scale PREP exercises in Michigan, and Enbridge served as the responsible party for both exercises.[6] PHMSA participated in both exercises and provided feedback. Following the 2014 Indian River exercise, and with PHMSA’s strong encouragement, Enbridge agreed to conduct an equipment deployment exercise in the Straits of Mackinac in 2015. The initial planning for the exercise began in February 2015, and Enbridge conducted monthly planning meetings and conference calls. PHMSA staff participated in the planning meetings, conferences, and workshops.

The drill included Enbridge, the Coast Guard, the Environmental Protection Agency, PHMSA, Marine Pollution Control (Oil Spill Response Organization - OSRO), Michigan Department of Environmental Quality, Michigan State Police, U.S. Fish and Wildlife, National Oceanographic and Atmospheric Administration (NOAA) Scientific Support Coordinator, local and tribal emergency managers, other pipeline companies, and local media.

As part of the drill, Enbridge provided Incident Command System (ICS) refresher training and liaison training, and the Coast Guard Public Information Assist Team provided Risk Communication and Joint Information Center (JIC) training.

The drill itself consisted of a full-scale equipment deployment exercise to test and evaluate Enbridge’s Superior Response Zone Integrated Contingency Plan, Straits of Mackinac Tactical Response Plan and consistency with the Coast Guard Sector Sault Ste. Marie Area Contingency Plan and the Environmental Protection Agency Region 5 Geographic Response Plan under a Unified Command. Enbridge also held demonstrations of Shoreline Cleanup and Assessment Techniques (SCAT) and oiled wildlife care.

These drills are a vital part of response preparation, and PHMSA experts provide valuable input to these drills, and will continue to participate in them regularly.

PHMSA also collaborates with the International Joint Commission (IJC). The International Joint Commission prevents and resolves disputes between the United States of America and Canada[7] – in particular, ruling on applications for approval of projects affecting boundary or transboundary waters. The IJC assists the two countries in the protection of the transboundary environment, and PHMSA is happy to assist with safety and environmental impact expertise when needed.

I also want to thank my PHMSA team and our partners at the Coast Guard for such a prompt and thorough response to the recent anchor strike on Line 5. I understand that the incident raised some concerns, but PHMSA has been working closely with Enbridge as the best strategy was developed to repair the dents. PHMSA does not believe the dents present any immediate or near-term threat; nonetheless, the agency requested that Enbridge operate Line 5 at reduced pressure until the damage is remediated. Our on-site team has been monitoring the coating repair activities and, if necessary, will enforce the provisions in our regulations that require the application of cathodic protection to those spots to mitigate the effects of external corrosion. We’ve been coordinating closely with the Coast Guard as well to ensure the complete safety of the line.

IV. Proactive Actions

Regulatory Reform

PHMSA is also committed to reviewing the effectiveness of our oversight program by conducting a comprehensive evaluation of current, in-progress, and planned regulations and is working within the Department of Transportation as part of a One-DOT approach to ensure that the regulatory budget meets President Trump’s “two-for-one” Executive Order.

Beyond identifying opportunities to reduce unnecessary regulatory burdens on public and private sector stakeholders, our goal is to use the regulatory reform efforts as an opportunity to remove unnecessary roadblocks to new technologies that can increase safety. I believe we can improve the way operators can achieve safety. We want 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. As PHMSA Administrator, I will continue to push industry to not wait, but to invest in and accelerate their pipeline safety efforts now, making substantive safety improvements best suited to their systems, and without specific direction from regulations.

Research and Development

In that vein, our own Research and Development program is a key tool in technology-driven safety improvements, and I am very proud of all the ways our R&D program supports new technology to further improve pipeline safety. Since its inception, PHMSA’s R&D program has worked on implementing a collaborative and coordinated research strategy with stakeholders who share PHMSA's safety goals.

Our program sponsors research 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, we have invested nearly $93 million dollars in 270 R&D projects. Among them, 22 patent applications and 28 new pipeline technologies have since hit the market, including above-ground, radar-based pipeline mapping and a nondestructive testing method for pipelines that cannot accommodate traditional in-line inspection tools. We’ve also invested over $800,000 on a project in leak detection systems,[8] a vital part of preventing large-scale spills, especially in high-consequence areas.

V. Looking Ahead

Lessons Learned

The lessons learned from these incidents spanned a wide range of safety topics, from control room operations, to pipeline maintenance, to spill response.

In 2014, PHMSA published an advisory bulletin, “Pipeline Safety: Lessons Learned From the Release at Marshall, Michigan.”[9] The bulletin informed operators of the deficiencies that contributed to the Marshall spill, specifically integrity management, control center operations, and public awareness.

Through the bulletin, PHMSA encouraged operators to review their own IM programs for similar deficiencies and to take corrective action, as well as consider training their control room staff as teams to recognize and respond to emergencies or unexpected conditions. The advisory also encouraged operators to evaluate their leak detection capabilities to ensure adequate leak detection coverage during transient operations and assess the performance of their leak detection systems following a product release to identify and implement improvements as appropriate. Additionally, the bulletin encouraged operators to review the effectiveness of their public awareness programs and whether local emergency response teams are adequately prepared to identify and respond to early indications of ruptures.

PHMSA learned that we needed to adjust regulations where control room management is concerned, which we did last year.[10] Our efforts to improve our regulations provide additional guidance on how control room operators work as teams, and included a component for team training in operator qualifications.

We’ve also conducted several workshops to share the lessons learned, including workshops on risk modeling, risk management, and improving the ability to detect pipeline seam defects.[11] These workshops help improve both our oversight and the knowledge base of the industry on managing risk. We are also planning a risk modeling workshop for later this year, to present the results of our work on improving the use of risk models to manage pipeline safety.

Safety Management Systems (SMS)

As you know, I believe that the Safety Management Systems (SMS) approach is a core part of our safety mission – and a key part of SMS is applying lessons learned. While the goal of SMS is to prevent accidents and incidents from ever occurring, we pursue that goal by learning from the accidents that do happen and proactively using that information.

To be effective, SMS requires PHMSA to move beyond the role of being just a regulator – to push operators to identify and target their own risks, and to encourage a company-wide culture that makes safety the number one priority, always.

For an SMS culture 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 to inform best practices. Just over a year ago, PHMSA established the Pipeline Safety Management System Working Group to tackle that problem – to identify SMS implementation performance metrics to measure both progress and challenges. The working group is made up of members of our gas and liquid pipeline advisory committees, and similarly includes representatives from each of our stakeholder groups.

Our Pipeline Safety Management Group will continue to work to encourage operators to implement SMS and support industry efforts to develop new SMS tools. 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.

Underlying Principles

It is the responsibility of pipeline operators to understand and manage the risks associated with their pipelines. While PHMSA pursues safety by impacting operating behavior and performance, front-line responsibility for safety is placed clearly in the hands of the industry.

PHMSA’s primary role is to establish minimum safety standards (defined in the regulations by required risk control practices) and to verify that the operators perform to these standards. We set the rules, but we don't assume compliance. We verify compliance through our inspections and take action as necessary if we find non-compliances. However, compliance is necessary, but not sufficient if we want to improve performance.

PHMSA also impacts industry performance beyond minimal compliance by improving the industry-wide knowledge base, participating in standards organizations, supporting R&D projects, promoting technology transfer and technical knowledge sharing though public workshops, and through direct executive level interactions with operators to review operator performance and discuss concerns and areas for improvement.

Regulatory Efforts

I understand the importance of moving forward PHMSA’s Safety of Hazardous Liquid Pipeline rulemaking. The Marshall rupture occurred during the last stages of a planned shutdown and was not discovered or addressed for over 17 hours. As a result, in part, of the rupture, we’ve determined that additional safety standards are needed, including the expansion of IM regulations to more hazardous liquid pipelines.

This rulemaking would amend the Pipeline Safety Regulations to improve protection of the public, property, and the environment by improving safety protections and filling regulatory gaps. This rule is one of our highest priorities and will be completed as quickly as possible.

The Marshall rupture was unconfirmed for many hours, but as soon as it was confirmed, the failed segment of the pipeline was immediately isolated using remote-controlled valves. Because of this and other large-scale incidents, PHMSA has determined that additional minimum Federal safety standards are needed to mitigate events involving large-volume, uncontrolled releases of gas and hazardous liquids.

We are currently developing a notice of proposed rulemaking for Pipeline Rupture Detection and Mitigation for Onshore Populated and High Consequence Areas that will newly define these large-scale events as “ruptures” and require operators to identify and isolate ruptures on their system within certain time frames.

The overall intent is that rupture detection metrics will be integrated with valve placement to improve overall incident response in populated or environmentally sensitive areas. Rupture response metrics would focus on mitigating large, unsafe, uncontrolled release events that have a greater potential consequence.

VI. Conclusion

Safety is the Department of Transportation’s highest priority. I assure you that the Department will remain vigilant in ensuring the safety and integrity of all pipelines under its jurisdiction. PHMSA holds all pipeline operators accountable for the safe operation of their pipelines, and we will continue to pursue our goal of a safe pipeline system through as many avenues as can, from transition inspection and enforcement, to education and technology innovation.

Thank you and I am happy to respond to your questions.

[1] Enbridge experienced several significant, successive spills on Lines 2, 6A, and 6B in 2010-2012. The largest occurred on the evening of Sunday, July 25, 2010, when Line 6B ruptured in Marshall, Michigan. Enbridge confirmed the pipeline rupture on Monday July 26, at 11:45 a.m. PHMSA and other Federal officials were not made aware of the incident until 1:33 p.m. (EST.), the time when Enbridge notified the National Response Center. The failure released approximately 20,000 barrels of crude oil that spilled into Talmadge Creek and the Kalamazoo River.

[2] Enbridge paid the proposed penalty, and a Final Order closing the case was issued on September 7, 2012.

[3] PHMSA issued a Corrective Action Order (CAO) to Enbridge on July 28, 2010, (amended on September 22, 2010), directing the company to take a number of measures, both immediate and long term, to ensure the pipeline was safe to re-start, and to ensure continued safe operation. In 2012, PHMSA issued an additional Consent Order that instituted the Lakehead Plan to improve the safety record of Enbridge’s pipeline system. The Lakehead Plan required significant safety improvements.

[4] As of July 31, 2018

[5] required under the Federal Water Pollution Control Act, as amended by the Oil Pollution Act of 1990

[6] The 2014 exercise was held in Indian River, MI. The 2016 exercise was held in Marysville, MI, on the St. Clair River, which is the international border. This exercise included CANUSLAK.

[7] under the 1909 Boundary Waters Treaty

[8] PHMSA’s project 560, Improving Leak Detection System Design Redundancy & Accuracy

[9]https://www.phmsa.dot.gov/regulations-fr/notices/2014-10248

[10] PHMSA’s “Pipeline Safety: Operator Qualification, Cost Recovery, Accident and Incident Notification, and Other Pipeline Safety Changes” final rule was published on January 23, 2017.

[11] Records of PHMSA’s public meetings and workshops are available here: https://primis.phmsa.dot.gov/meetings/

AIRSPACE INTEGRATION OF NEW AIRCRAFT

STATEMENT OF SHELLEY J. YAK, DIRECTOR OF THE WILLIAM J. HUGHES TECHNICAL CENTER,
BEFORE THE U.S. HOUSE OF REPRESENTATIVES COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE,
SUBCOMMITTEE ON AVIATION,
“AIRSPACE INTEGRATION OF NEW AIRCRAFT,”
SEPTEMBER 6, 2018

Chairman LoBiondo, Ranking Member Larsen, Members of the Subcommittee:

Thank you for the opportunity to speak with you today about the role of the Federal Aviation Administration’s (FAA) William J. Hughes Technical Center in facilitating new entrants, new users, and new technologies into the National Airspace System (NAS). Accompanying me today is Peter “Jay” Merkle, the Deputy Vice President of the Program Management Organization (PMO) within the Air Traffic Organization (ATO). The PMO is responsible for implementation of all Next Generation Air Transportation System (NextGen) program activity; all NAS communications; navigation, weather, surveillance and automation modernization programs; and all service life extensions to legacy NAS sensors, communications and navigation aids.

William J. Hughes Technical Center

The Technical Center has served as one of the core facilities for sustaining and modernizing the air traffic management system, and for advancing programs to enhance aviation safety, efficiency, and capacity since 1958. It is the Nation’s premier air transportation system federal laboratory. The Technical Center’s highly technical and diverse workforce carries out activities to support the full system/service development lifecycle—from conducting research and development, testing and evaluation, verification and validation, to operational sustainment and decommissioning.

The Technical Center’s staff develops scientific solutions to current and future air transportation safety, efficiency, and capacity challenges. Our engineers, scientists, mathematicians, and technical experts utilize a robust, one-of-a-kind, world-class laboratory environment to identify integrated system solutions for the modernization and sustainment of the NAS. Automatic Dependent Surveillance Broadcast (ADS-B), En Route Automation Modernization (ERAM) and Data Communications (Data Comm) were all developed, tested and began their nationwide deployment at the Technical Center through its engineering, testing, evaluation, and deployment platforms.

The Technical Center replicates the entire NAS, with the capability to support not only NextGen, but all aviation systems. The Technical Center’s areas of focus include air traffic management, communications, navigation, surveillance, aeronautical information, weather, human factors, airports, and aircraft safety. More recently, the Technical Center has been instrumental in the FAA’s efforts to facilitate new entrants and users to the NAS; particularly, unmanned aircraft systems (UAS or drones).

FAA’s Vision for UAS Integration

Future aviation operations must accommodate the increasing demand for airspace access by traditional civil aviation users as well as new entrants. UAS are at the forefront of change in the aviation industry. They are being used today to inspect infrastructure, provide emergency response support, survey agriculture, and to go places that are otherwise dangerous for people or other vehicles. Entrepreneurs around the world are exploring innovative ways to use drones in their commercial activities. To date, we have processed over 1.1 million UAS registrations, over 230,000 of which are for unmanned aircraft that can be flown commercially. For perspective, as of July 2018, there are just under 300,000 manned aircraft listed on the U.S. registry. The need for us to fully integrate this technology into the NAS continues to be a national priority.

The Department of Transportation and FAA’s vision for integration is ambitious. We intend to fully integrate UAS into the most complex airspace system in the world, enabling UAS to operate harmoniously with manned aircraft, occupying the same airspace and using many of the same standards and procedures. Two years ago, we established the regulatory framework—and set the global standard—for small UAS integration. Our roadmap for full UAS integration is intended to enable increasingly more complex UAS operations over time: (1) operations over people; (2) operations beyond the visual-line-of-sight of the operator; (3) small UAS package delivery operations; (4) routine/scheduled operations; (5) large carrier cargo operations; and, finally, (6) passenger transport operations.

Research and Development

As the FAA’s Director of Research, I oversee the FAA’s aviation research and development (R&D) activities. Effective research enables the FAA's mission to provide the safest, most efficient aerospace system in the world. As new technologies change the aviation industry, our approach to research must evolve as well. Emerging innovations, such as UAS, require an agile research and development strategy focused on change driven by technology and collaborative, data-driven partnerships across government and with industry and academia. Through this collaboration, we will continue building on our unparalleled safety record, while increasing the efficiency of our system and more fully integrating new users.

With the exponential growth of UAS technologies and market applications we have witnessed in just a few years, we know that research must keep pace to support full integration. We are aligning our UAS research activities with our integration roadmap. Safety is and will always be the FAA’s first priority, and continued support for UAS research initiatives will ensure that UAS are integrated into the NAS in a safe, secure, and efficient manner.

UAS research activities are coordinated across many different types of entities, including internal FAA organizations, different U.S. Government agencies, and nongovernmental entities that perform collaborative research to support the FAA’s overall integration objectives. Coordination with each type of entity includes the identification of research needs and current research, governance for continuous cooperation, and mechanisms for managing progress and results. Issues and considerations being addressed include detect and avoid standards and technologies, collision avoidance standards, command and control standards and technologies, human factors, severity thresholds (for example, impact effects), automation/autonomy, and wake turbulence effects. One example of this coordination is the UAS Standardization Collaborative (UASSC), co-chaired by the FAA and the Association for Unmanned Vehicle Systems International (AUVSI) and managed by the American National Standards Institute (ANSI). UASSC brings together over 230 members from the user applications, manufacturer, safety and emergency response, academic and government communities to accelerate development of standards and conformity assessment programs to facilitate the safe integration of UAS into the NAS.[1]

The FAA’s NextGen organization also has appointed a UAS portfolio manager to unify and manage all UAS R&D execution. The UAS R&D portfolio includes UAS research conducted at the Technical Center, the Center of Excellence for UAS, interagency UAS partnerships, UAS flight demonstrations and test sites, and all aviation safety research defined by the Office of Aviation Safety through the FAA’s UAS Integration Office. Additionally, the FAA’s ATO is developing concepts and requirements to address FAA challenges associated with the provision of air traffic services to UAS airspace users.

The FAA is also gathering operational data and experience that will inform future rulemaking to enable UAS operations over people and beyond line-of-sight. While the small UAS rule—14 C.F.R. part 107—has been largely successful by enabling operations such as crop monitoring/inspection; research and development; educational/academic uses; power-line/pipeline inspection; antenna inspections; emergency response; bridge inspections; aerial photography; and wildlife nesting area evaluations, it does not permit several potential uses for UAS that are highly valued by industry, such as operating beyond line-of-sight or at night. To accommodate these operations, the rule allows operators to apply for waivers from its provisions. As of August 2018, the FAA has reviewed almost 12,000 operational waiver applications and has issued approvals for over 1,800 waivers, significantly reducing the processing time from almost 90 days to approximately 20 days.

While most of these approved waivers (more than 90 percent) have been for night flying, others have been granted for more complex activities, such as for flying over people or beyond line-of-sight. The commercial activities that typically receive waivers for UAS operations are for filmmaking, photography, and infrastructure inspections.

The newly launched UAS Integration Pilot Program (IPP) sets the stage to move even closer to expanded operations through enhanced partnerships among industry and state, local and tribal authorities. On May 9, 2018, the Secretary of Transportation announced that 10 state, local, and tribal governments were selected to participate in the IPP. Each of the participants is partnering with private sector entities to evaluate operational concepts and provide DOT and FAA with actionable information that will accelerate safe and secure UAS integration. The goals of the program are to: identify ways to balance local and national interests; improve communications with local, state, and tribal jurisdictions; address security and privacy risks; accelerate the approval of operations that currently require special authorizations; and collect data to support the development of regulatory actions necessary to allow more complex, routine low-altitude operations. A list of the participants and each of their proposed operational concepts may be found at: https://www.faa.gov/uas/programs_partnerships/uas_integration_pilot_program/awardees/.

Airspace Management

The FAA’s primary mission is to provide the safest, most efficient airspace system in the world. We are responsible for providing air traffic control and other air navigation services 24 hours a day, 365 days a year, for 29.4 million square miles of airspace. In addition to this critical operational role, the FAA uses its statutory authority to carry out this mission by issuing and enforcing regulations and standards for the safe operation of aircraft—manned and unmanned—and by developing procedures to ensure the safe movement of aircraft through the nation’s skies.

Automated Airspace Authorization

The basic rules for small UAS operations—14 C.F.R. part 107—set the global standard for integration and provided small drone operators with unprecedented access to the NAS. Part 107 creates airspace rules specific to small UAS operations. It allows line-of-sight, daytime operations in uncontrolled Class G airspace without the need for approval from the FAA. Operations in controlled airspace—Class B, C, D, and surface area E—require prior approval from air traffic control.

Compliance with basic airspace requirements—the “rules of the road”—is essential to maintaining safety and efficiency in the NAS and ultimately will make it easier for our national security and law enforcement partners to identify a drone that is being operated in an unsafe or suspicious manner. To facilitate airspace approvals for small UAS operators, last November, we deployed the prototype Low Altitude Authorization and Notification Capability (LAANC) at several air traffic facilities to evaluate the feasibility of a fully automated solution enabled by public/private data sharing. Based on the prototype’s success, we began the first phase of a nationwide beta test of LAANC on April 30, 2018, enabling LAANC services at about 80 airports. This rollout will continue incrementally to nearly 300 air traffic facilities covering approximately 500 airports. We recently completed the fifth wave of this nationwide rollout, which now covers 82 percent of air traffic facilities, and we are on track to complete nationwide deployment in September 2018.

LAANC uses airspace data based on the FAA’s UAS facility maps, which show the maximum altitudes in one square mile parcels around airports where UAS may operate safely under part 107. It gives drone operators the ability to request and receive real-time authorization from the FAA, allowing them to quickly plan and execute their flights. LAANC also makes air traffic controllers aware of the locations where planned drone operations will take place, and it can provide information on aircraft that have requested access to a defined airspace.

UAS Traffic Management

LAANC is an important foundational step toward implementing UAS Traffic Management (UTM). UTM is a “traffic management” ecosystem for UAS operations not under FAA air traffic control (ATC), and is separate but complementary to the FAA’s air traffic management system. UTM development will ultimately identify services, roles/responsibilities, information architecture, data exchange protocols, software functions, infrastructure, and performance requirements for enabling the management of low-altitude UAS operations where ATC does not typically provide services.

We view UTM as a suite of capabilities that will incorporate components from the FAA, industry, and our government partners to create a comprehensive system of low-altitude airspace management for UAS. Our plan for future UTM capabilities includes a number of components—LAANC, remote identification, and dynamic airspace management—that will support the needs of industry, FAA, and our security partners. The eventual full deployment of UTM services will create an environment in which the entire spectrum of unmanned aircraft can be safely realized, including the transportation of people and property.

UAS in Controlled Airspace

We are also making headway with an Aviation Rulemaking Committee (ARC) to address UAS in controlled airspace, which will provide recommendations on UAS integration in, and transit to, high altitude airspace. The ARC will develop scenarios that will encompass the most desired operations, identify gaps in research and development needed to successfully integrate larger UAS into controlled airspace, and recommend up to five prioritized changes to policies and procedures that will spur integration and economic growth. The ARC held its fifth meeting in May 2018 and will continue to meet through the expiration of the ARC’s charter in June 2019.

Impediments to Full UAS Integration

The FAA has made significant progress in integrating UAS into the NAS and, through our ongoing research activities, we are well-positioned to continue to build on our accomplishments. We know, however, that there is much more work to do. The FAA’s commitment to the safe, secure, and efficient integration of UAS and the expansion of routine UAS operations also requires resolving specific challenges to enable this emerging technology to achieve its full potential.

Statutory Exemption for Model Aircraft

The most significant challenge the FAA continues to encounter is the perception by many recreational UAS operators that they are not required to follow the basic rules of UAS operation because they erroneously believe they fit under the statutory exemption for model aircraft operated under the programming of a community-based organization. These unknowing operators present risks to both manned and unmanned compliant operators. The current exemption for model aircraft—Section 336 of the FAA Modernization and Reform Act of 2012—makes it difficult for the FAA to develop new regulatory approaches that will help expand and facilitate more advanced uses of UAS in the NAS. A set of basic requirements for all UAS operators are essential to allow both the FAA and our security and law enforcement partners to discern between the clueless, the careless, and the criminal—including serious threats to national security—and to ensure all operators conduct compliant operations or face the consequences of introducing a safety or security risk into the NAS.

Remote Identification

As Congress has recognized, remote identification of UAS is another critical step on the path to full integration of UAS technology. In order to support beyond visual line-of-sight operations, UAS operators need to know where their aircraft is and where other aircraft are along their flight path. Remote identification is also essential to enable our law enforcement and national security partners to identify and respond to security risks. Effective integration and threat discrimination will continue to be a challenge until all aircraft in the NAS—manned and unmanned—can be identified. Anonymous operations are inconsistent with safe and secure integration.

Last December, we published the report and recommendations prepared by the summer 2017 UAS Identification and Tracking ARC[2]. The ARC’s 74 members represented a diverse array of stakeholders, including the aviation community and industry member organizations, law enforcement agencies and public safety organizations, manufacturers, researchers, and standards developing organizations involved with UAS. The ARC’s recommendations cover issues related to existing and emerging technologies, law enforcement and national security requirements, and how to implement remote identification. Although some recommendations were not unanimous, the group reached general agreement on most issues. The FAA is reviewing the technical data and recommendations in the ARC report to support the development of the FAA’s remote identification requirements. We are currently working on a proposed rule to implement these requirements as quickly as possible.

Conclusion

Throughout our history, the FAA has adapted to changes in technology and has successfully integrated new operators and equipment into the NAS. Our progress in accommodating new technologies and operations demonstrates that the agency is well positioned to maintain its status as the global leader in UAS integration. We are committed to working with Congress and all of our stakeholders to find solutions to our common challenges. Working together, we are confident we can balance safety and security with innovation. With the support of this Committee and the robust engagement of our stakeholders, we will continue to safely, securely, and efficiently integrate UAS into the NAS and solidify America’s role as the global leader in aviation.

Finally, before I conclude I would like to take a moment to acknowledge the support of Chairman Shuster and Subcommittee Chairman LoBiondo. You have been instrumental in providing the FAA with the direction and necessary resources to maintain our position as a global leader in aviation. I thank you both for your leadership and wish you well as you retire from Congress.

This concludes my statement. I will be happy to answer your questions at this time.

[1] https://www.ansi.org/standards_activities/standards_boards_panels/uassc/overview#UASSC%20Overview

[2]Seehttps://www.faa.gov/news/updates/?newsId=89404&omniRss=news_updatesAoc&cid=101_N_U

PIPES ACT OF 2016 IMPLEMENTATION: OVERSIGHT OF PIPELINE SAFETY PROGRAMS

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 Pipes Act of 2016 Implementation: Oversight of Pipeline Safety Programs

June 21, 2018

I. Introduction

Chairman Denham, Ranking Member Capuano, thank you for the opportunity to testify before the Railroads, Pipelines, and Hazardous Materials Subcommittee today.

PHMSA’s mission, and my objectives, are inextricably linked to the Secretary’s goals of safety, infrastructure, and innovation. While PHMSA executes its authority granted by Congress to oversee the safety of the pipeline industry, we also want to focus on finding innovative solutions to industry challenges; accommodate the fast pace of new and promising safety technology; ensure that our Nation’s pipeline infrastructure can continue to provide safe, reliable energy; and improve our oversight to hold all operators accountable.

During my railroad career, I responded to, and often visited again afterwards, the sites of more derailments and other man-made and natural disasters than I can remember. To inspire commitment, as for many other things, there is no more effective means than first-hand observation. I remember many of those scenes, often in unsettling detail, and they are the reason why I left retirement in Florida to take the job as PHMSA’s Administrator. But few of those tragedies I encountered in the railroad affected me any more deeply than a visit I made in April of this year to the site of a pipeline leak and resulting explosion that happened over 19 years ago in Bellingham, Washington.

As you may recall, on June 10, 1999, a ruptured gasoline pipeline leaked into to two creeks and floated downstream until it found an ignition source. An 18-year-old young man fishing in the creek collapsed from fumes and drowned. And two 10-year-old boys playing on the bank were caught in the explosion. As I listened to those who witnessed the incident unfold replay the events of that afternoon, the most heartbreaking detail was the concern of one boy that his mother not see how badly he was burned, completely unaware that it was so bad that he would not survive the next day. Tragedies like Bellingham underscore the criticality of PHMSA’s safety mission. Our goal – which I believe is attainable – is zero pipeline incidents, and I know that when regulators, industry, and the public collaborate, we can find new paths forward to achieve that goal.

II. The Office of Pipeline Safety’s Mission

PHMSA’s Office of Pipeline Safety is responsible for the regulation and oversight of our Nation’s energy pipeline systems. I want to take a moment to thank all our federal and state inspectors who are at the front lines of pipeline safety, supporting our oversight responsibility and enforcing our regulations. PHMSA’s staff of 250 pipeline inspectors and investigators is complemented by over 300 state pipeline inspectors who oversee intrastate pipeline safety on behalf of the Secretary of Transportation.

Since Congress authorized over one hundred additional full-time positions in 2015, and six more in FY 2017 to help inspect underground natural gas storage facilities, PHMSA has established an aggressive hiring strategy to reduce a backlog of unfilled vacancies and ensure that PHMSA has the personnel needed to carry out necessary inspections and accident investigations.

The Office of Pipeline Safety’s vision is straightforward: invest in our workforce – like our safety inspectors. Promote innovation. Strengthen oversight. And work with Congress and stakeholders to develop policies that advance the safe transportation of energy products and hazardous materials through America’s pipeline system.

I would be remiss if I failed to thank all of our stakeholders – especially the public – for the success of the national Call-Before-You-Dig number, 811. Over the past 10 years, since 811 was established, incidents caused by excavation damage – a leading cause of pipeline injury and death – have fallen 40 percent.[1] This decline would not be possible without the incredible outreach work of PHMSA, our state safety partners, and the public taking the time to call 811.

III. Mandates and Rulemaking

PHMSA has already made significant progress closing our Congressional mandates. Of the 42 mandates from the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011, PHMSA has eight mandates outstanding. And, there are six outstanding mandates from the 19 identified in the Protecting Our Infrastructure of Pipelines Enhancing Safety Act of 2016.

Closing these mandates is a top priority, and I understand that the remaining mandates are critical to advancing pipeline safety. As members of the Subcommittee may be aware, of the 14 outstanding mandates from the 2011 and 2016 Acts, six are tied to reports and other actions,[2] and eight are tied to in-progress rulemaking efforts. PHMSA will continue to concentrate our efforts on the path forward, which means not just pushing to finalize our rules, but also coming up with innovative alternative approaches that can meet the safety goals of the mandates without solely relying on regulations and the rulemaking process.

As PHMSA Administrator, I plan to focus on three main rulemaking efforts – the safety of hazardous liquid pipelines, the safety of gas transmission and gathering pipelines, and pipeline rupture detection and automatic shutoff valves – in order to close the majority of PHMSA’s open mandates, while also achieving the highest impact to pipeline safety.

Gas Rule

PHMSA has also made significant progress working toward the final gas transmission and gathering pipeline rulemaking efforts, which we believe will help close two very important open mandates[3] related to expanding integrity management requirements for gas transmission pipelines and requiring operators to confirm the maximum allowable operating pressure of certain pipelines. These changes are expected to allow operators to assess more pipelines in more areas and better understand their systems’ conditions.

When finalizing the “Safety of Gas Transmission and Gathering Pipelines” NPRM, the rulemaking was under review for nearly 2 years.[4] I believe a large cause of these delays was that the rule became too big and unwieldy. Accordingly, PHMSA has made the strategic decision to split the initial proposed rule into three more manageable rulemaking actions. This split may help us to move each individual, smaller rule forward more quickly; and, most importantly, prioritize Congressional directives on gas pipelines.

Hazardous Liquid Rule

I also understand the importance of moving forward PHMSA’s long-awaited Safety of Hazardous Liquid Pipeline rulemaking that dates back to 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, and ensuring 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 my highest priorities and with the intention to complete this rule as quickly as possible. I have had several substantive discussions with Departmental leadership, and I feel optimistic that, moving forward, we will get a final rule out quickly.

Valves and Rupture Detection Rule

Perhaps our biggest gap in both mandates and safety is our Shutoff Valve and Rupture Detection rule. We are currently developing a notice of proposed rulemaking to address this critical issue. The Shutoff Valve and Rupture Detection rule would meet the goals of several Congressional directives by proposing revisions to the Pipeline Safety Regulations related to newly constructed or entirely replaced natural gas transmission and hazardous liquid pipelines to improve rupture mitigation and shorten pipeline segment isolation times in high consequence and select non-high consequence areas. The proposals will also address recommendations from the National Transportation Safety Board and are necessary to reduce the serious consequences of large-volume, uncontrolled releases of natural gas and hazardous liquids.

Regulatory Reform

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

PHMSA is working within the Department of Transportation as part of a One-DOT approach to ensure that the regulatory budget meets the President’s “two-for-one” Executive Order.[5]

As part of our regulatory reform agenda, PHMSA has identified opportunities to reduce regulatory burdens on public and private sector stakeholders. The agency is confident that the regulatory amendments we have identified as a part of our regulatory reform will fit the requirements of the executive order.

Our role as the nation’s pipeline safety regulator is to establish minimum safety standards and develop rules that prioritize safety and balance resources. I want to emphasize that while the executive orders have focused on reducing regulatory burdens, it is not about sacrificing safety. Rather, it is about improving the way we achieve safety. I believe that our regulatory review efforts can help us simplify complex rules to make compliance less burdensome to operators without compromising safety.

In fact, PHMSA’s review will help to ensure that its regulations are right-sized – which can allow operators 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.

Recently Completed Mandates: Underground Storage and Others

PHMSA has made progress on several Congressional directives, such as developing minimum standards for underground natural gas storage facilities. For example, last December, PHMSA published an interim final rule, which established minimum regulations in this area. In addition, PHMSA’s Training and Qualifications Center in Oklahoma City (TQ) has already developed a program to ensure that federal and state inspectors can provide effective oversight in this area.

The TQ Center provides training for federal and state inspectors to understand how to apply the federal regulations and incorporated industry standards. The training includes classroom training, hands-on labs, and online training to keep inspectors current on updated regulations and practices.

The course instructs inspectors about the function and operations of underground natural gas storage; how to conduct an inspection of underground natural gas storage facilities; and how to evaluate an underground storage facility’s operations, maintenance, and emergency response processes, including integrity and risk management.

The distance learning course went online in February of this year, and the first instructor-led class for federal and state inspectors was conducted in April. We have two more courses scheduled for this year, and both are already full.

In addition to our federal inspectors, the new course also serves our state partners. We have inspectors from Alaska, California, Illinois, and Kansas signed up to complete training as well.

We have also taken other steps to improve safety and address Congressional directives, including issuing the interim final rule for Emergency Order Authority in October 2016. Additionally, PHMSA issued an advanced notice of proposed rulemaking to solicit public comment on the marking of identification numbers on cargo tanks, and published an advisory bulletin to clarify the regulatory requirements that may vary depending on the operational status of a pipeline.

For transparency, PHMSA regularly updates its public website on the status of final rules.

IV. Enhancing Safety

Alternative Actions

But while some on the PHMSA staff work through the rulemaking process, others are aggressively pursuing our core safety mission of conducting comprehensive inspections, investigations and public and industry outreach. I have challenged the PHMSA staff to look past simply clearing our mandates through regulations and to look for other, innovative ways to improve safety, and we’ve already implemented processes outside of regulations that will result in tangible safety benefits.

I have not hesitated to issue Corrective Action Orders when PHMSA identifies safety concerns in pipeline systems, pushing operators to address issues before they lead to problems. PHMSA has also developed advisory bulletins to alert operators of more widespread safety concerns.

One way that we’ve seen advisory bulletins and collaboration result in widespread improvements is in enhancing the integrity of river pipeline crossings. After flooding caused a significant oil spill into the Yellowstone River in 2011, PHMSA published three advisory bulletins related to pipeline crossings of inland water bodies and has proactively focused on pipeline integrity at river crossings to encourage operators to use new technologies to better build and monitor these lines. Operators have since opted to install over 50 pipelines at greater depth to ensure that the lines are unaffected by flooding, while others are performing real-time monitoring of rivers.

Training and Qualifications Center

I mentioned PHMSA’s Training and Qualification Center earlier, and have had the opportunity to visit the Center several times in person to witness the innovative ways they are making the important training that inspectors require more accessible and effective.

PHMSA’s Training Center offers 58 on-site and distance-learning courses and provides classroom training to an average of over 1,700 state and federal inspectors from around the country annually. They have also been pulling out the stops to handle the increased training needs stemming from the increase in new federal and state inspection personnel. The Center is conducting simultaneous instructor-led courses to increase capacity and exploring new learning approaches, curriculum improvements, and delivery efficiency to ensure relevancy.

A noteworthy commentary on the Training and Qualification Center’s dedication to quality is the full accreditation they recently received from the International Association for Continuing Education and Training (IACET). The 15-month intense accreditation process consisted of a thorough audit and review of their operating practices related to training development, documentation, and delivery. Accreditation from IACET validates the Center’s professional training efforts and allows PHMSA to issue continuing education credits to its students.

Grants

The financial support that we provide to our stakeholders through grants is another vital piece of the PHMSA safety mission.

Our State pipeline inspection partners oversee more than 80 percent of the Nation’s pipeline infrastructure – much of it gas distribution pipelines – through certification with PHMSA. The State Base Grant program offered by PHMSA supports state pipeline safety programs by reimbursing a portion of each state’s program expenses for a given calendar year based on their performance. Last year, we reimbursed $50.5 million to our state partners.

The consistent grant funding that we provide helps state programs purchase equipment and hire and maintain pipeline safety inspectors. As pipeline infrastructure continues to increase, this grant system is critical for our state partners to continue to inspect and oversee our nation’s 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 is also used to promote public participation in official proceedings. Since the program’s inception in 2009, PHMSA has awarded almost $8 million for 178 individual technical assistance projects. We issued a Notice of Funding Opportunity for the fiscal year 2018 TAG grants in May and expect to award $1.5 million in grant funds, up to $100,000 for each recipient.

PHMSA’s 811 One Call Grant Program provides funding to state agencies in 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, we awarded $1 million across 26 state agencies to assist in these efforts.

PHMSA recently restructured its grants program to improve program effectiveness and efficiency. We streamlined our Notices of Funding Opportunities, consolidated grants forms and formats, and condensed the grants review processes. We are also in the process of reducing grants management systems that will save the agency money and centralize grants management functions.

And I am pleased to say that the PHMSA will soon award its fiscal year 2018 Underground Natural Gas Storage Grants – the first grant designed to support states’ inspection and enforcement of underground natural gas storage facilities. The grants will be 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.

These awards signal the beginning of PHMSA’s underground storage partnership with states and show our support for their efforts to protect the public from underground natural gas storage incidents, such as the one that occurred in Aliso Canyon, California, in 2015.

Research and Development

Of course, a key component of using innovation to drive safety beyond minimal federal regulations is a robust Research and Development program, and I am very proud of all the ways our R&D program supports new technology to further improve pipeline safety. Since its inception, PHMSA’s R&D program has worked on implementing a collaborative and coordinated research strategy with stakeholders who share PHMSA's safety goals, and last year, PHMSA implemented additional safeguards against conflicts of interest in our R&D program, closing a mandate[6] from the PIPES Act of 2016.

PHMSA’s pipeline R&D program is consistent with the Department’s strategic goals of safety, infrastructure, innovation, and accountability and consistent with the DOT Five-Year Transportation Research, Development, and Technology Strategic Plan. The program’s focus is addressing safety challenges that maximize impact. Our program sponsors research on projects that can provide near-term solutions that will improve safety, reduce environmental impacts, and enhance the reliability of the Nation’s pipeline transportation system.

Since 2002, we have invested nearly $93 million dollars in 270 R&D projects. Among them, 22 patent applications and 28 new pipeline technologies have since hit the market, including above-ground, radar-based pipeline mapping and a nondestructive testing method for pipelines that cannot accommodate traditional in-line inspection tools.

Our research program funding strategy is driven by our R&D Forum, which is held periodically to generate a national research agenda focused on current technical gaps and challenges facing future research. The Forum includes representatives for the public, government, and industry, allowing all of our stakeholders to help identify the best direction of the program.

Specifically, our stakeholders identify technology and knowledge gaps within topic areas, which allow us to incorporate those gaps into our research solicitations. When all of our stakeholders work together to develop a consensus, we reduce research program duplication, leverage resources more efficiently, and ensure that our research agenda is aligned with the current needs of pipeline safety.

Our R&D program also takes a far-reaching view with our Competitive Academic Agreement Program (CAAP program), 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, funds university students to explore academic research focused on high-risk and high-pay-off solutions.

The program helps validate proof of concept for theories and theses that can be developed and further investigated by our core research program – but it also serves to expose the next generation of engineers to pipeline challenges and solutions, ensuring that the pipeline workforce can keep up with the growing needs of our nation’s expanding pipeline infrastructure.

Damage Prevention

Pipeline safety is a shared responsibility and working with all of our stakeholders is at the heart of what PHMSA does. The Office of Pipeline Safety does its work by collaborating where possible to address serious pipeline safety issues and improve performance, and I think this is really illustrated by two recent strides that PHMSA has made toward improving safety.

The PIPES Act of 2006 mandated that PHMSA establish criteria to determine the adequacy of state enforcement of damage prevention laws. Through our implementation of this mandate and working with states, PHMSA has seen an improvement in how states implement their damage preventions laws.

Last year, PHMSA determined that 28 states had inadequate enforcement, and 24 states[7] had adequate enforcement of their state one-call damage prevention laws. Last month, PHMSA sent determination letters to state damage prevention law-enforcement programs for 2017. The number of states with inadequate enforcement procedure dropped from 28 to 16, an impressive 43 percent reduction. PHMSA will keep working with states to further close the gap and so that we see further reductions next year.

Inspections

Finally, I want to talk about the vital work that our inspectors – both federal and state – do to further safety through targeted oversight. We are in our sixth year of fully implemented “integrated inspections,” a risk-based, data-driven approach where each inspection is specifically designed to look at the risk profile of individual pipeline operators and focus on the greatest risks to safety. To roll out this new way of doing things, PHMSA has improved its inspection software and developed new training for inspectors.

However, our inspection process is adaptable – whether we have an emerging safety concern or receive new mandates or recommendations, we alert our inspectors to focus on those specific safety issues as a part of their general integrated inspection. This ensures that our inspectors are conducting inspections that are not just targeted to the operator, but to prevailing system-wide safety issues and concerns as well.

The work of our inspectors underscores the fact that we are proactive and do make tangible safety gains without waiting for rulemaking. Risk mitigation is generally viewed as a defensive function; but this kind of innovation gives us an offensive weapon to pursue safety improvements. In addition, our inspectors are meeting the PIPES 2016 mandate to provide timely inspection feedback to operators and keep them informed of any potential safety issues that they find, an important piece of the inspection process, that gives operators the safety information they need as quickly as possible.

Safety Management Systems (SMS)

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

V. Conclusion

I believe that first-hand experience is the best way to fully understand the impact of an event, which is why I’ve tried to personally visit as many of our own regional offices, pipeline facilities, construction sites, R&D centers, and incident sites as I can.

I’ve worked hard to get out of the office and meet with safety advocates to understand their needs and objectives. I’ve also met with many operators to engage their leadership and encourage them to address our own needs, such as better communication in emergencies and more open collaboration for SMS.

Of all my travels as Administrator, by far the most striking was the trip to Whatcom Falls in Bellingham, Washington, where I saw the pristine environment and heard the story of that tragic afternoon in June, 19 years ago. Adding that to my own experiences from 40 years in the railroad industry reinforced my steadfast commitment to doing everything possible to prevent these events from ever occurring again. There are many paths towards safety, and I know that we can ask the right questions now to get ahead of problems before they lead to incidents, and certainly before they become tragedies.

[1] PHMSA All Reported Incident 20 Year Trend data, https://www.phmsa.dot.gov/data-and-statistics/pipeline/pipeline-incident-20-year-trends

[2] Pipeline Safety Act of 2011: 5(e) IMP Expansion and Class Location Replacement, 6(a) Public Awareness and Education, 15 CO2

[3] 5(f) IMP Expansion and Class Location Replacement, 23 (c-d) Determination of MAOP and Testing Regulations

[4] From March 12, 2014, to February 29, 2016

[5] Executive Order 13771 January 30, 2017, Reducing Regulation and Controlling Regulatory Costs

[6] Section 22 Research and Development

[7] Includes DC and PR

FAST Act Implementation: Motor Carrier Provisions

STATEMENT OF ADMINISTRATOR

RAYMOND MARTINEZ

FEDERAL MOTOR CARRIER SAFETY ADMINISTRATION

BEFORE THE

UNITED STATES HOUSE OF REPRESENTATIVES

COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

SUBCOMMITTEE ON HIGHWAYS AND TRANSIT

FAST ACT IMPLEMENTATION: MOTOR CARRIER PROVISIONS

MAY 22, 2018

TESTIMONY

Chairman Graves, Ranking Member Norton, and Members of the Subcommittee, thank you for inviting me to testify about the Federal Motor Carrier Safety Administration’s work to improve commercial truck and bus safety and implement the Fixing America’s Surface Transportation Act (FAST Act). It is an honor to testify today before the subcommittee.

The primary mission of the Federal Motor Carrier Safety Administration (FMCSA) is to reduce crashes, injuries and fatalities involving large trucks and buses.

FMCSA was established as a separate administration within the U.S. Department of Transportation on January 1, 2000, pursuant to the Motor Carrier Safety Improvement Act of 1999. For more than 18 years, the 1,100 men and women of FMCSA have worked hard to ensure that freight and people move safely by providing oversight of motor carriers, commercial motor vehicles, and commercial drivers in the United States.

We regulate more than half a million interstate motor carriers. including truck and motorcoach companies, household goods carriers, and hazardous materials carriers and nearly 4.7 million active holders of commercial drivers’ licenses.

Through our Motor Carrier Safety Assistance Program, grant funding supports 13,000 State law enforcement partners who conduct 3.5 million commercial motor vehicle inspections each year. We thank Congress for the FAST Act changes that streamlined our grant programs and increased funding level. These changes provide the critical resources necessary for our State enforcement partners and other grantees to carry out important safety work.

We have seen success from our work, but more remains to be done. During 2016, 37,461 people were killed in crashes on the nation’s roadways, an increase of about 2,000 over 2015.

Fatalities increased from 2015 to 2016 in all segments of the population—including occupants of large trucks. 4,317 fatalities occurred in crashes involving large trucks, 5.4 percent more fatalities than in 2015, the highest since 2007. Of those fatalities, 722 were occupants of large trucks. So our work, Mr. Chairman, continues.

Since beginning my tenure with FMCSA on February 28, 2018, we have engaged with our industry and safety partners, working consistently to maintain the safest transportation system possible—a system of excellence that includes holding motor carriers accountable, promoting knowledgeable drivers, ensuring that vehicles are well maintained to avoid breakdowns and the attendant roadside hazards, and encouraging innovation to unleash sound technology to advance highway safety.

FMCSA is proceeding on several fronts to accomplish those goals. Among them: our work to help the industry adapt and transition to Electronic Logging Devices (ELDs) to address hours of service compliance and driver fatigue.

The Congressionally-mandated ELD rule requires most drivers previously using paper logs to use ELDs to record information about their hours-of-service, making it easier for drivers to document their hours, and for employers and enforcement officials to review them.

The final rule’s first compliance date was December 18, 2017, and full enforcement of the ELD rule began on April 1, 2018. Mr. Chairman, we are seeing results. Of the nearly 300,000 driver inspections that have been conducted April 1, less than one percent of drivers inspected have been cited for failing to have an ELD, when required.

FMCSA also is working to address the unique needs of agricultural industries. For example, the Agency has issued two 90-day temporary waivers from the ELD rule for agriculture-related transportation, and are implementing Congress’ direction in our Fiscal Year 2018 appropriations.

FMCSA has invested a considerable amount of time as an Agency to ensure that industry, law enforcement partners, and our stakeholders understand the requirements surrounding the use of this life-saving technology. Since 2017, we conducted more than 550 outreach events regarding ELD requirements around the country, with more outreach efforts planned in the future.

Mr. Chairman, I also would like to mention the efforts FMCSA is making to reach military members and veterans as they transition to civilian life. We have several efforts under way to ease the transition into commercial driving careers, and we thank Congress for its partnership with FMCSA to reduce those administrative barriers.

These efforts include options such as allowing States to waive the skills test for military personnel with experience operating heavy vehicles in the military, allowing certain military personnel to simply “exchange” their military vehicle license for a CDL.

So far, more than 23,000 current and former military have taken advantage of this waiver process.

In addition, FMCSA is working to finalize a rulemaking which would establish a training program for qualified providers at VA to become certified in conducting commercial driver’s medical examinations. Veterans, in turn, would have access to a more comprehensive system of health care service as more VA providers become qualified medical examiners.

FMCSA is working to implement an “Under 21” driver pilot program that would allow certain 18-, 19-, or 20-year-old drivers with training and experience in certain military occupations to operate commercial motor vehicles in interstate commerce.

FMCSA believes these rulemakings will go a long way to raising the bar for safety on our roadways by producing better trained and qualified CMV drivers. Taken together, these efforts represent a “win” for military personnel, to more directly use the skills they learned in the military; for industry, to address perennial driver shortages; and for public safety, to allow military drivers to use their heavy vehicle training gained by military service to prepare them to safely operate civilian vehicles.

Finally, Mr. Chairman, FMCSA is moving forward to encourage innovation—one of Transportation Secretary Elaine Chao’s top priorities—with our work on automated driving systems.

By leveraging innovative technology to improve CMV safety, we see the potential to save thousands of lives while both improving productivity and limiting the costs associated with crashes.

FMCSA is proceeding in the following ways. The Motor Carrier Safety Advisory Committee (MCSAC) met on June 12th and 13th, 2017, to discuss highly automated commercial motor vehicles. They met in October 2017, and will issue recommendations later this year.

We are also working with the National Highway Traffic Safety Administration, the Federal Highway Administration, and the Federal Transit Administration to develop a comprehensive plan to better manage department initiatives related to automated vehicles, in addition to a research plan.

FMCSA recently released a Request for Comments about FMCSA safety regulations which inadvertently may be a barrier to the safe testing and deployment of these technologies on public roads. We especially encouraged industry leaders and other interested parties to provide comments to the RFC, particularly given the dramatic pace of technology and clear interest in the market.

The comment period ended on May 10 and the Agency is reviewing the information received to incorporate into future plans. We plan to continue engaging the commercial motor vehicle community through public listening sessions, outreach activities, and through meetings with industry, safety advocates, driver organizations, and the motoring public.

Mr. Chairman, the public expects a safe, efficient, and reliable transportation system. With your support, FMCSA employees, partners, and stakeholders will continue to share this solemn commitment to maintaining safety for all road users.

I would be happy to answer any questions you may have.

KEEPING PACE WITH INNOVATION – UPDATE ON THE SAFE INTEGRATION OF UNMANNED AIRCRAFT SYSTEMS INTO THE AIRSPACE

STATEMENT OF

EARL LAWRENCE

DIRECTOR OF THE FEDERAL AVIATION ADMINISTRATION’S

UNMANNED AIRCRAFT SYSTEMS INTEGRATION OFFICE

BEFORE THE

SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

SUBCOMMITTEE ON AVIATION OPERATIONS,

SAFETY AND SECURITY: KEEPING PACE WITH INNOVATION –

UPDATE ON THE SAFE INTEGRATION OF UNMANNED AIRCRAFT SYSTEMS INTO THE AIRSPACE

MAY 8, 2018

Chairman Blunt, Ranking Member Cantwell, Members of the Subcommittee:

I appreciate the opportunity to appear before you today to discuss the Federal Aviation Administration’s (FAA) Unmanned Aircraft Systems (UAS) integration efforts. UAS—also referred to as drones—are at the forefront of aviation. They are being used today to inspect infrastructure, provide emergency response support, survey agriculture, and to go places that are otherwise dangerous for people or other vehicles. Entrepreneurs around the world are exploring innovative ways to use drones in their commercial activities. As of mid-April 2018, we have processed over 1 million UAS registrations, over 170,000 of which are for unmanned aircraft that can be flown commercially. The need for us to fully integrate this technology into the National Airspace System (NAS) continues to be a national priority.

The Department of Transportation and FAA’s vision for integration goes beyond the accommodation practices in use today by most countries, which largely rely on operational segregation to maintain systemic safety. Our goal is ambitious. We intend to fully integrate UAS into the most complex airspace system in the world, enabling UAS to operate harmoniously with manned aircraft, occupying the same airspace and using many of the same standards and procedures. With the support of this Committee, and the continued engagement of our stakeholders, we have made significant progress toward realizing this vision.

One year ago, we appeared before this Committee to discuss the status of the safe integration of UAS into the NAS. Since then, we have worked tirelessly to maintain the United States’ position as the global leader in UAS integration. Today, I would like to share with you some of our accomplishments, our challenges, and our ongoing work toward our goal of fully integrating drones and their operators into the NAS.

Enabling Increased UAS Operations

The FAA is open for business. Using existing authorities, we are working with stakeholders to authorize increased UAS operations to the extent they can be accommodated safely. The small UAS rule, waivers and exemptions, and our traditional certification processes provide different pathways for UAS operators to access the NAS.

The small UAS rule, 14 CFR part 107, sets the global standard for small drone integration, enabling UAS operations with unmanned aircraft weighing less than 55 pounds. Today, drone operators are using part 107 to inspect oil and gas infrastructure, survey land and crops, support search and rescue, conduct disaster impact assessment, and capture photographs and videos for real estate and other commercial marketing purposes.

In keeping with our goal of a flexible regulatory framework to accommodate the rapid growth of UAS technology, some provisions of part 107 can be waived to allow expanded operations. Applicants must demonstrate that their proposed operation can be conducted safely outside the provisions of part 107. To assist applicants, we have published guidance on our website, including a step-by-step explanation of the waiver process.

We are also taking steps to further streamline the waiver and authorization process. Operators can now apply for waivers through the FAA DroneZone, our online portal for all UAS information and resources. To date, the FAA has issued almost 20,000 authorizations for operations in controlled airspace, and over 1,500 operational waivers, most of which enable night operations.

Consistent with our risk-based approach we are increasingly able to grant waivers for more complex operations, including for operations over people and beyond visual line-of-sight. Two of our original Pathfinder Program partners, BNSF Railway and PrecisionHawk, have been using these waivers to inspect infrastructure and conduct precision agricultural operations and crop monitoring, respectively. CNN, another Pathfinder partner, is using a waiver for operations over people to enhance its newsgathering and reporting. And X’s Project Wing has used a waiver to test package delivery at an FAA-designated UAS test site in Blacksburg, Virginia. We encourage operators and innovators to bring us new ideas. If an operator provides the appropriate safety case to justify a more complex UAS operation, we will issue the waiver.

We are also working with stakeholders to enable additional UAS operations using more traditional certification pathways. Like manned aircraft, drones are increasingly being used to spray pesticides and fertilizers, and for other aerial applications needed for agriculture, horticulture, and forestry. Using our existing certification process under 14 CFR part 137 and our exemption authority, we have issued three agricultural aircraft operator certificates to UAS operators, with additional certifications in process. Other applicants are in the process of demonstrating compliance with applicable aircraft, operator, and airspace requirements for small cargo delivery beyond what is currently authorized under part 107. And we are working with several manufacturers to certify larger UAS. In November 2017, we published the first Federal Register notice seeking public comments on proposed design standards needed for an unmanned aircraft weighing 55 pounds or more—the FlightScan Corporation Camcopter S-100—to fly safely in the NAS.

Supporting Emergency Response

UAS were invaluable in supporting response and recovery efforts following the widespread devastation brought about by hurricanes in 2017. When winds and floodwaters destroyed homes, businesses, roadways, and industries, many agencies and companies sought FAA authorization to fly drones in the affected areas. We responded quickly, issuing a total of 355 emergency airspace authorizations, many within an hour or two of the request, to ensure that those drones could operate safely.

Drones played a critical role in performing search and rescue missions, assessing damage to roads, bridges, and other critical infrastructure, and helping insurance companies act more quickly on claims from homeowners. In Puerto Rico, the FAA approved the first UAS operation of its kind to provide essential communication services. We granted AT&T approval to operate a 60-pound tethered drone to provide temporary voice, data, and internet service while construction crews rebuilt a tower to restore permanent service on the island. Today, drones are playing an important role in restoring power to many parts of the island where the terrain makes it difficult and dangerous for workers to make repairs. Drones are being used to find broken utility poles and downed power lines, and to lift new transmission lines into place, making it easier and safer for workers to do their jobs.

The FAA’s ability to quickly authorize UAS operations after these storms was especially critical because most local airports were either closed or dedicated to emergency relief flights, and the fuel supply was low. As former Administrator Michael Huerta said: “Essentially, every drone that flew meant that a traditional aircraft was not putting an additional strain on an already fragile system. I don’t think it’s an exaggeration to say that the hurricane response will be looked back upon as a landmark in the evolution of drone usage in this country.”

UAS Airspace Authorizations and Traffic Management

Under part 107, drone operators must secure approval from the agency to operate in any airspace where air traffic control is providing separation services. To facilitate those approvals, we deployed the prototype Low Altitude Authorization and Notification Capability (LAANC) at several air traffic facilities last November to evaluate the feasibility of a fully automated solution enabled by public/private data sharing. Based on the prototype’s success, we began the first phase of a nationwide beta test of LAANC on April 30, 2018, enabling LAANC services at about 80 airports in the South Central United States. This rollout will continue incrementally to nearly 300 air traffic facilities covering approximately 500 airports. We expect to complete nationwide deployment in September 2018.

LAANC uses airspace data based on the FAA’s UAS facility maps, which show the maximum altitudes in one square mile areas around airports where UAS may operate safely under part 107. LAANC gives drone operators the ability to request and receive real-time authorization from the FAA, which allows operators to quickly plan and execute their flights. Air traffic controllers are also made aware of the locations where planned drone operations will take place.

LAANC is an important step toward implementing UAS Traffic Management (UTM). NASA’s UTM research efforts are exploring concepts of operation, data exchange requirements, and a supporting framework to enable multiple beyond visual line-of-sight UAS operations at low altitudes in airspace where FAA air traffic services are not provided. NASA is coordinating with the FAA’s seven UAS test sites around the country, as well as a variety of industry partners, to perform phased testing. Phase one testing was completed in 2016, and phase two testing concluded in June 2017. While we’re supporting NASA in completing the final stages of their testing this spring, the FAA is already implementing foundational UTM capabilities like LAANC, and also beginning work to establish remote identification requirements. The UAS Identification and Tracking Aviation Rulemaking Committee (ARC) delivered their recommendations last October, and we have initiated a rulemaking process as directed by Section 2202 of the FAA 2016 Reauthorization (FAA Extension, Safety, and Security Act).

UAS Integration Pilot Program

On October 25, 2017, President Trump directed the Secretary of Transportation to launch an initiative to safely test and validate advanced operations of drones in partnership with state, tribal, and local governments in select jurisdictions—the UAS Integration Pilot Program. The pilot program is a crucial step in accelerating the Department of Transportation’s and FAA’s UAS integration efforts. The goals of the program are to identify ways to balance local and national interests, improve communications with local, state, and tribal jurisdictions, address security and privacy risks, accelerate the approval of operations that currently require special authorizations, and collect data to support the regulatory development steps needed to allow more complex, routine low-altitude operations. The results of this program will be used to help ensure the United States remains the global leader in UAS integration and fully realizes the economic and societal benefits of this technology.

As stated in the Federal Register notice announcing the pilot program, the deadline for Lead Applicants—state, local, or tribal governments—to submit their completed proposals was January 4, 2018. The response to the program has been enthusiastic—149 lead applicants submitted proposals for consideration. After evaluating the applications, the Secretary of Transportation will invite a minimum of 10 government/private sector partnerships to participate in the pilot program. We are in the final stages of the selection process and anticipate an announcement soon.

Additionally, in the course of reviewing the applications for the UAS Integration Pilot Program, we realized some good news: a large number of the projects and activities proposed by applicants could go forward under the FAA’s existing rules, including with waivers where appropriate. Accordingly, once the ten selections for the Pilot Program are announced, the FAA will be reaching out to other applicants, as well as interested state and local authorities, to provide additional information on how to operationalize their proposed projects.

Challenges Ahead

The FAA’s commitment to the safe, secure, and efficient integration of UAS and the expansion of routine UAS operations requires resolving several key challenges to enable this emerging technology to achieve its full potential. Congress recognized a number of these challenges in the FAA Extension, Safety, and Security Act of 2016. Technical issues to ensure that a drone maintains a safe distance from other aircraft and that the pilot retains control of the drone must be addressed before UAS operations beyond visual line-of-sight can become routine. And there are additional policy questions raised by UAS use, including security, privacy, and enforcement.

The 2016 FAA Extension clearly articulates Congress’s concerns that the security challenges presented by the malicious or errant use of UAS technology require a layered and integrated government response. We are using our existing authority to address concerns about unauthorized drone operations over certain sensitive federal facilities. To date, we have restricted drone flights over military facilities, sensitive energy facilities, and iconic landmarks like the Statue of Liberty, Hoover Dam, and Mount Rushmore in the interest of national security. Using this authority, we are considering additional federal agency requests for restrictions as they are received. To ensure the public is aware of these restricted locations, we created an interactive map available on the FAA website, and we updated our B4UFLY mobile app to include a warning to users in close proximity of these sites. This work is also helping us determine the most efficient and effective way to implement section 2209 of the 2016 FAA Extension, which will offer non-federal critical infrastructure owners to petition the FAA for flight restrictions over their facilities.

We also continue to work with our interagency federal partners to develop policies and procedures that will support protection of critical facilities and assets from UAS-based threats, while preserving airspace access and the safety and efficiency of operations in the NAS. Congress has provided the Department of Defense and the Department of Energy authorities to respond to UAS that pose a threat to designated facilities and assets. We also support the Administration’s proposal to enable the Departments of Justice (DOJ) and Homeland Security (DHS) to protect certain facilities, assets, and operations critical to national security against threats from UAS. Under this proposal, DOJ and DHS will work closely with FAA to ensure that detection and mitigation technologies are developed, tested, and deployed in a manner that minimizes adverse impacts on airspace access, as well as air navigation services, avionics, and other systems that ensure safe and efficient operations in the NAS. By enabling Federal security and law enforcement agencies to detect and mitigate UAS threats and risks posed by errant or malicious UAS operations, the United States will continue to lead the way in UAS innovation and offer the safest and most efficient aviation system in the world.

Another ongoing challenge to UAS integration is the potential for conflict between manned and unmanned aircraft. Last year, we saw a significant increase in the number of reported drone-sightings from pilots of manned aircraft. Although we cannot verify these reports, as the federal agency responsible for the safety of the flying community, we are greatly concerned with the increasing number of these reports, along with events in New York, South Carolina, and Las Vegas.

Our Unmanned Aircraft Safety Team (UAST) made recommendations to further reduce the likelihood of serious incidents and provide more accurate information about UAS sightings. First, public education and outreach are key to reducing these incidents. Efforts such as the “Know Before You Fly” information campaign and the small UAS registration process serve as opportunities to ensure UAS operators understand the rules and responsibilities for flying an aircraft in the NAS. The UAST also recommended continued work on remote identification of UAS to provide more accurate and critical data that will allow us to contact a UAS operator, educate the operator, or, when necessary, take enforcement action to address a violation of federal regulations. We, along with our security and law enforcement partners, need to be able to quickly identify unmanned aircraft and their operators in order to discern between the clueless, the careless, and the criminal—including serious threats to national security—and to ensure that all operators conduct compliant operations or face the consequences of introducing a safety or security risk into the NAS.

Remote Identification

As Congress has recognized, remote identification of UAS is a critical step on the path to full integration of UAS technology. In order to ensure that our airspace remains the safest in the world, and to enable our law enforcement and national security partners to identify and respond to security risks, we need to know who is operating in the airspace. Effective integration and threat discrimination will continue to be a challenge until all aircraft in the NAS—manned and unmanned—are able to be identified. Anonymous operations are inconsistent with safe and secure integration.

We recently published the report and recommendations prepared by the summer 2017 UAS Identification and Tracking ARC. The ARC’s 74 members represented a diverse array of stakeholders that included the aviation community and industry member organizations, law enforcement agencies and public safety organizations, manufacturers, researchers, and standards entities involved with UAS. The ARC’s recommendations cover issues related to existing and emerging technologies, law enforcement and national security, and how to implement remote identification and tracking. Although some recommendations were not unanimous, the group reached general agreement on most issues. The FAA is reviewing the technical data and recommendations in the ARC report to support the development of the FAA’s remote ID requirements, which we are committed to implementing as quickly as possible.

We are also making headway with an ARC to address UAS in controlled airspace, which will provide recommendations on UAS integration in, and transit to, high altitude airspace. It will develop scenarios that will encompass the most desired operations, identify gaps in research and development needed to successfully integrate larger UAS into controlled airspace, and recommend up to five prioritized changes to policies and procedures that will spur integration and economic growth. The ARC held its fourth meeting at the end of March 2018 and plans to have its fifth meeting at the end of this month, where the ARC will draft and prioritize a working list of recommendations. The ARC will continue to meet through the expiration of the ARC’s charter in June 2019.

Conclusion

This concludes my statement. I will be happy to answer your questions at this time.

Subcommittee on Surface Transportation and Merchant Marine Infrastructure, Safety and Security

STATEMENT OF

CRAIG H. MIDDLEBROOK

DEPUTY ADMINISTRATOR

SAINT LAWRENCE SEAWAY DEVELOPMENT CORPORATION

U.S. DEPARTMENT OF TRANSPORTATION

BEFORE THE

SUBCOMMITTEE ON SURFACE TRANSPORTATION AND

MERCHANT MARINE INFRASTRUCTURE, SAFETY AND SECURITY

UNITED STATES SENATE

APRIL 24, 2018

Chairman Fischer, Ranking Member Peters, Members of the Subcommittee, thank you for the opportunity to testify on the activities of the Saint Lawrence Seaway Development Corporation (SLSDC). It is an honor to represent the Corporation and to appear today before the Subcommittee.

The SLSDC is a wholly owned government corporation within the U.S. Department of Transportation with an enacted FY 2018 budget of $40 million. The SLSDC's annual funding is appropriated primarily from the user fee-based Harbor Maintenance Trust Fund, not from charging Seaway tolls to commercial vessels. The SLSDC's mission is to operate and maintain the U.S. infrastructure and waters of the St. Lawrence Seaway, while performing trade and economic development activities designed to enhance the utilization of the Great Lakes St. Lawrence Seaway System. The SLSDC is primarily responsible for maintaining and operating the two U.S. Seaway locks located in Massena, New York, and controlling commercial vessel traffic in areas of the St. Lawrence River and Lake Ontario. Since the opening of the St. Lawrence Seaway in 1959, the SLSDC has directly served the marine transportation industries by providing a safe, reliable, and efficient deep-draft international waterway, in cooperation with our Canadian counterpart, the St. Lawrence Seaway Management Corporation (SLSMC).

Over the last 59 navigation seasons, nearly 2.9 billion tons of cargo has transited the St. Lawrence Seaway, including grain, iron ore, iron and steel, project cargoes, and other raw and bulk commodities. During the 2017 navigation season, the Seaway enjoyed a 9 percent increase in commercial trafTic, including a 25 percent increase in U.S. exports to foreign markets.

A ship entering the St. Lawrence Seaway at Montreal, Canada, and transiting to Lake Erie crosses the international border 27 times while passing through the St. Lawrence Seaway's 15 locks (2 U.S. and 13 Canadian). As a consequence of this geographic fact, when constructing the Seaway in 1954, the U.S. and Canada created a binational governance approach for the Seaway through an exchange of diplomatic notes, constituting a binding international agreement between the countries. It was and remains a bold, optimistic, and unique governance approach; all other U.S. inland waterways are operated and maintained directly either by the U.S. Army Corps of Engineers or the U.S. Coast Guard. Due to the geography of the St. Lawrence River and the importance of the sovereignty issues involved, the U.S. and Canadian Governments established a binational framework of civilian federal oversight and control of this international waterway, which today is administered by the SLSDC and the Canadian SLSMC.

To carry out its mission, the SLSDC possesses legal authorities that distinguish it from other operating modes at the Department of Transportation and from most other Executive Branch agencies. The Wiley-Dondero Act of 1954 (Seaway Act), which created, and permanently authorized the SLSDC, incorporated authorities that were first put into law through the Government Corporation Control Act of 1945. The SLSDC was created as a corporation to manage this public infrastructure asset and provide a direct service to customers moving ships safely and efficiently through a binational waterway. The succinct and efficient nature of the Corporation's enabling statute allows sufficient flexibility to manage its operations like a business. Some of the distinguishing attributes include the ability to make and carry out contracts or agreements (MOUs) as necessary to conduct business as well as the ability to acquire real and personal property and sell, lease, or dispose of such property. Together with its mission of providing 24/7 transportation services, these legal authorities help promote a culture within the SLSDC of accountability and customer service.

The deep degree of trust and operational cross-border interaction that has developed between the U.S. and Canadian Seaway entities over the past 60 years helps maintain a transit experience for Seaway users that is essentially seamless from a ship captain's perspective. It is a remarkable achievement given the operational complexities and multiple jurisdictions that impact that transit. This close binational partnership is built on institutional and personal relationships, and everyone at the SLSDC works hard to maintain and enhance these relationships. The SLSDC's ability to achieve its mission is directly dependent on its success in sustaining and improving stakeholder interactions.

The St. Lawrence Seaway directly serves an eight-state, two-province region that accounts for one-quarter of the U.S. gross domestic product (GDP), one-half of North America's manufacturing and services industries, and is home to nearly one-quarter of the continent's population. The Great Lakes region is the world's third largest economy with annual economic output of nearly $6 trillion1

Annual commerce on the Great Lakes Seaway System typically exceeds 180 million metric tons and serves U.S. miners, farmers, factory workers, and commercial interests from the Great Lakes region. Virtually every type of bulk and general cargo commodity moves on the Great Lakes Seaway System, including iron ore for the U.S. steel industry; limestone for construction and steel industries; coal for power generation and steel production; grain exports from U.S. farms; general cargo such as iron and steel products and heavy machinery; and cement, salt, and stone aggregates for agriculture and industry.

Maritime commerce on the Great Lakes Seaway System provides shippers with nearly $4 billion in annual cost savings compared to the next least expensive mode of transportation 2 . The BMO (Bank of Montreal) Capital Markets Economic Research, Great Lakes-St. Lawrence Region Special Report, Spring 2017, page 1. Author, Robert Kavcic, Senior Economist.

2 U.S. Army Corps of Engineers, Great Lakes Navigation System: Economic Strength to the Nation, January, 2009 waterway also produces significant economic benefits to the Great Lakes region. An economic impact study completed in 2011 concluded that maritime commerce on the Great Lakes Seaway System sustains 227,000 U.S. and Canadian jobs, $35 billion in transportation-related business revenue, $14 billion in personal income, and $5 billion in federal, state, provincial, and local taxes each year. An updated economic impact study is currently being completed and new data is expected to be released by early summer. The 2011 study significantly raised awareness about the importance of the Great Lakes Seaway System and this updated report will likely be equally impactful.

Safety/Reliability/Accountability

The continued safety and reliability of our waterway is the foundation upon which we can promote and accommodate increases in maritime cargo. The St. Lawrence Seaway is already one of the world's safest waterways and that safety record continues to improve. Over the last 20 years, the average number of vessel incidents in the Seaway has decreased significantly. An incident is defined as a situation that triggers an on-board inspection by one of the Seaway inspectors. It could include on board injuries and vessel damage. From 1996-2006, the average number of incidents was 19 per year. Over the next 11 years, from 2007 through 2017, the average number of incidents declined to only 6 per year. Despite the harsh weather conditions during this past year's closing period, 2017 was one of the safest Seaway navigation seasons on record with just 4 vessel incidents in the U.S. sector during the 298-day season. This positive development can be attributed to several factors including the implementation of a consolidated U.S.-Canadian Enhanced Ship Inspection (ESI) Program in Montreal in 1997, the development of the Seaway's Automatic Identification System (AIS) vessel traffic management technology, exceptionally skilled SLSDC lock operations and maintenance staff as well as professionals, including pilots and vessel officers and crews, and a major fleet renewal program implemented by many of the Seaway's customers.

In addition, since the Seaway's opening in 1959, the SLSDC has consistently maintained a 99 percent reliability rate for its locks and the U.S. sector of the waterway. The SLSDC calculates the reliability rate by subtracting delays (weather, vessel, and lock-related) from the total hours/minutes during the navigation season. The SLSDC manages the tabulation of this rate inhouse and is not dependent on contractor data. This high mark of success is due primarily to the SLSDC's efficient management and operations of the locks and control of vessel traffic. Global customers from nearly 70 countries return each year to use the Seaway because of the waterway's strong safety record, efficient operations, and near-perfect reliability rate.

The Seaway also ensures strict ballast water management efforts to prevent any new introductions of aquatic invasive species via commercial vessels entering Seaway waters. In 2008, the SLSDC and Canadian SLSMC implemented regulations jointly requiring all ships with no ballast in their tanks to conduct saltwater flushing of the empty ballast water tanks before arriving in the Seaway. The SLSDC, along with the U.S. Coast Guard, Transport Canada, and the SLSMC, formed the Ballast Water Working Group (BWWG) to enforce ballast water inspections of all vessels to ensure these regulations are carried out. The BWWG's inspection efforts are an SLSDC operational performance measurement and an annual summary report documents the group's inspections and findings. The report measures both the performance of the binational inspection team in inspecting the ballast tanks of incoming ocean vessels and the compliance by the oceangoing trade in meeting U.S. and Canadian ballast water management requirements.

In both cases, the results of this year's report are outstanding. In 2017, every ballast tank of every ocean vessel entering the Seaway was assessed. Of these 8,350 tanks, only 68 registered low salinity, which equates to a ship compliance rate of 99.2 percent. In those rare instances where salinity levels do not meet the standard, the ballast tanks are sealed and then re-inspected on the vessel's outbound journey to ensure that the tank was not used on its voyage in the Great Lakes. Since 2009, 100 percent of international vessels entering the Seaway have received a ballast water management exam. The Great Lakes Seaway System has one of the most stringent inspection regimes in world. The effectiveness of the Seaway's ballast water inspection program has been publicly credited as a key factor in preventing the discovery of establishment of any new invasive species through ballast water in the Great Lakes since 2006 — the longest such period of non-detection on record.

Infrastructure Modernization

The locks, channels, and accompanying infrastructure of the St. Lawrence Seaway owned and maintained by the SLSDC are "perpetual" transportation assets that require periodic and regular capital reinvestment in order to continue to operate safely, reliably, and efficiently. In 2007, the U.S. Army Corps of Engineers completed a binational assessment of the infrastructure needs of the Great Lakes St. Lawrence Seaway System. That study laid foundational groundwork by identifying the specific infrastructure rehabilitation and modernization projects that were needed throughout the system. After 50 years of continuous operation with only minimal capital reinvestment, Congress approved the authorization and funding for the Seaway's Asset Renewal Program (ARP) beginning in FY 2009. Every penny of the ARP program is accounted for and we provide Congress with an annual ARP progress report. This program will enable the SLSDC to effectively manage the Seaway's assets for the next 50 years.

The projects and equipment included in the ARP address various needs for the two U.S. Seaway locks, the Seaway International Bridge, maintenance dredging, operational systems, and Corporation facilities and equipment. The start of the program marked the first time in the Seaway's 50-year history that a coordinated effort to repair and modernize the U.S. Seaway infrastructure had taken place.

During the ARP's first nine years (FY2009-FY2017), the SLSDC obligated $139 million on 48 separate projects. Several ARP projects involve implementation of new innovations and improved technologies for the operation of the Seaway infrastructure, resulting in reduced maintenance needs and operating costs to Seaway users. In FY 2017, the SLSDC obligated $27.9 million on I I ARP projects, including $18.1 million for the start of the SLSDC's tugboat replacement project and $8. I million for construction work for the Hands-Free-Mooring (HFM) system installation at Snell Lock. These are two of our largest planned capital and infrastructure projects, on which work continues in FY 2018.

The SLSDC's tugboat, the Robinson Bay, is 60 years old and is the SLSDC's primary watercraft for emergency response, ice breaking operations, navigation aid (buoy) placement/removal, and other operational activities, including moving the SLSDC's 300-ton capacity gatelifter crane barge. It is the only icebreaking asset stationed full-time in the region, and the replacement tug will have even greater icebreaking capabilities. Expenses incurred in maintaining the existing tugboat have increased significantly in recent years. We anticipate delivery of the new tug in the summer of 2019 and look forward to the greater operational and cost saving efficiencies it will bring.

The Seaway's HEM project is the first use of this technology for an inland waterway to safely transit commercial vessels through a lock system. The innovative technology allows commercial ships to transit safely and efficiently, while also enhancing workplace and operational safety conditions. It is estimated that HFM technology will reduce lock transit times by approximately seven minutes per lockage for each vessel, which equates to 3-4 hours of potential time savings on a roundtrip transit. HFM will be operational at all Seaway locks by the end of next year (2019).

Innovation

The SLSDC is always looking to leverage technology to improve system utilization. The list of cutting-edge technologies implemented, or soon to be introduced by the Seaway is impressive. It includes the Automatic Identification System (AIS), the Draft Information System (DIS), and the Hands-Free-Mooring technology. Mandatory Global Positioning System-based (GPS)

Automatic Identification System (AIS) carriage became effective on the St. Lawrence Seaway on March 3 1, 2003. The Seaway became the first inland waterway in the western hemisphere to implement an operational AIS vessel traffic services system. All commercial vessels transiting in Seaway waters from Montreal to mid-Lake Erie are capable of ship-to-ship, ship-to-shore, and shore-to-ship communication under all weather conditions on a 24/7 basis.

A major enhancement to the AIS system occurred in July 2012 with implementation of the Draft Information System (DJS), DIS is an onboard technology, providing Seaway mariners with realtime information on current and projected distances between a vessel's keel and the river bottom using real-time, three-dimensional displays. The Seaway is the first inland waterway in the world to implement this technology. Vessels with DIS technology are permitted to sail at a draft ofup to three inches above the published maximum, which could allow för transport of as much as 360 additional metric tons of cargo per voyage. In addition to increasing the productivity and economic competitiveness of the Seaway, AIS and DIS have greatly enhanced the safety and efficiency of the waterway and have improved Great Lakes Seaway System maritime security. By pairing these navigation technologies, precise vessel traffic management has been enhanced more than ever, and ships equipped with these technologies can travel the Seaway more safely and with more cargo.

The SLSDC and Canadian SLSMC are currently assessing how to improve and enhance our joint vessel traffic management system. We are studying how to enhance our existing AIS real-time data to generate precise arrival time calculations between a vessel's current location and waypoints critical to the safety and efficiency of the Great Lakes Seaway System. Ultimately, this technology could form the foundation of a more comprehensive traffic management system that could enable enhanced voyage planning and traffic management not only in the Seaway, but throughout the entire Great Lakes. Although still in the 'concept' stage, this technology innovation has exciting possibilities for Great Lakes Seaway System shipping.

Economic Development

The statute that created the SLSDC provided general authority for the Corporation to undertake trade and economic development activities and this is an important aspect of our mission. The SLSDC devotes resources to trade and economic development activities aimed at increasing commercial trade through the St. Lawrence Seaway and improving economic conditions in the eight Great Lakes states. The primary benefit is the stimulation of U.S. and Canadian port city economies through increased maritime industry activity, including services and employment to support maritime commerce. In 2015, the SLSDC designated a Great Lakes Regional Representative who leads this value-added service for the broad stakeholder community.

Initiative activities include facilitating new trade for Great Lakes Seaway System ports, conducting trade research and analysis to assist Great Lakes Seaway System stakeholders in identifying cargo trends and new business, participating in joint marketing efforts with our Canadian counterparts, promoting the Seaway System to prospective customers, and assessing the economic impact of Great Lakes Seaway shipping.

The SLSDC's trade and economic development activities were instrumental in the launch of the first regularly scheduled international liner service to a U.S. port on the Great Lakes since the 1970's. In 2014, the SLSDC joined the Port of Cleveland and the Dutch carrier company, the Spliethoff Group, in announcing and promoting the launch of the new Cleveland-Europe Express monthly liner service. It is significant in that these vessels carry containers as well as high-value cargoes into and out of the Lakes. The new service runs between the Port of Cleveland and Antwerp, Belgium, via the St. Lawrence Seaway. In 2015, the Spliethoff Group added a second monthly vessel to the program. This year marks the fifth year of operations for this service, and the Spliethoff fleet of vessels is making additional calls at ports throughout the Great Lakes Seaway System while sustaining its dedicated sailing schedule into Cleveland.

Working directly with Great Lakes ports, the SLSDC helps identify ways to increase tonnage traffic in traditional Seaway cargoes as well as in diversifying the types of cargo moving through their port. One example is the Seaway's initiative on increasing U.S. grain exports through the St. Lawrence Seaway system, which led to a 21 percent increase in U.S. grain transiting the locks in the 2016 shipping season. Overall, during the 2017 navigation season, U.S. exports moving through the St. Lawrence Seaway to foreign markets increased 25 percent, as compared to 2016. In 2017, many U.S. Great Lakes ports identified, developed, secured and promoted new initiatives within their communities, providing new business opportunities that are benefiting their local and regional economies. The Port of Milwaukee, Wisconsin, is a prime example. Over the last several years, the Port, in coordination with the SLSDC, has developed a close working relationship with one of its private tenants, COFCO (formerly Nidera) to find ways to increase Seaway-related grain exports. From 2008 to 2013, only 8 total vessels shipped export

U.S. grain from the Port of Milwaukee via the Seaway. Over the last four shipping seasons, however, that number has increased to 40 total vessels, averaging 10 Seaway vessels per year. As a result of these efforts, the Port of Milwaukee and the SLSDC have been able to better utilize the Great Lakes as a reliable maritime artery for commerce of Wisconsin agribusiness.

Likewise, the Port of Monroe, Michigan, is diversifying its cargo traffic and more than doubled its international cargo tonnage in 2017. Last year, the Port of Monroe handled the majority of components of Michigan's largest construction project in 2017, the Arauco Fiberboard Plant in Grayling, Michigan. The Port also constructed a new riverfront dock in 2017. The new dock capabilities, together with its partnership with Spliethoffto move project cargo, should provide for Seaway-related tonnage increases this year.

Additionally, international cruising activity is increasing in the Great Lakes. Two additional ships have been added to the inventory for a total of eight cruise vessels that have itineraries in the Lakes, in what will be the busiest cruise season since 2004. The increase in inventory will offer no less than 85 separate cruises between May and early November this year. The SLSDC continues to work with U.S. Customs and Border Protection to find ways to streamline passenger processing and bring more cruise vessels to more ports in the Great Lakes. Seaway stakeholders and customers alike are realizing the benefits from a modernizing vision of the Great Lakes and the added value the SLSDC and Great Lakes ports are providing to their communities and to the region.

Challenges

Water Levels — Water flows and levels can significantly impact the safe and efficient operation of navigation in the Seaway. In December 2016, the International Joint Commission (IJC), after concurrence by the U.S. and Canadian Governments, adopted a new water level plan for Lake Ontario and the St. Lawrence River, Plan 2014, which replaced the plan in place since 1958. This plan is the successful result of many years of extensive collaboration between and among the U.S. and Canadian governments, the IJC, and other stakeholders who depend on the economic as well as environmental health of Lake Ontario and the St. Lawrence River. The SLSDC was an active participant in the process that led to the adoption of Plan 2014. A part of the discussions that led to Plan 2014, it was recommended that a seat on the Board of the International Lake Ontario-St. Lawrence River Board be provided for DOT/SLSDC. The Board manages water flows and levels on the St. Lawrence River, and the ability for the SLSDC to participate as a Board member would be extremely helpful to our operations. However, this has not yet occurred. As we approach another season of anticipated high water levels similar to last year, there could be significant impacts on commercial shipping, as well as other stakeholders.

Pilotage All international vessels entering the Great Lakes and St. Lawrence Seaway System (GLSLS) are required by U.S. and Canadian regulations to have a certified vessel pilot on board to assist the vessel's captain in navigating the vessel while transiting the GLSLS. The oversight of pilotage services is a state-regulated activity everywhere in the U.S., except for the Great Lakes, where pilotage is regulated by the U.S. Coast Guard Office of Great Lakes Pilotage pursuant to the Great Lakes Pilotage Act of 1960. In addition to overseeing the three U.S. pilot districts in the GLSLS, the U.S. Coast Guard also establishes the rates that the U.S. pilots may charge for the provision of their services to vessel owners. Changes in the rate adjustment methodology have been controversial and have been met with criticism, and litigation, from various U.S. and Canadian commercial navigation stakeholders. The availability and cost of U.S. pilotage services in the Great Lakes St. Lawrence Seaway System are crucial components of the overall safety and economic competitiveness of the System. It is essential that the availability of Great Lakes Seaway System pilots be maintained in a manner that ensures safety while promoting the competitiveness of the System.

FY2019 Budget Request

For FY 2019, the President's Budget request includes an appropriation from the Harbor Maintenance Trust Fund of $28.84 million to fund the operations and maintenance of the U.S. portion of the St. Lawrence Seaway as well as infrastructure-related projects included in the Seaway's Asset Renewal Progranf (ARP). The request for the SLSDC's Agency Operations program of $19.11 million will fund all non-ARP activities and expenses, including all Corporation personnel compensation and benefits for 144 FTEs. For the ARP program, the request is for $9.73 million for 19 projects, including $5 million for the completion of the ongoing tugboat replacement project and $2.5 million for the continuation of maintenance dredging in the U.S. sections of the St. Lawrence River. SLSDC activities in the budget request support the Secretary's priorities of safety, infrastructure, innovation, and mission efficiency. At the FY 2019 request level, the SLSDC will continue to perform its core mission of serving the U.S. intermodal and international transportation system through the operation and maintenance of a safe, reliable, efficient, and competitive deep-draft waterway. The FY 2019 budget request also highlighted an Administration proposal to examine the feasibility of privatizing or commercializing U.S. Seaway operations currently managed by the SLSDC. The Canadian federal government commercialized Canadian Seaway operations in 1998, resulting in greater operational efficiencies and enhanced customer service focus.

The SLSDC remains dedicated to safely and efficiently operating the U.S. portion of the St. Lawrence Seaway, while also promoting the economic benefits of the marine mode, attracting new cargoes to the Seaway, and leveraging technology and innovation to enhance the system's performance and safety. Next year, 2019, will mark the Seaway's 60th Anniversary. For the past 59 years, the Seaway has been a model of binational partnership, ensuring that this international waterway is one of the safest, innovative, and reliable transportation routes in the world. With the investments being made in the Seaway by the U.S. and Canada, it will remain so for many years to come.

Thank you again for the opportunity to appear before you today. I am glad to answer any questions from Members of the Subcommittee.

#####

Maritime Transportation: Challenges and Opportunities

STATEMENT OF

REAR ADMIRAL JAMES HELIS, U.S. MARITIME SERVICE

SUPERINTENDENT

UNITED STATES MERCHANT MARINE ACADEMY

BEFORE THE

COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORATION

SUBCOMMITTEE ON SURFACE TRANSPORTATION AND

MERCHANT MARINE INFRASTRUCTURE, SAFETY AND SECURITY

UNITED STATES SENATE

HEARING ON

MARITIME TRANSPORTATION: CHALLENGES AND OPPORTUNITIES

APRIL 24, 2018

Good afternoon, Chairwoman Fischer, Ranking Member Peters and members of the Subcommittee. Thank you for the opportunity to update you on the U.S. Merchant Marine Academy (USMMA or Academy) and highlight accomplishments made since I appeared before you last year.

First, I am pleased to say that the Middle States Commission on Higher Education (MSCHE) fully reaccredited the Academy in November 2017. I am proud of the commitment and effort shown by our faculty, staff, and Midshipmen in achieving this goal in a short period of time. It speaks to the dedication of the Academy community that so many worked so hard to address MSCHE’s concerns.

We are building on this progress as we develop the Academy’s 2018-2023 Strategic Plan. This March, we invited 161 representatives of the maritime industry, the Department of Defense, alumni, parents, Midshipmen, faculty, and staff to provide input on the plan. In addition, Academy staff solicited input from more than 700 stakeholders over the past few months. Our planning discussions are ongoing and we plan to have a final plan by graduation in June.

In June 2016, the Department paused Sea Yea training on commercial vessels. Over the past year, the Academy restored Sea Year training on commercial vessels, and reestablished the mix of Midshipmen who completed Sea Year on commercial and Government vessels to pre-stand down levels. As of April 5, 2018, the Maritime Administration (MARAD) certified 17 commercial operators as eligible to host Midshipmen for Sea Year training.

We have been working hard to implement requirements established in the Fiscal Year 2018 National Defense Authorization Act (FY 2018 NDAA), P.L. 115-91, including testing global satellite communication devices for Midshipmen at sea. Those tests were successful and we are beginning to procure sufficient devices to equip all Midshipmen. MARAD and the Academy also worked with the Ship Operations Cooperative Program (SOCP), an organization with members from across the maritime industry, to develop industry-standard sexual assault and sexual harassment prevention and response training. This training is required for all Midshipmen prior to starting Sea Year and is available to all commercial operators. As required by the FY 2018 NDAA, Academy staff has begun visiting commercial vessels hosting Midshipmen during Sea Year to ensure compliance MARAD Sea Year eligibility requirements. We have also surveyed Midshipmen returning from Sea Year in November 2017 and March 2018 and are analyzing these results to determine where further improvements can be made.

I am committed to the elimination of sexual assault and harassment on our campus and improving the environment at the Academy so that victims are comfortable reporting all incidents and they are confident that Academy personnel will respond appropriately to reported incidents. Over the past year, we have seen an increase in reports of sexual assault, with a total of 12 reports made. While this increase could reflect an increase in the number of sexual assaults taking place, it is more likely that it indicates greater confidence by victims that reports will be responded to appropriately and therefore more willingness by victims to make reports. The Office of People Analytics (formerly the Defense Manpower Data Center) began the bi-annual survey of Midshipmen in April 2018, which will be the basis for the next annual report to Congress.

The Academy has continued to build on its Sexual Assault Prevention and Response (SAPR) Program, established in 2012, by implementing provisions of the FY 2018 NDAA, including expanding and improving training requirements for Midshipmen, faculty, and staff; updating procedures for handling reports of sexual harassment, dating violence, domestic violence, sexual assault, or stalking; and refining a plan to combat retaliation against Midshipmen who make reports. We have also increased staffing of the SAPR Office, which now includes a SAPR program manager/Sexual Assault Response Coordinator (SARC); a Sea Year coordinator, who is an activated U.S. Navy Reserve Strategic Sealift Officer and an Academy alumnus with commercial sailing experience; and one Victim Advocate/Prevention Educator, with a second in the process of being hired. The Academy also expects to hire an attorney shortly who will be available to provide sexual assault and harassment legal advice to victims. In addition, the Academy has five volunteer Victim Advocates from the faculty trained and certified to receive restricted and unrestricted reports of sexual assault. The Academy has also completed a contract with the Rape Assault Incest National Network (RAINN) to establish and operate a 24/7 worldwide hotline with access to worldwide resources, similar to the Department of Defense Safe Helpline. We expect Midshipmen to have phone, text, and internet-based access to RAINN in May 2018.

While the Academy has made progress in developing its SAPR Program, we know there is more work to be done. The recent Department of Transportation Office of Inspector General (DOT IG) report on the Academy’s SAPR Program highlights gaps in prevention sexual assault and sexual harassment, as well as processes for evaluating the effectiveness of the program. The Academy has concurred with the ten recommendations made by the DOT IG to improve the program and is acting to address the recommendations. For example, the Academy is implementing a procedure for validating the Academy’s data on reported sexual assault and sexual harassment incidents, which we expect to have finalized very soon. In addition, the Academy is working to improve communication of policies and procedures to all Academy stakeholders.

The Academy has also been focused on addressing the culture at the Academy regarding sexual assault and harassment. The LMI study completed in 2016 identified challenges in Academy culture in terms of inclusiveness, respect for differences, and empathy for victims of sexual assault and all forms of harassment. Sexual assault is a symptom of a culture that tolerates it and does not want to acknowledge or accept it as a problem. Tolerance can arise from peer pressure not to “get someone in trouble” and an absence of inclusiveness that signals a tolerance of these behaviors. This is a core issue that we must address. The entire USMMA community must have zero tolerance for sexual assault and sexual harassment, retaliation, bullying, hazing, coercion, victim blaming, and alcohol misuse/abuse. To begin, we have launched the “Be KP” campaign, which is a campus-wide effort led by Midshipmen, with support from faculty and staff, to focus on Academy values, enhance pride, and build a campus climate in which each individual is valued and has the opportunity to reach their fullest potential. Our approach is to re-emphasize the Academy’s core values—Respect, Honor, Service—with the goal of eliminating signals of intolerance that are enablers for those who commit sexual assault and barriers to reporting for victims.

As we look to the future, there are positive trends at the Academy that we intend to build upon. Over the past few years, the quality and diversity of incoming classes has improved and we expect to see continued progress in this area. We are also making great strides in improving campus facilities. We have completed construction and outfitting of Zero Deck of the Midshipmen barracks to include additional fitness rooms, baggage storage for Midshipmen during Sea Year, a recreation center, and club storage and meeting places. The Academy’s wi-fi network has been expanded to the barracks and new furniture has been installed in two of them. Additional surveillance cameras have been installed primarily in the barracks, the security command center has been upgraded, and improvements have been made across campus on drainage and paving. Thanks to a generous gift from the Academy Alumni Foundation, the gym floor has been refurbished. We have also replaced equipment in one of the gym’s weight rooms. Looking ahead, funding provided in the recently passed FY 2018 Consolidated Appropriations Act, P.L. 115-141 will allow facilities improvements to continue, with $45 million in funding for capital improvements and $7 million for facilities maintenance, repair, and equipment. These increases will enable us among other things to accelerate the timeline to renovate and upgrade our Midshipmen health service and athletic facilities, enhance campus lighting and vehicle access control, and continue work to repair the sea wall, roads, and parking areas on campus.

Thank you for inviting me to testify today. I appreciate your interest and continued support for the Academy and will be happy to answer any questions you may have.

Maritime Transportation: Opportunities and Challenges

STATEMENT OF

MARK H. BUZBY

ADMINISTRATOR

MARITIME ADMINISTRATION

U.S. DEPARTMENT OF TRANSPORTATION

BEFORE THE

COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORATION

SUBCOMMITTEE ON SURFACE TRANSPORTATION AND

MERCHANT MARINE INFRASTRUCTURE, SAFETY AND SECURITY

UNITED STATES SENATE

HEARING ON

MARITIME TRANSPORTATION: OPPORTUNITIES AND CHALLENGES

April 24, 2018

Good afternoon Chairwoman Fischer, Ranking Member Peters, and members of the Subcommittee. Thank you for this opportunity to testify about the challenges facing the U.S. maritime sector and opportunities to ensure the long-term viability of this important industry.

The Maritime Administration’s (MARAD) mission is to foster, promote and develop the U.S. maritime industry to meet the Nation’s economic and security needs. A key challenge MARAD faces in carrying out this mission, is meeting Department of Defense (DOD) sealift requirements. The United States relies on strategic sealift capabilities, which include ships and the necessary mariners to crew those ships to efficiently and effectively deploy military forces around the world. Strategic sealift consists of Government-owned vessels, privately-owned vessels engaged in commerce under the U.S.-flag and the mariners who operate them, and intermodal systems upon which the Government relies. These vessels, mariners, and supporting infrastructure transport 90 percent of equipment and supplies that move and sustain our military forces around the globe.

Government Fleet Readiness

Vessels in MARAD’s 46-ship Ready Reserve Force (RRF), along with 15 Military Sealift Command (MSC) vessels, form the 61-ship surge sealift fleet to rapidly deliver equipment and supplies during major contingencies. Readiness of the RRF is a constant challenge given that the average age of the vessels is 43 years. Repairs to older equipment and aging systems require shipyard periods lasting longer and costing more each year. In addition, MARAD and DOD must make investments to meet new regulatory requirements, such as installing modern enclosed lifeboats on RRF vessels. MARAD and the U.S. Transportation Command (USTRANSCOM) are working with the U.S. Navy to address the challenges of recapitalizing the sealift fleet to ensure mission readiness.

U.S.-Flag Commercial Fleet Viability

Our Nation relies on privately-owned commercial vessels operating under the U.S. flag to augment the capabilities of the Government’s fleet. The U.S.-flag commercial fleet delivers supplies and equipment to deployed forces and to service members and their families stationed overseas during steady-state operations and essential sustainment during long military deployments. Unfortunately, the U.S. commercial presence in the international maritime domain has declined and is currently at the lowest level in its history. Of some 41,000 deep-draft self-propelled oceangoing commercial vessels in the world today, just 181 sail under the U.S. flag, including 81 vessels operating exclusively in international trade, while the total capacity of U.S.-flag containership and roll-on/roll-off vessels is roughly the same as 25 years ago. The other 100 consist of the oceangoing ships in our Jones Act fleet. 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]

The Maritime Security Program (MSP), cargo preference laws, and the Jones Act are used to maintain a baseline U.S.-flag fleet. The MSP helps maintain an active, privately-owned, U.S.-flag and U.S.-crewed fleet of 60 militarily useful commercial ships operating in international trade. MARAD provides MSP participants an annual stipend, and their ships and logistics networks are available “on-call” to support DOD’s global transportation needs. The MSP facilitates employment for 2,400 U.S. merchant mariners qualified to sail on oceangoing vessels who we can rely upon to crew RRF vessels when activated, and assures DOD access to the critical multibillion-dollar global network of intermodal facilities and transport systems maintained by MSP participants.

Cargo is essential to sustain the vessels and jobs in the U.S.-flag fleet. Cargo preference laws require shippers 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 vessel availability. Absent other measures, a strong cargo preference mandate supports the sustainment of a U.S.-flagged, privately-owned commercial fleet and to the continued availability of the associated American merchant mariners.

In addition to cargo preference laws, U.S. coastwise trade laws, commonly referred to as the Jones Act, contribute to a baseline of sealift capability and capacity help sustain the U.S-flag fleet and supports the U.S. shipping industry.[2] Jones Act requirements support U.S. shipyards and repair facilities. They also keep current the supply chains moving that produce and repair American-built ships (including Navy and Coast Guard vessels). Finally, the Jones Act ensures 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, as is the case for 98.5% of our nation’s waterborne international trade. 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.

Availability of Mariners

Another challenge to meeting DOD sealift requirements is ensuring enough qualified U.S. merchant mariners are available to operate the surge fleet of 61 Government-owned cargo ships in times of need. The mariners required to operate these vessels are civilians regularly employed on board U.S.-flag, oceangoing commercial ships. I am concerned about the availability of a sufficient number of qualified mariners with the necessary endorsements to operate large ships (unlimited horsepower and unlimited tonnage) and to sustain a prolonged sealift mobilization beyond the first four to six months. While the entire RRF has not been fully activated at one time, there have been more than 600 activations since 1990, over half of which were for reasons other than readiness testing. We seek to ensure there are enough qualified U.S. mariners to safely crew our Government vessels when the need arise.

The FY 2017 National Defense Authorization Act (FY 2017 NDAA) directed MARAD to convene a working group consisting of agency and maritime industry representatives to assess the size of the pool of qualified U.S.-citizen mariners necessary to crew the U.S.-flag fleet in times of national emergency, and recommend actions to enhance the availability and quality of mariner data. MARAD provided the working group’s conclusions to Congress in January 2018. In it, the working group estimated a shortfall of 1,800 qualified mariners in the event of a full, prolonged mobilization, but this estimate assumed a “best case” that all qualified mariners would voluntarily report when called upon, and that there will be no ship losses or personnel casualties. Given this assessment, I am working closely with USTRANSCOM, MSC, the USCG, and the commercial maritime industry to develop actions to identify and maintain an adequate number of trained mariners, and ensure they receive training unique to operating in contested waters. Additionally, we are working to better track credentialed mariners who are not sailing, but could serve if needed, and to develop tools to count and understand the characteristics of fully qualified mariners available to meet the Nation’s commercial and sealift requirements at any given time.

One opportunity to ensure qualified U.S. mariners are available is continued support for the United States Merchant Marine Academy (USMMA), and the state maritime academies (SMAs). MARAD provides funding and oversight to Kings Point and the SMAs to produce highly skilled and licensed officers for the U.S. Merchant Marine. These institutions graduate most of the USCG-credentialed officers who hold an unlimited tonnage or horsepower endorsement qualified to crew these U.S.-flag ocean-going ships.

I will leave it to Rear Admiral Helis to discuss the Academy’s accomplishments and challenges, but I must say that I am proud of what they have done. I have been particularly encouraged during my visits to the Academy by the Midshipmen-driven, on-campus culture change program, “Be KP (Kings Point).” The Midshipmen have taken ownership of efforts to change the climate at the Academy and are now leading this effort. Progress is being made, but more work needs to be done as noted in the recent DOT Office of Inspector General report on the USMMA’s Sexual Assault Prevention and Response Program. We appreciate the insight from this report and are addressing the recommendations to continue improving the Academy as a whole.

In addition to providing oversight of the USMMA, MARAD provides funding to six SMAs[3], which collectively graduate more than three-fourths of the entry-level merchant marine officers annually. As part of this support, MARAD loans training ships to SMAs and covers a portion of those ships’ maintenance and repair costs. In addition to being used to train mariners, these vessels, which are part of the National Defense Reserve Fleet (NDRF), are used to respond to national disasters when requested by other Federal agencies. Most recently, MARAD activated RRF and NDRF ships to support Federal relief activities following Hurricanes Harvey, Irma, and Maria. During these deployments MARAD vessels supplied citizens and first responders with housing, meals, logistical support, and relief supplies, including delivering critical Federal Aviation Administration replacement air navigation equipment to the Virgin Islands. These vessels are aging and nearing the end of their life cycles, with two of the vessels more than 50 years old. Ensuring the continued availability of these ships is a high priority for MARAD. Congress recognized this need and provided $300 million in the FY 2018 Appropriations Act to fund the design and construction of a new common school ship—the National Security Multi-Mission Vessel.

Port Infrastructure

Another challenge we face is the state of Our Nation’s 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.[1] Without major improvements to multimodal transportation infrastructure and technologies, congestion resulting from greater volumes of freight could lead to growing delays and failures in the supply chain that would reduce our quality of life. There is great potential to improve the efficiency of this system by increasing the efficiency of our ports, which are the interfaces between water and land-based

MARAD is engaged with port communities to leverage existing DOT financing programs such as TIFIA and RRIF, and grant programs such as BUILD and INFRA, to increase Federal and non-Federal investment in port infrastructure and first/last mile intermodal connectivity. MARAD is also exploring ways to use our existing authorities to attract more non-federal investment in port infrastructure. We are also leading the way in identifying the critical challenges in port operations that could be met by increased use of intelligent transportation system technologies to interface more seamlessly between global and domestic transportation systems. We do this work in partnerships with the Federal Highways Administration’s Intelligent Transportation System Joint Program Office and the American Association of Port Authorities. Finally, we are working to attract new investment in technologies to more efficiently and safely integrate maritime cargo movement into the overall transportation system.

Other MARAD Programs

In addition to meeting DOD sealift requirements, MARAD programs support the environmentally sound disposal of obsolete Government-owned vessels, innovation to address maritime energy and environmental issues, activities to address infrastructure challenges at our ports and on our inland rivers and waterways, and ship repair. Funding in the FY 2018 Appropriations Act allows MARAD to capitalize on opportunities in each of these areas as highlighted below.

MARAD is the ship disposal agent for Federal government-owned merchant-type vessels of 1,500 gross tons or greater. Currently, MARAD has 11 obsolete vessels not yet under contract for disposal, which is a historic low. The FY 2018 Appropriations Act provides $6 million for the disposal of these vessels. MARAD is also responsible for continuing the required protective storage activities for the Nuclear Ship (NS) SAVANNAH until decommissioning and license termination are complete. The FY 2018 Appropriations Act provides $110 million for the storage, maintenance, and final decommissioning of the NS SAVANNAH.

The FY 2018 Appropriations Act provides $3 million for MARAD’s Maritime Environmental and Technical Assistance (META) program. This program supports applied research and development to facilitate environmental compliance and enhance sustainability in 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.

MARAD received $5 million in funding in FY 2017 for the America’s Marine Highway Program. The goal of this program is 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, serious implementation of this program represents an opportunity to significantly enhance American supply-chain competitiveness. MARAD is currently reviewing project applications and expects to announce the FY 2017 grant awards later this Spring. In addition, the FY 2018 Appropriations Act included $7 million in grant funding for the program. We expect to issue a Notice of Funding Opportunity for those grant funds soon.

The Small Shipyard Grant program provides funds to support capital improvements and training at small U.S. shipyards. Small shipyards play a significant role in our shipbuilding and repair activity. The grants support modernization that allow U.S. shipyards to compete more effectively in the global market place. The FY 2018 Appropriations Act provides $20 million in funding for the grant program. MARAD published a Notice of Funding Opportunity on April 14, 2018, and DOT will award grants by July 23, 2018.

Lastly, the Maritime Administration is an active member of the U.S. Committee on the Marine Transportation System (CMTS). In August 2017, I was appointed by the Secretary to Chair the subcabinet Coordinating Board for one year. The CMTS is an interagency forum through which 25-plus federal agencies and offices collectively address challenges of the marine transportation system. In October 2017, Secretary Chao approved the National Strategy on the Marine Transportation System: Channeling the Maritime Advantage. The interagency members, which also includes the Saint Lawrence Seaway Development Corporation, U.S. Coast Guard, U.S. Army Corps of Engineers, the National Oceanic and Atmospheric Administration, and Federal Maritime Commission, to name a few, is addressing five areas of focus in the Strategy for system performance, navigation safety, maritime security, energy innovation, and infrastructure investment.

In addition to managing the programs discussed above, MARAD is reviewing recommendations made in a November 2017 National Academy of Public Administration (NAPA) report on the agency. MARAD requested this assessment from NAPA to provide a review of the agency’s programs and offer recommendations for improving the alignment of activities to enhance performance and meet MARAD’s mission to foster, promote, and develop the maritime industry of the United States. In response to recommendations, MARAD is conducting an internal business process review to ensure MARAD’s mission is clear and supports the Administration’s policy goals.

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.

[1] See February 13, 2018 Statement of General Darren W. McDew, Commander, U.S. Transportation command, before the Senate Armed Services Committee: “If the fleet continues to lose ships, when the Nation goes to war, the DoD risks protracted deployment timelines or a scenario in which it must deploy U.S. Forces on foreign-flag ships. Moreover, further reduction in the fleet mean waning access to the global commons, contracting our competitive space and threatening the U.S. strategic advantage in this domain.”

[2] The Jones Act requires the use of qualified U.S.-flag vessels to carry goods in domestic commerce, which includes transportation between and among the U.S. mainland, Hawaii, Alaska, and Puerto Rico.

[3] The six SMAs are: California Maritime Academy in Vallejo, CA; Great Lakes Maritime Academy in Traverse City, MI; Texas A&M Maritime Academy in Galveston, TX; Maine Maritime Academy in Castine, ME; Massachusetts Maritime Academy in Buzzards Bay, MA; and State University of New York (SUNY) Maritime College in the Bronx, NY.

[1]DOT Bureau of Transportation Statistics, Freight Facts and Figures 2017, Table 2-1.

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Testimony

I. PTC Mandate

II. PTC Status Update

III. Grant Funding and Financial Assistance

IV. Enforcement of the PTC Implementation Mandate

I. Introduction

II. The Office of Pipeline Safety’s Mission

III. Mandates and Rulemaking

Gas Rule

Hazardous Liquid Rule

Valves and Rupture Detection Rule

Regulatory Reform

Recently Completed Mandates: Underground Storage and Others

IV. Enhancing Safety

Alternative Actions

Training and Qualifications Center

Grants

Research and Development

Damage Prevention

Inspections

Safety Management Systems (SMS)

V. Conclusion

U.S. Department of Transportation

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