STATEMENT OF

MICHAEL A. CIRILLO,
VICE PRESIDENT FOR SYSTEMS OPERATIONS SERVICES,
AIR TRAFFIC ORGANIZATION OF THE
FEDERAL AVIATION ADMINISTRATION,

BEFORE THE

COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE,
SUBCOMMITTEE ON AVIATION,

ON

COMMERCIAL JET FUEL SUPPLY: IMPACT AND COST ON THE U.S. AIRLINE INDUSTRY

FEBRUARY 15, 2006

Good morning Chairman Mica, Congressman Costello, and Members of the Subcommittee.  I’m happy to be here today, testifying on the commercial jet fuel market and its impact and cost to the U.S. aviation industry; and how we can reduce fuel consumption in the aviation industry.  This is an enormously important issue, not only for commercial carriers, but for business and general aviation, as well.  The Federal Aviation Administration is well aware of the dramatically increasing fuel costs, and we are actively implementing new technologies and procedures to help reduce fuel consumption, while maintaining the highest levels of safety.

Today’s aircraft are on average about 70 percent more fuel efficient than aircraft were 40 years ago.  Modern aircraft achieve fuel efficiencies of 67 passenger-miles per US gallon.  In terms of energy intensity, or the amount of energy consumed to transport one passenger one mile (a useful metric that allows comparisons across transportation modes), an aircraft’s energy intensity has improved dramatically since the mid-1960s, and nearly matches that of automobiles today.

The Department of Transportation has a goal to improve aviation fuel efficiency per revenue plane-mile by 1 percent per year, through Fiscal Year 2009.  In the near term, new technologies and procedures to improve air traffic management will help reduce fuel usage and emissions.  I would like to take a moment to describe some of these technologies and procedures, and how they will help reduce fuel consumption.

One important fuel savings procedure was implemented by the FAA last year.  It is known as Domestic Reduced Vertical Separation Minima or DRVSM.  DRVSM has significantly increased capacity in the en route airspace by doubling the number of usable altitudes between 29,000 and 41,000 feet.  The procedure permits controllers to reduce minimum vertical separation at altitudes between 29,000 and 41,000 feet from 2,000 feet to 1,000 feet for properly equipped aircraft.    DRVSM allows greater access to fuel efficient routes that was previously unavailable due to the increased separation requirements.  We originally estimated DRVSM would save airlines approximately $5 billion through 2016, an estimate that now appears to be conservative in light of the dramatic increase in fuel prices in the last year.

Another major initiative is expanding the implementation of Area Navigation (RNAV) procedures to additional airports.  RNAV procedures are performing successfully at Las Vegas, Philadelphia, and Dulles airports.  Last year, 13 RNAV departure procedures and four RNAV arrival procedures went into full operation at Atlanta Hartsfield-Jackson International Airport – the world’s busiest airport.  These procedures promote reduced fuel usage through more efficient climb and descent gradients; shorter, more predictable, and more repeatable ground tracks, and reduced delays.  RNAV procedures provide flight path guidance that is incorporated into onboard aircraft avionics systems, requiring minimal air traffic instructions.  This significantly reduces routine controller-pilot communications, allowing more time on frequency for pilots and controllers to handle other safety-critical flight activities.  Also, RNAV procedures use more precise routes for take-offs and landings, reducing fuel burn and time intervals between aircraft on the runways, and allowing for increases in traffic, while enhancing safety.  Key benefits of the RNAV procedures include more efficient use of airspace, with improved flight profiles, resulting in significant fuel efficiencies to the airlines.  In post-implementation studies by MITRE/CAASD, the annual operational benefits from RNAV procedures at Atlanta are estimated to be $15 million.  Delta Airlines anticipates potential benefits up to $30 million with refinements to the procedures published in 2005.  Additionally, 16 RNAV departures implemented at Dallas/Fort Worth International Airport in 2005 are expected to provide operators with estimated savings of $10 million annually through reduced delays.  American Airlines anticipates operational benefits up to $20 million with increased throughput and departure capacity gains.  The FAA has over 75 RNAV procedures under development this year.

In the en route environment we plan to publish more than 20 low-altitude and high altitude RNAV routes.  The high altitude routes eliminate the need to over-fly ground-based navigation aids and allow the design of more direct, efficient routes.  Low altitude RNAV routes allow direct routing through terminal airspace for Global Navigation Satellite System (GNSS) equipped aircraft. These routes are especially useful for general aviation flights, which previously would have been vectored around the terminal airspace.  Additionally, last fall nine high altitude off-shore RNAV routes were implemented in Florida as part of airspace optimization efforts which I will address in a moment.

Another technological innovation, known as Required Navigation Performance or RNP, promises to add to capacity and reduce fuel consumption.  RNP uses on-board technology that allows pilots to fly more direct point-to-point routes reliably and accurately.  RNP is extremely accurate, and gives pilots not only lateral guidance, but vertical precision as well.  RNP reaches all aspects of the flight – departure, en route, arrival, and approach.  This not only will allow more efficient airspace management, but also provide savings in fuel costs for the airlines.  For example, in January 2005, in partnership with Alaska Airlines, we implemented new RNP approach procedures at Palm Springs International Airport, which is located in very mountainous terrain.  Under the conventional procedures in use today at Palm Springs, planes cannot land unless the ceiling and visibility are at least 2,300 feet and 3 miles.  With these new RNP procedures, approved air carriers can now operate with a ceiling and visibility as low as 734 feet and one mile.  This lower landing minima has allowed Alaska Airlines to “save” 27 flights between January and November, 2005, flights which would have otherwise had to divert to Ontario, California, an added distance of at least 70 miles.  Additionally, when compared to the conventional procedures at Palm Springs, the RNP approaches will reduce the distance an aircraft has to fly from between 3 miles to nearly 30 miles – which translates into fuel savings for operators.  These RNP procedures also provide laterally and vertically guided flight paths from the initial approach fix to the runway end.  This attribute keeps aircraft safely separated from terrain and obstacles and in stabilized flight until landing, thus adding a critical margin of safety in prevention of the two major causes of commercial-aviation fatalities: controlled flight into terrain (CFIT) and approach-and-landing accidents (ALAs).

RNP procedures were also published in 2005 for Ronald Reagan Washington National Airport; Portland, Oregon; Hailey, Idaho; and San Francisco.  The U.S. is leading the world in RNP.  We are working with the international community to establish global standards.

We must also make sure we are using the best technology to maintain a safe and efficient air traffic system.  The en route air traffic control computer system is considered the heart of the National Airspace System (NAS).  En Route Automation Modernization (ERAM) replaces the software for the Host Computer System and its backup.  The ERAM system will be deployed at all 20 Air Route Traffic Control Centers by Fiscal Year 2009.  ERAM will enable the FAA to increase capacity and improve efficiency in a way that cannot be realized with the current system, which is a mix of different technologies that evolved over the years and is extremely difficult to expand or upgrade.  ERAM will process more than double the number of flight plans, and use almost triple the number of surveillance sources as the current system.

Traffic Flow Management (TFM) is the “brain” of the NAS.  The TFM system is the nation's single source for capturing and disseminating traffic information for the purposes of coordinating traffic across the aviation community. As the NAS is impacted by severe weather, congestion and/or outages, the TFM system provides timely information to our customers to expedite traffic and minimize system delays.   The FAA is currently in the process of modernizing the TFM infrastructure through its TFM Modernization program.  This spring we will introduce the Airspace Flow Management technology to reduce the impact of delays incurred during the severe weather season.  FAA estimates show that TFM provides roughly $340 million in benefits to our customers on a yearly basis in reduced direct operating costs through delay reductions.  ERAM and TFM together will enable flexible routing around congestion, weather, and flight restrictions, and help controllers to automatically coordinate flights, during periods of increased workload. 

Another area where technology has made it possible to increase capacity, and improve fuel efficiency is Advanced Technologies and Oceanic Procedures (ATOP), or Ocean 21.  Ocean 21/ATOP automation adds dependent surveillance, satellite communications, and conflict probe capabilities for oceanic airspace, so that air traffic control can provide more efficient air traffic services, reducing current separation minimums from 100 nautical miles to 50 nautical miles, or 30 nautical miles for appropriately equipped aircraft.  This capability permits more aircraft to have access to more fuel efficient trajectories because routes can be spaced more closely together, and aircraft can operate more closely in trail.  These more efficient trajectories allow aircraft to operate on better time tracks, with less excess fuel reserves, consequently allowing them to carry extra payload.  ATOP went operational at New York last June, and at Oakland last October.  Since implementation, oceanic controllers using ATOP are granting 24 percent more requests for changes in altitudes and controller response time has improved by 30 percent.  This increased efficiency is even more remarkable considering the 20 percent increase in requests for altitude changes observed in the last year.

The Air Traffic Organization of FAA has also implemented a new technology called the User Request Evaluation Tool or URET.  URET permits the controller to predict potential aircraft to aircraft, and aircraft to airspace conflicts earlier, allowing them to construct alternative flight paths or cancel climb or descent restrictions.  URET allows these conflicts to be addressed in a strategic sense rather than a tactical sense, with fewer deviations to the route or altitude and less restrictive climb or descent profiles.  Fewer deviations can result in less fuel burn. The system makes it easier for controllers to respond to pilot requests for more efficient routings, more fuel efficient altitudes, and wind-optimal routes, all of which can lead to fuel savings.  Estimated savings for the aviation industry from URET in FY 2005 are 25 million miles in aircraft travel, and $175 million in operating expenses.

Throughout 2005, a joint team of industry and FAA representatives collaboratively redesigned the airspace in Florida to improve air traffic management efficiency and to reduce airspace complexity.  This project is known as the Florida Airspace Optimization.  The expected benefits of the airspace redesign for customers include:  reduced flight distances on standard arrival and preferential routes into south Florida airports; reduced re-routes into adjoining foreign airspace which cause additional foreign over-flight fees; and reduced departure delays from Boston, New York and Washington, DC metropolitan airports to south Florida destinations.  Pre-deployment estimates indicated a cost savings of nearly $20 million per year for airlines.  Delays at key south Florida airports have been reduced by 50 percent or more.

The Wide Area Augmentation System, known as WAAS, is another example of using new technology to improve fuel efficiency.  WAAS is a satellite-based navigation system that enhances the satellite signals from the Global Positioning System (GPS) to provide increased accuracy and reliability necessary for pilots to rely on satellite navigation during all phases of flight.  Because the system is satellite-based, WAAS procedures cost a lot less to implement and maintain than procedures based on traditional ground-based navigation systems.  WAAS makes more airspace usable to pilots, provides more direct en route paths, and provides new precision-like approach services to runway ends, all of which can result in fuel savings for operators.  The integration of WAAS into the NAS will result in safety and capacity improvements, in addition to reducing fuel consumption.  WAAS was commissioned in July 2003 and as of tomorrow there will be nearly 3,800 instrument approaches available to WAAS users, including nearly 1,200 precision-like approaches that offer vertical guidance.

Lastly, one recent development with the potential for significant improvements in reducing fuel consumption for the aviation industry is successful negotiations with Russia to open additional polar routes over Russian airspace.  Polar routes are used by traffic between the United States, Russian, and Southeast Asian destinations.  These routes significantly reduce fuel burn in comparison to the traditional “Great Circle” routes over the Pacific Ocean.  Increased traffic is expected on these routes in future years.

What steps are being taken to reduce aviation fuel consumption in the future?  The pace of technological change across the aviation industry is increasing.  Aerospace manufacturers continue to develop engine and aircraft designs that are improving fuel efficiency further by reducing weight and improving aerodynamics.  Aircraft design improvements mostly fall into one of three categories:  weight reduction, aerodynamics, and control systems.  New and improved metal alloys and composite materials are being developed to reduce aircraft weight while simultaneously improving structural performance.  Aerodynamic improvements include the design of winglets for wing tips, which reduce turbulence and vortex generation by the wings.  Significant improvement in control systems has come about by replacing mechanical and hydraulic systems with electrical systems, which often reduce weight while providing more precise control.  Improvements of these systems will contribute to improved overall fuel efficiency.  However, aircraft technology development follows relatively long cycles, which limits the pace of fundamental changes in design.  Therefore, in the near term, the FAA and its Air Traffic Organization are undertaking the air traffic technology development, and operations and procedures improvements spelled out above to help the aviation sector reduce fuel consumption.  We take this commitment seriously, and we continuously strive to improve our systems and procedures to provide the safest, most efficient National Airspace System possible. 

Mr. Chairman, this concludes my testimony, and I would be happy to answer any questions you may have.

Statement of

J. Richard Capka, Administrator
Federal Highway Administration
United StatesDepartment of Transportation

Before the

Subcommittee on Highways, Transit, and Pipelines
Committee on Transportation and Infrastructure
United States House of Representatives

Hearing on Celebrating 50 Years:
The Eisenhower Interstate Highway System

June 27, 2006

Introduction

              Mr. Chairman, Members of the Subcommittee, thank you for the opportunity to appear before you at today’s hearing on celebrating the 50^th anniversary of the Dwight D. Eisenhower System of Interstate and Defense Highways. 

The creation of the Interstate System is one of the greatest public works projects in history.  The importance of the Interstate System to our economy cannot be exaggerated.  President Eisenhower wrote the following in his memoirs:  “...more than any single action by the government since the end of the war, this one would change the face of America.  Its impacts on the American economy – the jobs it would produce in manufacturing and construction, the rural areas it would open up – was beyond calculation.”  This year is an opportunity to recognize the importance of transportation to our economy and our way of life.  It is also an opportunity to look ahead to the next 50 years.

Origins of the Interstate System

In the very early part of the last century, national highway policy was focused on getting farmers out of the mud and getting their produce to market.  The Federal-aid highway program began in 1916 with that concept in mind, but it lacked a national focus.  In 1921, the focus shifted as Congress reshaped the program to restrict Federal-aid to a limited, designated system totaling no more than 7 percent of each State’s roads, with three-sevenths of this system being “interstate in character.”  Up to 60 percent of the funds could be used on these interstate roads as the Nation embarked on construction of its first interstate system—the name often used to describe it.  By the late 1930s, there was a paved network of two-lane roads across the Nation, but its design and operation were inadequate for growing traffic volumes.

The Federal-Aid Highway Act of 1938 directed the Bureau of Public Roads (BPR), the predecessor of the Federal Highway Administration, to study the feasibility of a toll-financed system of three east-west and three north-south superhighways.   The 1939 study, entitled Toll Roads and Free Roads, rejected the idea of a toll network, but proposed a system of toll-free interregional highways, with connections to and around cities.  The network of highways would meet the needs of increasing automobile traffic and the requirements of national defense in time of war.

              A subsequent report to Congress, entitled Interregional Highways, helped shape the Federal-Aid Highway Act of 1944, in which Congress directed the designation of a 40,000 mile “National System of Interstate Highways” by joint action of State highway agencies, subject to the approval of BPR.  In 1947, BPR designated 37,681 miles of principal highways, including 2,882 miles of urban thoroughfares carrying the main line through cities.  Construction of this system began in 1947, but without increased Federal support, many States did not pursue construction.  Furthermore, road design standards were not uniformly applied.  What was missing was a program to fund and build an interstate system with a uniform design.

The Federal-Aid Highway Act of 1952 provided some support for the system by authorizing $25 million with 50/50 Federal-State participation.  However, when President Eisenhower assumed office in 1953, only 6,000 miles had been completed at a cost of $955 million.

President Eisenhower’s Vision

President Dwight D. Eisenhower understood the value of roads.  In 1919, he was aboard the U.S. Army’s first transcontinental convoy, a two-month journey from Washington, DC, to San Francisco, CA, to assess the readiness of military vehicles to make such a long trip and to promote good roads.  The trip convinced the participants, which included military personnel, road advocates, and members of the press, of the country’s need for better roads.  During and after World War II, the future President  traveled on Germany’s Autobahn network of rural superhighways.  President Eisenhower later noted “The old convoy had started me thinking about good, two-lane highways, but Germany had made me see the wisdom of broader ribbons across land.”

              To address the Nation’s highway needs and build upon the progress of the 1930s and 1940s, President Eisenhower developed a “Grand Plan.”  The “Grand Plan” is sometimes misunderstood as simply recommending the construction of the Interstate System; however, President Eisenhower’s vision was far grander.  The “Grand Plan” envisioned each level of government – Federal, State, county, and municipal – contributing to the upgrade of the Nation’s entire road network over a 10-year period.  The goal of the “Grand Plan” was a system to improve safety, reduce traffic jams, reduce traffic-related litigation, increase economic efficiency, and provide for the national defense.  President Eisenhower appointed General Lucius D. Clay to head a committee, now known as the Clay Committee, to further develop the plan.

              In 1955, President Eisenhower submitted the Clay Committee’s report to Congress, along with accompanying legislative proposals for financing construction of the Interstate System over a 10-year period.  Despite widespread support for the concept, Congress rejected the Clay plan, which entailed $25 billion in bonds and redirection of the gas tax to retire the debt.  When legislation failed in 1955 because of financing issues, observers predicted that such a sweeping and costly plan would not be passed in the presidential election year of 1956. 

The Federal-Aid Highway Act of 1956

President Eisenhower continued to urge approval of his legislative plan and worked with Congress to reach compromises that made approval possible.  On June 26, 1956, Congress passed the Federal-Aid Highway Act of 1956 (1956 Act).  President Eisenhower, who had fought so hard for his vision, was in the final stages of recovery from surgery at Walter Reed Medical Center when he signed the Act on June 29, 1956, with no fanfare, no statement, and no photograph of the moment. 

Despite the lack of ceremony, the 1956 Act resulted in landmark changes to the connectivity of highways in the U.S. and the way in which those highways are financed.  Congress created today’s Interstate System by expanding the system to 41,000 miles.   The Act called for uniformity of design and signs to eliminate surprises that could lead to crashes.  An extended authorization period was established to add certainty to the process to enable States to plan major highway projects to be completed over several years.  The legislation also created a linkage between highway user tax revenue and highway expenditures.

The Highway Trust Fund was created as a dedicated revenue source for the Interstate System.  Revenue from the Federal gas and other motor-vehicle user taxes was credited to the Highway Trust Fund to pay the Federal share of Interstate construction and all other Federal-aid highway projects.   In this way, the Act guaranteed construction of all segments on a "pay-as-you-go" basis, thus satisfying one of President Eisenhower's primary requirements -- that the program be self-financing and not contribute to budget deficits. The 1956 Act set the Federal share for Interstate construction at 90 percent in recognition of the National scope of the project.

Impacts of the Interstate System

The Interstate System succeeded in achieving President’s Eisenhower’s vision of connecting our Nation.  From the early years, highway engineers across the country built Interstate highways to match geographic and other challenges.  The design of the Interstate System has not been static.  The public and private partnerships that created the System adapted the highways to operational and safety experiences, criticism from the environmental community and safety advocates, and advances in bridge, pavement, and tunnel technologies.  Through creativity and engineering expertise, each State built highways that, while uniform in some respects, were also unique to their setting.  The close partnerships between Federal and State agencies and other stakeholders played an important role in establishing standards in design, operations, and safety. 

Fifty years after the inception of the program, President Eisenhower's legacy has made America the most mobile society in history.  Although the Interstate System comprises only 1 percent of the Nation's highways, it carries 24 percent of the Nation's traffic.   In 2004, Americans traveled approximately 267 billion vehicle miles on rural Interstate highway, 26 billion vehicle miles on “small urban” Interstate highways, and over 434 billion vehicle miles on urbanized Interstate highways.  This mobility has lead to an improved quality of life – more job opportunities and expanded choice on where to live. 

The construction of the Interstate System also significantly expanded the reach of efficient truck movement.  Highways are a key conduit for freight movement in the U.S., accounting for 71 percent of total freight transportation by weight and 80 percent by value in 1998.  Freight transportation supports local businesses, interstate commerce, international trade, and provides Americans with access to goods and services.  Today, transportation is woven into the economic fabric of the nation, and the Interstate System played a large role in establishing its importance.

One of the primary reasons for building the Interstate System was to improve the safety of the highway users: drivers, passengers, and pedestrians.  Over the past 50 years, the Interstate System has done much to make highway travel safer and more efficient.  Relative safety is measured by the "fatality rate" (fatalities per 100 million miles traveled, a measure used so data can be compared as traffic volumes change).  The Interstate System is the safest road system in the country, with a fatality rate of 0.8—compared with 1.44 for all roads in 2004.  This statistic is particularly noteworthy given that Interstate highways carry 26 times the traffic per mile as the rest of the road system.

When the Interstate construction program began in 1956, the national fatality rate was 6.05.  This improvement in safety has been the result of many factors working together:  the shifting of traffic onto the safer Interstate highways and technological advances in safety, such as wider shoulders; slid-resistant pavements; better guardrail, signing, and markings; better sight distances; and breakaway sign posts and utility poles.  In addition, many other factors have contributed to improved safety on the Nation's highway system, including new vehicle safety features, such as safety glass, padded interiors, safety belts and air bags; programs to reduce impaired and aggressive driving; and the combined, coordinated efforts of many private organizations and public agencies working together to make the Nation's highways ever safer.   Safer vehicles operating on safer highways also require safer driver behavior in order to deliver significant safety benefits.  The most important life-saving action every State should take to achieve this is to  pass a primary safety belt law.  The Safe, Accountable, Flexible, Efficient Transportation Equity Act:  A Legacy for Users (SAFETEA-LU) resulted in the enactment an incentive grant program to encourage States to pass primary safety belt laws.  Buckling up is not complex -- it's simple, it works, and it saves lives.

              The 1956 Act officially named the Interstate System the “National System of Interstate and Defense Highways.”  (In 1990, President George H.W. Bush signed legislation that would rename the Interstate System to honor President Eisenhower.)  This name recognized that national defense was part of the justification for constructing the Interstate system.  Indeed, the Interstate System has provided for defense access and readiness, most recently with the mobilization prior to Operation Desert Storm, Operation Desert Shield, and Operation Iraqi Freedom.

The Interstate System supports a growing economy, a strong national defense, and the vibrant American way of life. It is not only our safest highway network, but also the most flexible as it serves changing traffic, increasing freight needs, and evolving American goals.  Since President Eisenhower, every President and each succeeding Congress has supported the Interstate System, including preservation of the taxpayers' investment in its construction.

Looking to the Future

As we celebrate the 50^th anniversary of the Interstate System, we must think about the future.  We must examine the remaining service life of Interstate highways and how to preserve and improve the system.  As demand on the transportation system continues to increase, we must continue to find ways to protect and enhance the environment and be good stewards of the environment, while speeding up decisions and completion of vital transportation projects. The Federal-Aid Highway Program has been financed in the same way for 50 years.  We need to broaden our thinking and move forward to address today’s challenges.  Instead of thinking of roads and bridges as liabilities, State and local governments need to think of infrastructure as an asset.

              In many respects, our transportation system has become the victim of its own success.  Our growing economy and standard of living have created a demand for travel and movement of goods that is increasingly difficult to meet.  Congestion and delays have become a fact of life on our highways and in our airports and seaports.  However, congestion is not an insurmountable problem.  We must embrace new solutions in order to make meaningful progress in reducing congestion.

During National Transportation Week, Secretary Mineta launched the National Strategy to Reduce Congestion on America's Transportation Network -- a national congestion relief initiative designed to address the challenges ahead for our surface transportation system.  This dynamic plan will maximize valuable tools Congress provided in SAFETEA-LU to improve operation of our surface transportation system, encourage the development and deployment of new technologies and construction methods, and expand opportunities for private investment in transportation infrastructure. 

              One of the most critical aspects of the National Strategy is reducing or removing barriers to private-sector investment in the construction and operation of transportation infrastructure.  The Department will encourage more States to pursue private-sector investment opportunities.  Major financial institutions and their clients are expressing increasing willingness to invest billions of dollars in roads.  Furthermore, public-private partnerships (PPPs) can include incentives for system management and congestion relief, can make owners more accountable to users, and can lower the long-term costs of infrastructure maintenance and reconstruction.  PPPs maximize the strengths of both the public and private sectors.  It is time to take advantage of the private sector’s flexibility, innovation, creativity, expertise, and access to capital, while maintaining public oversight, accountability to taxpayers and long-term strategic planning.

              The National Surface Transportation Policy and Revenue Study Commission, which is meeting today, is reviewing current methods and exploring alternatives for investing in and managing our surface transportation systems.   The Commission is tasked with finding solutions that not only support the sustainability of financing surface transportation, but also reduce the costs of congestion.

              We also must continue to keep highway safety as the top priority.  Secretary Mineta has declared highway traffic deaths a “national tragedy.”  It is unacceptable that over 43,000 people died on American roadways last year.  SAFETEA-LU provided a comprehensive set of new and expanded tools for the U.S. DOT to use in working with States and other partners to improve highway safety through better safety data and analysis of crashes, development of strategic highway safety plans, and increased financial resources and flexibility to States to address their safety problems.  Continuing this emphasis on a data-driven, comprehensive approach to safety will be critical to successes in the future.

Ours is unquestionably the most physically complex highway system in the world. Operational improvements will play a vital role in the future management of the system.  The application of advanced technology or Intelligent Transportation Systems (ITS) is critical to address these operational issues.  One example is the establishment of a national 3-digit telephone number for traveler information, 5-1-1, which gives callers information about local road and traffic conditions by dialing an easy-to-remember number, and our current efforts to promote the deployment of 5-1-1 services.  As a result of these efforts, we expect 5-1-1 service to be available to half the nation by the end of this year.  Services like 5-1-1 give motorists the information they need to make better choices about the routes they take, helping them save time by avoiding traffic tie-ups.

              We must improve the efficiency of our transportation system by improving materials, contracting, and construction techniques. SAFETEA-LU includes $75 million for the Highways for LIFE pilot program.  The purpose of the program is to promote state-of-the-art technologies, elevated performance standards, and new business practices in the highway construction process.   We believe that the Highways for LIFE pilot program will help to build highways faster, make them last longer, and make them safer.

Research also will play a vital role in improving and maintaining the Interstate System.  Although SAFETEA-LU increases funding for Surface Transportation Research, Development, and Deployment, certain structural problems within research funding challenge the Department's ability to carry out the program Congress envisioned in Title V of SAFETEA-LU.  Because all of the Title V funding for FY 2006 through 2009 is designated in statute for specific programs and projects, there is no flexible Title V research funding remaining for certain activities that are authorized by Congress, and that are important for a national program.  The result is that across-the-board reductions are required each fiscal year in order to stay within authorized contract authority, and many research activities underway in FY 2005 will be slowed or stopped.   I would welcome an opportunity to answer your questions about the structural issues and program impacts, including risk to achieving our vision for the future.

Conclusion

The Interstate System has been the backbone of our economy for 50 years.  It provides a vital connection between people, goods, and services and helps link U.S. markets with those around the world.  The consistent network of roads, bridges and tunnels became a vehicle for freedom and helped our nation become the most mobile in history.

This year, we honor President Eisenhower’s vision of a network of highways that brought America together and strengthened the national economy, but we also set the stage for the system’s next 50 years.  Our vision for the future focuses on reducing congestion and improving the system’s capacity.  With new building techniques, new financing methods, advanced system operations that include freight logistics, and new programs that improve construction and repair projects, we will continue President Eisenhower’s legacy and keep America’s highway system strong, safe, and efficient for the future.

Thank you again for the opportunity to testify at this hearing commemorating the 50^th anniversary of the Interstate System.  I look forward to continuing to work with you as we move forward in shaping the next 50 years of our Nation’s highway transportation system in support of the Nation’s economic growth and our quality of life. 

Statement of

Sandra Bushue
Deputy Administrator
Federal Transit Administration
U.S. Department of Transportation

Before the

Subcommittee on Housing and Transportation
Committee on Banking, Housing, and Urban Affairs
United States Senate

Hearing on

Implementation of the Safe, Accountable, Flexible, Efficient Transportation Equity Act – A Legacy for Users

June 27, 2006

Thank you, Mr. Chairman, for the opportunity to testify today on the Federal Transit Administration’s (FTA) implementation of the Safe, Accountable, Flexible, Efficient Transportation Equity Act:  A Legacy for Users (SAFETEA-LU) enacted by Congress and signed by the President on August 10, 2005. The hard work of the members of this committee is reflected in the legislation that is good for public transportation.  We appreciate your continued interest and strong commitment to public transportation as embodied in it.

Since my arrival at the FTA in January, I have made timely implementation of SAFETEA-LU my top priority.  I am pleased to report to the committee that the FTA is making substantial progress in implementing this important legislation. 

As you know, SAFETEA-LU authorizes a total of $45.3 billion in guaranteed funding for Federal transit programs over five fiscal years (FY) 2005 - 2009, an increase of 46 percent over the funding provided in the Transportation Equity Act for the 21^st Century (TEA 21).  In addition to historic funding levels, SAFETEA-LU added new programs such as New Freedom, Tribal Transit Program, and Alternative Transportation in the Parks and Public Lands that began in FY 2006, and modified other programs, such as Job Access and Reverse Commute and Clean Fuels.  SAFETEA LU also required that FTA promulgate 17 new regulations, including regulations to implement FTA and Federal Highway Administration (FHWA) planning requirements, New Starts (including the Small Starts program), Buy America, Charter Bus, and a joint rulemaking with the Department of Homeland Security on transit security grants.  This is an unprecedented amount of rulemaking for FTA.  In fact, FTA was tasked by SAFETEA-LU with more rulemaking actions than any other Department of Transportation (DOT) modal administration.  Besides regulatory changes, SAFETEA-LU also requires FTA to issue nearly 29 other program guidance documents and 19 reports to Congress.

Since the President signed SAFETEA-LU in August 2005, FTA has worked diligently with an aggressive schedule to meet the requirements in SAFETEA-LU and facilitate program implementation.  First, I will outline the steps we have taken to assure an orderly implementation process, and to get the maximum amount of stakeholder input as possible.  Second, I will describe the regulatory steps taken to date, and our plans for completing these actions.  Finally, I will discuss the implementation of the other program changes.

Implementation Process and Outreac

Immediately after enactment of SAFETEA-LU, FTA set out to define the regulatory actions that had to be taken, the new programs to be implemented, the reports and studies to be undertaken, and the program guidance documents that had to be revised.  Over 60 such products were identified, including 17 regulations, 19 reports, and 29 program guidance documents.  FTA then developed a prioritized listing of these products and a detailed timeline.  FTA identified 12 of these products as first priority items, based on the need for action.  The delivery of these top priority items on time is one of FTA’s core accountabilities for evaluating the performance of our Senior Executives, and will be reflected in their performance appraisals and compensation.  I am extremely pleased to say that we have already completed eight of these twelve first priority items.  Two will not meet our original schedule, but we have deliberately delayed delivery of those items to better accommodate the high degree of interest from our stakeholders in providing input to the design of the program guidance being developed.  We are making steady progress on those not yet completed.  Many of these first priority items involve interim steps, such as publication of Federal Register Notices for public comment 24 of which have been published by FTA to thus far.

Indeed, a key aspect of our implementation plan has involved getting input from our stakeholders.  We have held nearly 100 outreach events, ranging in size from a Webinar, conducted jointly with the American Public Transportation Association, with nearly 1,000 participants, to a series of five general outreach sessions conducted last December, at which about 700 people participated, a series of three outreach sessions focused on New Starts and Small Starts with nearly 500 participants, and two national outreach sessions focused on Tribal Transit with over 100 participants, to more targeted sessions at which small groups of 20 or 30 met to discuss specific program issues.

Let me also stress our efforts to include the Congress in our outreach process.  Over the last several months, we have provided periodic updates to the Congress on the status of our reauthorization implementation efforts and schedules.  Let me assure you of my commitment to continue to provide timely information to Congress on our work to implement all features of this important legislation.

Further, we have taken very seriously the changes made by SAFETEA-LU that calls for FTA to provide notice and an opportunity for comment on any FTA policy or guidance document that might produce a “binding obligation” on our grantees.  In implementing this provision, I am happy to report that FTA has developed a process that is fostering a healthy dialogue between FTA and our stakeholders.  While there may be additional time and steps involved because of this new notice and comment provision, comments received on our draft guidance and policy statements will allow us to assure that the documents are more complete, more responsive to stakeholder needs, and more likely to take account of on-the-ground realities.

Our recent experience with the New Starts Policy Guidance demonstrates how seriously we are taking the Notice and Comment process.  As I will discuss in more detail later, of the nine changes in New Starts procedures we proposed to take effect this year, three were adopted as originally proposed; three were modified to incorporate stakeholder comments; and three were either rejected or deferred pending further analysis.  This is a clear demonstration of FTA’s willingness to listen to our stakeholders, make changes when necessary, and even go back to the drawing board if the comments we receive make it clear that we need to do so. 

Status of Regulatory Actions

Now I would like to quickly review for you the status of some of the key regulatory actions we are taking in response to direction in SAFETEA-LU.  FTA has initiated rulemakings on Buy America and Charter Bus and joint rulemakings with other agencies on Security Grants, Metropolitan and Statewide Planning, and Section 4(f) of the DOT Act.  In general, I believe we are making good progress on our own rulemakings; however, progress on the joint rulemakings has been comparatively slower due to the additional complication of working with other agencies.

Buy America.  FTA issued its Notice of Proposed Rulemaking on Buy America on November 28, 2005.  The rulemaking covered the definition of microprocessor and end product and the standards for pre-award and post-delivery audits for small transit vehicle purchases, among other issues.  In response, we received comments indicating that the issues were more complex than originally thought.  As a result, we issued a Final Rule covering the non-controversial aspects of the rule, such as the pre-award and post-delivery audits, on March 21, 2006.  We now plan to issue another Notice of Proposed Rulemaking covering the remaining issues, including the definition of end product, by early fall.  In addition, FTA plans to hold a public hearing in Washington, D.C. to discuss the new proposal. 

Charter Bus.  As you know, SAFETEA-LU requires a Negotiated Rulemaking to develop proposed changes to FTA’s Charter Bus regulation.  This involves establishment of a formal Advisory Committee under the Federal Advisory Committee Act (FACA).  To do so, we published an initial Notice in the Federal Register on January 31, 2006 inviting comments on the proposed issues to be addressed and asking for nominations for membership on the Advisory Committee.  We published a Notice responding to these comments and announcing the members of the Advisory Committee on April 10, 2006.  The first meeting of the Committee was held on May 8 and 9, 2006, in Washington D.C.  The next meeting was held on June 19 and 20, 2006 and the next meeting is scheduled for July 17 and 18, 2006.   We expect to hold a series of meetings over the next several months.  The exact timing of the Notice of Proposed Rulemaking will depend on the deliberations of the Committee.

­Security Grants.  FTA and DHS are jointly finalizing a Notice of Proposed Rulemaking mandated by SAFETEA-LU that outlines requirements and characteristics of public transportation security grants, including funding priorities and eligible activities, methods for awarding these grants, and limits on administrative expenses.  It is anticipated that DHS will administer these grants and DOT will provide technical assistance on development of the application and eligibility process.  Also, as required by SAFETEA-LU, FTA and the Transportation Security Administration of DHS completed an Annex to the Memorandum of Understanding between DOT and DHS on transportation security on September 8, 2005.

Metropolitan and Statewide Planning.  SAFETEA-LU made a number of changes to the metropolitan and statewide transportation planning and programming process.  We have been working with FHWA, with whom FTA jointly administers these requirements, to implement these changes.  On September 2, 2005, we provided joint guidance on the initial changes, and a Notice of Proposed Rulemaking was published on June 9, 2006.  We expect to have the Final Rule in place by Spring 2007.

Section 4(f).  SAFETEA-LU also made a number of changes in the requirements for protections of parks and historical resources, commonly known as Section 4(f) [of the DOT Act].  We have submitted a Notice of Proposed Rulemaking on these changes, to the Office of Management and Budget for clearance and we expect to publish this it in July 2006.

New Programs and Program Guidance

In addition to the rulemaking required by SAFETEA-LU, FTA has been working to implement our new program structure, several new programs, and to change our program guidance to reflect the changes made in program requirements.  Among the most important are the New Starts and Small Starts Program, the New Freedom Program (and related changes to the Job Access and Reverse Commute program, and Elderly and Persons with Disabilities programs), the Alternative Transportation in Parks and Public Lands Program, the Tribal Transit Program, and the Public Private Partnership Pilot Program. 

New Program Structure.  One of our first tasks was to restructure our appropriations accounts to deal with the new program structure enacted in SAFETEA-LU.  I am pleased to say that FTA successfully restructured its accounts in accordance with SAFETEA-LU in time to award grants in FY 2006.  The new accounting structure will prevent the Mass Transit Account of the Highway Trust Fund from running out of money in FY 2007.   The enactment of a solely trust funded account and 3 separate General Fund accounts should ensure the solvency of the Mass Transit Account well beyond the current authorization period.  In fact, our estimates indicate that the Mass Transit Account should have a positive cash balance of over $6.9 billion at the end of FY 2009.

General Program Guidance.  Even before tackling the major program changes, and new programs, we decided that it was important to make sure that our continuing programs were allowed to proceed on an uninterrupted basis.  Thus, on November 30, 2005, we issued a Federal Register Notice outlining the changes in all our programs, and providing initial guidance on implementing these changes.  This allowed us to make grants in fiscal year 2006 to such programs as the Urbanized Formula Program, the Fixed Guideway Modernization Program, the Other than Urbanized (Rural) Formula Program, and our planning grants programs as soon as FY 2006 funds were appropriated.  We are now proceeding with revising our program guidance circulars on all of these programs to accommodate the changes that were made by SAFETEA-LU.

New Starts and Small Starts.  SAFETEA-LU made a number of changes to the criteria for evaluating New Starts projects, and of course, established the new program category, Small Starts, for projects with a total cost of under $250 million and a New Starts share of under $75 million.  Needless to say, this has generated a significant amount of interest by our stakeholders.  In addition, as we reviewed the Small Starts program as enacted, it became clear that there were a wide range of issues that needed to be addressed in some detail.  Further, SAFETEA-LU specifically required FTA to provide notice and comment on any changes in policy or procedures in the New Starts program early in calendar year 2006 and at least every two years thereafter.  Accordingly, on January 19, 2006, we issued a Notice of Proposed New Starts Policy Guidance in the Federal Register.  And on January 30, 2006, we issued an Advance Notice of Proposed Rulemaking (ANPRM) on Small Starts.  While we did not have to take the preliminary step of issuing an ANPRM on Small Starts, the wide range of issues that are posed by the program suggested that we take an opportunity to get stakeholder input before embarking on a more formal NPRM. 

The response to these publications suggests that this was a good idea.  We received over 70 written comments on the draft New Starts Policy Guidance and over 90 comments on the Small Starts ANPRM.  In response, on May 22, 2006, we published our final New Starts Policy Guidance and the FY 2008 Reporting Instructions for the New Starts criteria for submissions for the FY 2008 New Starts Report (submissions are due by June 30 for ridership and cost estimates and August 15 for financial plans).  As I described earlier, we made several modifications to the proposals for specific changes in FTA New Starts Policy made in the January 19, 2006 Federal Register Notice.  We believe that these changes will help make the process more effective in the short term and allow FTA to leave other major changes for later determination during the rulemaking process.

I would note that since coming to FTA, I have expressed my concerns about how long it takes and how much it costs to develop a New Starts project.  While we have been able to address some of these concerns in the New Starts Policy Guidance, I believe that we should systematically reassess all that FTA and our grantees must do to move a project to the finish line.  Accordingly, we have recently engaged a management-consulting firm to undertake a complete review of the New Starts project delivery process.  This quick but intensive effort will be undertaken in parallel with our development of the New Starts Notice of Proposed Rulemaking.

With respect to Small Starts, we have just published, on June 9, 2006, draft Interim Guidance that FTA and our grantees may use to develop and evaluate projects beginning this year until the Final Rule is in place.  We are aware that project sponsors are considering a large number of projects that may be eligible for funding under this program.  In fact, a recent survey by the American Public Transportation Association identified over 75 projects in various stages of project development.  Once we have received comments on the June 9 draft, FTA will modify the Interim Guidance and publish it later this summer in final form.  This will allow grantees to assess projects and submit them to us for possible funding during FY 2007 and inclusion in the fiscal year 2008 New Starts report.

We also plan to develop a single NPRM later this year, which would cover both New Starts and Small Starts.  Once comments are received, we would then be able to issue the Final Rule on both programs during 2007.  Given the large number of comments already received on these subjects, and the large amount of interest in these programs, we want to make sure that we, and our stakeholders, have sufficient time to think through the features that should be included in this rule.  The Interim Guidance on Small Starts and the Policy Guidance on New Starts should provide us with the tools needed to assure that the New Starts and Small Starts programs can be effectively executed even while the rulemaking process is underway.

New Freedom, Job Access and Reverse Commute and Elderly Individuals and Individuals with Disabilities Programs.  As you know, SAFETEA-LU established a New Freedom program for grants to provide improved public transit services to persons with disabilities, altered the Job Access and Reverse Commute (JARC) Program to make it a formula rather than discretionary program, and modified the program requirements of the Elderly Individuals and Individuals with Disabilities Program.  Taken together, these changes now provide FTA with a portfolio of interrelated programs designed to address certain essential transportation needs.  An important feature of all three programs is a new requirement for locally developed, coordinated public transit--human services transportation plans.  In addition, the New Freedom and JARC programs require selection of subrecipients on a competitive basis.  Finally, there are some complex eligibility questions, particularly with respect to the New Freedom program which is targeted to provide new public transportation service and alternative transportation services beyond those required by the Americans with Disabilities Act. 

Given the challenges involved in implementing all three programs, and the large amount of interest in them from a wide variety of stakeholders, FTA has undertaken an extensive process of outreach and public involvement.  This process began with the November 30, 2005 Federal Register Notice that outlined the broad parameters of these programs and asked for input on several key issues.  These issues were a major topic for discussion at the outreach sessions held around the country in December 2005 and subsequent meetings early in 2006.  The process culminated with a Federal Register Notice on March 15, 2006 that responded to the comments received on the broad issues outlined in the November 30, 2005 Notice, laid out interim guidance to allow the programs to proceed in FY 2006, and provided further detailed topics for comment with respect to the major issues identified in the comments already received.  FTA then held a major outreach meeting with over 150 participants on March 23, 2006 to discuss the issues in the Notice.  FTA also held public conference calls and began to receive and review comment.  While the comment period was originally set to end by April 21, 2006, FTA received a request for and granted an extension of the comment period through May 21, 2006.  We are reviewing the comments received, and are planning to issue final program guidance later this year.  In the meantime, the interim guidance included in the March 15, 2006 Notice is allowing each of these programs to be implemented during this fiscal year.  The March 15th Federal Register Notice also included proposed strategies for implementation of the programs beginning in FY 2007.

Alternative Transportation in Parks and Public Lands.  SAFETEA-LU established a new discretionary program, to be administered in concert with the Department of the Interior, for alternative transportation in federally-managed parks and public lands.  FTA has been working closely with the Department of Interior and its National Park Service, its Fish and Wildlife Service and its Bureau of Land Management, and the Department of Agriculture’s U.S. Forest Service on implementation of this program.  We have established an inter-agency team with representatives of these organizations.  This group has worked to develop the details of the program and a proposed Memorandum of Agreement between the Departments of Transportation and the Interior.  In addition, the working group developed a Notice of Funding Availability that was published in the Federal Register on March 23, 2006.  This Notice laid out the parameters of the program, and invited proposals for projects for FY 2006 funding.  Proposals were due on May 5, 2006.  Representatives of the participating agencies have been reviewing the proposals and are preparing a final program of projects for funding.  We expect to award these funds later this fiscal year.

Grants to Native American Tribes.  SAFETEA-LU establishes a new program for direct grants to Native American Tribes for public transportation within our Section 5311 program of grants to other-than-urbanized areas (the “Rural Program”).  As you know, prior to passage of SAFETEA-LU, Native American Tribes were eligible to receive funding for transit projects, including projects located on reservations, but only through the States.  This new program sets up a direct relationship between FTA and tribal governments.  We have been working hard to implement this new program.  In the November 30, 2005 Notice, we stated our basic intentions for this program and solicited comment.  At the general outreach sessions held in five cities around the country in December 2005, we received a good deal of comment.  We also had numerous discussions with interested parties on this program during January and February of this year.  Having considered these initial comments, we then issued a Notice proposing specific program details on March 22, 2006.  In that Notice we asked for comments on a number of disparate issues.  We also held a series of public meetings at which tribal governments, and other interested parties, have discussed these subjects with us.  The comment period on that Notice has now closed and we are reviewing the comments.  We hope to issue a final Notice of Funding Availability shortly that will outline program administration details and request applications for funding.  We expect to be able to announce project selections by the end of this fiscal year.

Public Private Partnership Pilot Program.  SAFETEA-LU establishes a Pilot Program to assess the benefits of public private partnerships for delivery and management of major transit investments.  However, the language of the legislation is very broad.  Accordingly, on March 22, 2006, we issued a Notice asking for suggestions and proposals on how FTA might design the program; posing a series of specific questions on the concept of public private partnerships and how they might relate to transit projects and FTA program requirements; and requesting statements of interest for potential participants in the program.  The comment period, and period for initial statements of interest, closed on June 1, 2006.  FTA is quite excited by the concept of public private partnerships, and believes there are significant lessons to be learned by considering how it might be applied to our programs.  We received 19 comments providing useful input on the issues raised, and 4 candidate projects.  We are now reviewing the comments and proposals, and will determine how to respond shortly.

Conclusion

Mr. Chairman, and Members of the Committee, I believe you will agree that FTA is making excellent progress in implementing SAFETEA-LU.  You have my commitment that we will work hard to sustain this record of achievement in the coming months.  I would be happy to answer any questions you might have.

Statement of

Sandra Bushue
Deputy Administrator
Federal Transit Administration
U.S. Department of Transportation

Before the

Committee on Banking, Housing, and Urban Affairs
United States Senate

Hearing on

The Federal Transit Administration FY 2007 Budget

February 28, 2006

Thank you, Mr. Chairman, for the opportunity to testify today on the Federal Transit Administration’s fiscal year (FY) 2007 budget request.  We appreciate your continued interest and strong commitment to public transportation as embodied in the Safe, Accountable, Flexible, Efficient Transportation Equity Act:  A Legacy for Users (SAFETEA-LU) enacted by Congress and signed by the President on August 10, 2005.

I am pleased to report to the committee that the President’s FY 2007 budget for transit is a record $8.9 billion.  This is a significant commitment given the overall context of the President’s FY 2007 budget.  At a time when most non-security related domestic programs are experiencing reductions in their funding levels and when the Department of Transportation’s total budget is holding steady, funding for transit in this budget grows by more than 4 percent or $370 million above the FY 2006 level.  This shows the high priority this Administration puts on funding public transportation among many competing national priorities.  

Top FY 2007 Priorities

            Since my recent arrival, I have been impressed with the energy and dedication of FTA’s staff.  Thus I want to take this opportunity to focus on FTA’s top priorities. They include:

• Effective and timely implementation of SAFETEA-LU
• Effective management and oversight of almost $8.9 billion in formula and capital investment grants, especially New Starts full funding grant agreements
• Improved coordination of human services transportation for disabled persons, older adults and individuals with lower incomes
• Continued work with the Department of Homeland Security to strengthen transit security, including training, emergency preparedness and public awareness
• Use of performance information and program assessments to better manage risk and drive agency results, and
• Attracting and retaining the best workforce with the skill-set to meet the challenges facing the agency

SAFETEA-LU Implementation

SAFETEA-LU authorizes a total of $45.3 billion in guaranteed funding for Federal transit programs over the five-year period FYs 2005 - 2009, an increase of 46 percent over TEA‑21 funding.  In addition to historic funding levels, SAFETEA-LU added new programs such as New Freedom and Alternative Transportation in the Parks and Public Lands that began in FY 2006, and modified other programs.  SAFETEA‑LU also required that FTA promulgate about a dozen new regulations for joint planning requirements, New Starts (including the Small Starts program), Buy America, Charter Bus, and a joint rulemaking on security with the Department of Homeland Security.

Since the President signed SAFETEA-LU in August 2005, FTA has worked diligently to implement the many changes and requirements.  FTA has demonstrated progress with an aggressive schedule to meet the requirements in SAFETEA-LU and facilitate program implementation.  In the early months following enactment, FTA signed the Memorandum of Understanding Annex with the Department of Homeland Security, published interim FY 2006 transit program guidance for public comment, and initiated a communications and outreach strategy that included publishing informational materials on its web site and hosting several dozen listening sessions to solicit public and industry input on its program proposals. 

Since January, FTA has worked to publish for public comment in the Federal Register New Starts Policy Guidance, an Advance Notice of Proposed Rulemaking on the Small Starts program, and a Notice of Proposed Rulemaking on Buy America.  FTA will continue its aggressive implementation of SAFETEA-LU and will hold additional listening and outreach sessions to obtain public input for agency consideration as it develops circulars and guidance for official comment.

FY 2007 Budget Request

Now I would like to touch on some of the highlights of the President’s FY 2007 budget for the FTA.  The budget reflects the Administration’s commitment to public transportation as envisioned in SAFETEA-LU.

Urbanized Area Programs

In FY 2007, $7.3 billion is requested in a solely trust-funded account for Formula and Bus Grants.  This includes $3.9 billion for the Urbanized Area Formula Grants Program, including Growing States and High Density States and $1.4 billion for the Fixed Guideway Modernization Program to ensure that the Nation’s older fixed guideway systems continue to meet the transportation needs of the communities they serve.

Formula Grants funding can be used for all capital transit purposes and, in areas under 200,000 in population, for operating assistance.  Eligible capital expenses include: planning, bus, van, railcar, intelligent transportation systems (ITS), and equipment purchases; facility repair and construction, new technology introduction, and preventive maintenance.    These funds help public transit agencies reduce congestion, ensure basic mobility, promote economically vital communities and meet the requirements of the Americans with Disabilities Act (ADA) and the Clean Air Act (CAA).

Bus and Bus-Facilities

FTA requests $856 million for bus and bus-related capital projects that enhance the efficiency and safety of the nation’s bus systems.  In FY 2007, FTA is proposing a clean fuels and electric drive bus deployment (hybrid-electric) program to encourage and provide incentives to transit agencies to procure low emission technology buses, including hybrid electric buses.  The FTA hybrid-electric program will develop a comprehensive approach to addressing existing barriers and challenges to the adoption and deployment of new low emission technology by a greater number of the Nation’s transit agencies. 

State Administered Grants

The important goal of improving mobility for the elderly, persons with disabilities, and individuals with low-incomes requires more flexibility and fewer funding constraints on communities.  FTA’s budget requests $809 million for several transit programs administered primarily by States.  For the Nonurbanized Area Formula program, $467 million may be used to support intercity bus service as well as to help meet rural and small urban areas’ transit needs and includes funding for the new Growing States program.  A total of $117 million in formula grants for the Elderly and Individuals with Disabilities program will be apportioned to each State according to a legislatively required formula to assist in providing transportation to the elderly and individuals with disabilities.  The budget includes $144 million for the Job Access and Reverse Commute program apportioned to States by formula for grants to non-profit organizations and local transit agencies to support transportation services for welfare recipients and low-income individuals.  Funding for the New Freedom program totals $81 million and will provide additional support to overcome the significant transportation barriers facing millions of Americans with disabilities seeking access to jobs and integration into the workforce.

Metropolitan and Statewide Planning

In FY 2007, FTA requests a total of $99 million for Metropolitan and Statewide Planning.  Funding will support implementation of the expanded analytic, environmental, transportation air-quality conformity, and evaluative work necessary to ensure that Federal and other transportation investments are cost-effective.  Metropolitan Planning Organizations (MPOs) and State departments of transportation use these funds for planning activities that support over $8 billion in annual capital transit projects located in all 50 States, Puerto Rico, and the District of Columbia.  These funds also support planning activities for FTA capital grants that will be made to rural transit operators and tribal governments.  Both the FTA and the Federal Highway Administration (FHWA) carry out statutory planning requirements through Metropolitan Planning Organizations, State DOT’s, and transit operators as a condition of Federal assistance for most mass transportation and highway projects.  

Alternative Transportation in Parks and PublicLands

For FY 2007, $23 million is requested to enhance the protection of America’s national parks and public lands by improving the experience of those visiting our national parks, while ensuring transportation access and mobility for all visitors, including individuals with disabilities.  FTA is working with the Department of the Interior and the U.S. Forest Service to implement this new program.  Investment in alternative transportation solutions in our national parks and public lands has many benefits, such as relieving traffic congestion and parking shortages, enhancing visitor mobility, accessibility, and safety, enhancing mobility and safety for local residents, conserving sensitive natural, cultural, and historic resources, and reducing pollution.

Clean Fuels Grant Program

The Clean Fuels Grant program is requested at $45 million to provide financing for the purchase or lease of clean fuel buses and facilities and the improvement of existing facilities to accommodate these buses.  This includes buses powered by compressed natural gas, biodiesel fuels, batteries, alcohol-based fuels, hybrid electric technology, fuel cell and certain clean diesel fuels (up to 2 percent of grants annually), and other low or zero emissions technology.

Major Capital Investments

The budget requests almost $1.5 billion for the New Starts program.  New Starts projects help improve mobility, reduce congestion and pollution, and promote new economic activity throughout the Nation.  The $1.5 billion fully funds the Federal commitment included in 16 existing full funding grant agreements (FFGAs) with transit agencies.  Funding also supports two FFGAs that we expect to sign before the end of FY 2006, one in Pittsburgh and one in New York City.

I am also pleased that five new projects have made it to the New Starts finish line and are ready for FFGAs.  These projects include three light rail transit projects in Denver, Portland and Dallas.  In addition, commuter rail projects in Washington County, Oregon and Salt Lake City are also ready for FFGAs.

I want to share with the committee our plans for implementing the new “Small Starts” program in FY 2007.  This program will provide Federal Small Starts funding up to $75 million for projects under $250 million in total cost.  We are very excited about this new program.  It is a program we recommended to Congress because it levels the playing field for medium and small communities. 

We know from several listening sessions we have held that communities across the country are interested in this new program and how it will work.  Last month, we published in the Federal Register for public comment an Advance Notice of Proposed Rulemaking on the evaluation criteria and other requirements.  Final regulations are not expected until June of 2007.  Given all the work ahead of us and the strong interest by communities to help develop the program requirements, we believe that $100 million will provide a sound first investment for a program we are committed to implement during FY 2007.

Project Oversight

FTA remains committed to ensuring the completion of New Starts projects on time and on budget.  Our successful oversight program works with transit agencies to identify potential problems before they grow into major crises.  The DOT Inspector General has reported that FTA’s oversight program is “essentially a sound approach that can provide early warnings of cost, schedule, and quality problems.”

One tool we use to help ensure that projects meet their cost, schedule and transportation benefit expectations is a quantitative risk assessment.  These risk assessments help project sponsors identify the issues that could affect schedule or cost, as well as the probability that they will do so.  Utilizing the risk assessment tool, every project sponsor is required to: identify the project’s key cost drivers; identify, quantify, and prioritize based on impact and probability the risks associated with potential cost increases and schedule delays; and develop contingency levels and risk mitigation plans sufficient to assure confidence in the project cost estimates.

Research and University Research Centers

In 2007, $61 million is requested for the National Research and Technology program, Transit Cooperative Research Program, the National Transit Institute and University Research Centers.  Of this amount, $40 million is requested for the National Research and Technology program.  These funds support the goals of FTA’s Strategic Transit Research Plan developed in consultation with the transit industry.  The budget includes $9.3 million for the Transit Cooperative Research Program (TCRP), which focuses on issues significant to the transit industry.  The budget requests $4.3 million for the National Transit Institute (NTI) and $7 million for University Research Centers that provide continued support for research, education, and technology transfer activities aimed at addressing regional and national transportation problems.

Administrative Expenses

FTA is requesting $85 million in administrative expenses to help ensure it can effectively and efficiently fulfill its mission.  This request supports 14 additional full time equivalent (FTE) personnel for a total of 531 FTEs, information technology, space management, travel, training, and other related administrative expenses.

New requirements and program changes must be supported with higher staffing levels if FTA is to be effective and timely in implementing SAFETEA-LU.  The law creates a number of new programs such as Small Starts, Transit in the Parks, and New Freedom, and requires that regulations be developed and published in the Federal Register for New Starts, Buy America, security, and Charter Bus.  In addition, significant outreach efforts are needed in order to provide other Federal and State agencies, public transit agencies, the transit industry and the transit riding public with information on changes in statute, policies and procedures, guidance and technical assistance. 

Transit Security

The security of our public transportation system remains a high priority of this Administration and the Department and our budget includes $42 million to support security, within which is the one percent set aside from urban formula grants to fund public transportation security projects.  Transit agencies across America have strengthened their security systems and enhanced their emergency response plans, and FTA has placed a high priority on increasing the security of our public transportation systems and ensuring that they are prepared for security threats and emergency situations.

Working with the Department of Homeland Security, FTA has identified three priority areas with regard to security: 1) training transit employees to deter, detect, mitigate and respond to a variety of emergency scenarios; 2) ensuring that local agencies have emergency plans in place and routinely practice them; and, 3) increasing public awareness, so that passengers can identify suspicious or unusual behavior, communicate with transit officials, and exit safely in the event of an emergency. 

Enhanced Coordination of Human Service Transportation   

In response to the recommendations of the President’s Council on Access and Mobility, and in accordance with the President’s Executive Order 13330, FTA implemented United We Ride, a five-part nationwide initiative to improve transportation services for people with disabilities, individuals with low incomes, and older adults.  The initiative to improve the coordination of human services transportation includes: 1) publication of “A Framework for Action”-- a self-assessment tool that States and communities can use to identify areas of success and the actions still needed to improve the coordination of human service transportation; 2) recognition of leadership -- in February 2004, Secretary Mineta recognized five States -- Ohio, North Carolina, Washington, Florida, and Maryland that are leading the way in building and implementing infrastructures, policies and programs that facilitate human service transportation coordination; 3) holding a National Leadership Forum -- Governor-appointed senior leadership teams from 47 States and U.S. territories met to raise the visibility of the need to improve human service transportation coordination among State leaders, provide technical assistance, and secure commitments to action; 4) providing grants -- $1.5 million to address gaps and needs related to human service transportation in their geographic regions; and 5) providing technical assistance -- “Help Along the Way” was launched that built on the work of the Community Transportation Assistance Program, the Rural Transportation Assistance Program, and Easter Seals Project ACTION.

            Mr. Chairman, we look forward to working with this Committee in support of public transportation in our great country.  Thank you again for the opportunity to testify on the FY 2007 budget request and other issues important to us.  I would be happy to respond to questions from the Committee.

Written Statement of

Joseph H. Boardman,
Administrator,
Federal Railroad Administration,
U.S. Department of Transportation,

before the

Subcommittee on Railroads,
Committee on Transportation and Infrastructure,
U.S. House of Representatives

June 27, 2006

              Chairman LaTourette, Ranking Member Brown, and other members of the Subcommittee, I am very pleased to be here today to testify, on behalf of the Secretary of Transportation, about the Federal Railroad Administration’s (FRA) current safety regulations and rulemaking proceedings.  My testimony will begin with an overview of how FRA is working daily to reduce both the number and the severity of railroad accidents.  My testimony will then highlight the plan announced by the Secretary and FRA in May 2005, the National Rail Safety Action Plan, and FRA’s real and substantial progress in bringing it to fruition, with special emphasis on safety rulemakings called for by the plan.  Finally, I will touch on FRA’s additional, new, passenger-safety rulemakings and other initiatives.

FRA’s Railroad Safety Program

      FRA is the agency of the U.S. Department of Transportation (DOT) charged with carrying out the Federal railroad safety laws.  These laws provide FRA, as the Secretary’s delegate, with very broad authority over “every area of railroad safety.”  49 U.S.C. 20103(a).  In exercising that authority, the agency has issued a wide range of safety regulations, which cover such topics as track, passenger equipment, locomotives, freight cars, power brakes, locomotive event recorders, signal and train control systems, maintenance of active warning devices at highway-rail grade crossings, accident reporting, alcohol and drug testing, protection of roadway workers, operating rules and practices, locomotive engineer certification, positive train control, and use of train horns at grade crossings.  FRA currently has active rulemaking projects on a number of important safety topics, many of which will be described later in this testimony.  In addition, FRA enforces in the rail mode of transportation the Hazardous Materials Regulations, which are promulgated by DOT’s Pipeline and Hazardous Materials Safety Administration (PHMSA).

              FRA has an authorized inspection staff of about 400 persons nationwide, distributed across its eight regions.  In addition, about 160 inspectors employed by the approximately 30 States that participate in FRA’s State participation program inspect for compliance with the rail safety laws.  Each inspector is an expert in one of five safety disciplines: Track; Signal and Train Control; Motive Power and Equipment; Operating Practices; or Hazardous Materials.  In addition, FRA has 16 highway-rail grade crossing experts in the field.  Every year FRA’s inspectors conduct thousands of inspections, investigate more than 100 railroad accidents, investigate hundreds of complaints, develop recommendations for thousands of enforcement actions, and engage in a range of educational activities on railroad safety issues, including educating the public about highway-rail grade crossing safety and the dangers of trespassing on railroad property.  FRA closely tracks the railroad industry’s safety performance, and the agency uses this information to guide its accident prevention efforts and to strive continually to make better use of the wealth of available data to achieve the agency’s mission.  FRA also sponsors collaborative research with the railroad industry to introduce innovative technologies to improve railroad safety.  Finally, under the leadership of the U.S. Department of Homeland Security, FRA plays a supportive role in the Federal rail security effort.

The National Rail Safety Action Plan

              As detailed in the appendix to my testimony, the railroad industry’s overall safety record has improved during recent decades, and most safety trends are moving in the right direction.  However, significant train accidents continue to occur, and the train accident rate has not shown substantive improvement in recent years.  Moreover, several major freight and passenger train accidents in 2004 and 2005 (such as those at Macdona, Texas; Graniteville, South Carolina; and Glendale, California) have raised public awareness and specific concerns about railroad safety issues deserving government and industry attention. 

              On May 16, 2005, DOT and FRA launched an aggressive and ambitious National Rail Safety Action Plan to address these safety issues with the following strategy:

•      Target the most frequent, highest-risk causes of train accidents;
•      Focus FRA’s oversight and inspection resources more precisely; and
•      Accelerate research efforts that have the potential to mitigate the largest risks.

The Action Plan includes initiatives intended to-- 

•      Reduce train accidents caused by human factors;
•      Improve track safety;
•      Enhance hazardous materials safety and emergency preparedness;
•      Better focus FRA resources (inspections and enforcement) on areas of greatest safety concern; and
•      Improve highway-rail grade crossing safety.

              The causes of train accidents are generally grouped into five categories: human factors; track and structures; equipment; signal and train control; and miscellaneous.  In the five years from 2001 through 2005, the great majority of train accidents resulted from human factor causes or track causes.  In recent years, most of the serious events involving train collisions or derailments resulting in release of hazardous material, or harm to rail passengers, have resulted from human factor or track causes.  Accordingly, human factors and track are the major target areas for improving the train accident rate.

Reducing Train Accidents Caused by Human Factors

              Development of Rulemaking to Address Leading Causes of Human Factor Accidents

              Accidents caused by human factors constitute the largest category of train accidents, accounting for 37 percent of all train accidents over the last five years.  Some human factors are addressed squarely by FRA regulations.  For example, FRA’s regulations on alcohol and drug use by operating employees were the first such standards in American industry to incorporate chemical testing, and they have been very successful in reducing accidents resulting from substance abuse.  FRA also has regulations on locomotive engineer certification, and FRA  enforces the hours of service restrictions, which are wholly governed by statute.  However, FRA has been concerned that several of the leading causes of human factor accidents are not presently covered by any specific Federal rule, and they can have serious consequences.  These leading causes include improperly lined track switches, leaving cars in a position that obstructs a track, and shoving rail cars without a person on the front of the move to monitor conditions ahead. 

              In May 2005, FRA asked its Railroad Safety Advisory Committee (RSAC) to develop recommendations for a new human factors rule to address the leading causes of human factor accidents.  In February 2006, RSAC reported that good progress on a number of issues had been made; however, it was unable to reach a consensus recommendation.  FRA thanked the members of RSAC for the guidance provided and has drafted a notice of proposed rulemaking targeted for publication later this year.  As discussed in the RSAC, this regulation will address core railroad operating rules governing the handling of track switches, leaving cars in the clear, and “protecting the point” of shoving movements. 

              Meanwhile, in response to an increasing number of train accidents caused by hand-operated, main track switches in non-signaled territory being left in the wrong position and the potential for catastrophic accidents, FRA took action by issuing Emergency Order No. 24 in October 2005.  This emergency order itself followed FRA’s issuance of Safety Advisory 2005-01 in January 2005, immediately after an accident in Graniteville, South Carolina, which resulted in nine deaths from the breach of a tank car containing chlorine.  The National Transportation Safety Board (NTSB) determined the probable cause of the Graniteville accident was the failure of a Norfolk Southern Railway Company train crew to return a main line switch to its normal position.  Hours later, the next train to traverse the main track was misdirected onto the wrong track, where it collided with a standing train.  This emergency order mandates that railroads retrain and periodically test employees on switch operating procedures and that railroads require increased communication among crewmembers and dispatchers regarding the proper positioning and locking of this type of switch.  A switch position awareness form must be maintained by each employee operating a switch to record when the switch was operated and when it was returned to the normal position (i.e., typically lined for the main track).  This emergency order is expected to remain in place until a final rule addressing the major causes of human factor accidents is promulgated and becomes effective.

              Launch of “Close Call” Pilot Research Project

              “Close calls” are unsafe events that do not result in a reportable accident but could have done so.  FRA is working to better understand these phenomena.  In March 2005, FRA completed an overarching Memorandum of Understanding (MOU) with railroad labor organizations and management to develop pilot programs to document the occurrence of close calls.  In other industries, such as aviation, adoption of close-call reporting systems that shield the reporting employee from discipline (and the employer from punitive regulatory sanctions) has contributed to major reductions in accidents.  In August 2005, FRA and DOT’s Bureau of Transportation Statistics (BTS) entered into an MOU stipulating that BTS will act as a neutral party to receive the close-call reports and maintain the confidentiality of the person making the report.  In October 2005, a contract to evaluate the close-call data was awarded to Altarum Institute of Alexandria, Virginia.  Four railroads have expressed interest in taking part in this project.  Educational efforts are under way to ensure that key stakeholders (local rail management and labor) at each potential site understand the purpose of the program and what would be required of them.  Specifically, participating railroads will be expected to develop corrective actions to address the problems that may be revealed.  Aggregated data from these projects may also provide guidance for program development at the national level.  An Implementing MOU involving the first site is under discussion, and data collection is expected to begin in the near future.

              Identification of Technology to Improve Safety in Dark (Non-signaled) Track Territory

              As previously mentioned, a leading cause of human factor train accidents is track switches that are improperly lined.  A track switch that is improperly lined can divert a train onto the wrong track.  An improperly lined track switch located on the main line in dark (non-signaled) territory led to the Graniteville accident. 

              In November 2005, FRA partnered with BNSF Railway Company in a $1 million Switch Point Monitoring System pilot project.  The main objective of the project is to develop a low-cost system that electronically monitors, detects, and reports a misaligned switch on the main line track located in dark territory.  Switch position monitoring units are now in place at 49 switch locations on the railroad’s Avard Subdivision in Oklahoma.  If a switch is left other than in the normal position, the dispatcher at the railroad’s operations center is alerted, and corrective action is taken to protect train movements.  A final report is expected in August 2006.  Along with the planned human factor rule, this new switch monitoring system may prevent future train accidents such as the one at Graniteville.

              Addressing Fatigue

              Fatigue has long been a fact of life for many railroad operating employees, given their long and often unpredictable work hours and fluctuating schedules.  Train crews may legally work an enormous number of hours in a week, month, or year.  While commuter train crews often have some predictability in their work schedules, crews of freight trains rarely do.  The long hours, irregular work/rest cycles, and lack of regular days off combine to have a very deleterious effect on employee alertness.  Railroads are necessarily 24-hour businesses, and the effects of “circadian rhythms” challenge the alertness of even well-rested employees, particularly in the early morning hours.  The hours of service law, originally enacted in 1907 and last substantially amended in 1969, sets certain maximum on-duty periods (generally 12 hours for operating employees) and minimum off-duty periods (generally 8 hours, or if the employee has worked 12 consecutive hours, a 10-hour off-duty period is required).  However, the limitations in that law, although ordinarily observed, do not seem adequate to effectively control fatigue.  Given the statutory nature of these parameters, however, FRA is not free to change them by rule. 

              FRA’s knowledge of industry employee work patterns and the developing science of fatigue mitigation, combined with certain NTSB investigations indicating employee fatigue as a major factor, have persuaded FRA that fatigue is very likely at least a contributing factor in a significant number of train accidents and other railroad accidents caused by human factors.  However, FRA’s accident/incident data base rarely shows an occurrence as being the result of an employee’s having fallen asleep, since making that determination after an event is very difficult.  To obtain better information on the subject, FRA revised its own accident investigation procedures in 2004 so that FRA inspectors collect information on employees’ sleep/rest cycles and evaluate fatigue as a factor. 

              As identified in the Action Plan, FRA is conducting applied research aimed at validating and calibrating a fatigue model that can be used to more precisely determine the role of fatigue in human factor-caused accidents and improve crew scheduling practices by evaluating the potential for fatigue given actual crew management practices.  When the model is properly validated, it will be made available to railroads and their employees as the foundation for developing crew scheduling practices based on the best current science.  A final report is targeted for release in August 2006.

Improving Track Safety

              Track-caused accidents are the second-largest category of train accidents, comprising 34 percent of all train accidents over the last five years.  Some of the leading causes of track-caused accidents are very difficult to detect during normal railroad inspections.  Broken joint bars, for example, are a leading cause, but the kinds of cracks in those bars that foreshadow a derailment-causing break are very hard to spot with the naked eye.  Similarly, broken rails account for some of the most serious accidents, but the internal rail flaws that lead to many of those breaks can be detected only by specialized equipment. 

              Demonstration of New Technology to Detect Cracks in Joint Bars

              FRA is developing an automated, high-resolution video inspection system for joint bars that can be deployed on a hi-rail vehicle to detect visual cracks in joint bars without having to stop the vehicle.  In October 2005, a prototype system that inspects joint bars on both sides of each rail was successfully demonstrated.  Testing showed that the high-resolution video system detected cracks that were missed by the traditional visual inspections.  In 2006, the system is being enhanced with new developments to improve the reliability of joint bar detection and to add capabilities to include the Global Positioning System coordinates for each joint to facilitate future inspection and identification.  Additionally, software is being developed and tested to scan the images automatically, detect the cracked joint bar, and then send a message to the operator with an image of the broken joint bar.

              Requirements for Enhanced Capability and Procedures to Detect Track Defects

              FRA is also addressing joint bar cracks on the regulatory front.  On November 2, 2005, FRA published an interim final rule (IFR) requiring track owners to develop and implement a procedure for the detailed inspection of rail joints in continuous welded rail (CWR) track.  Among other things, track owners must perform visual, on-foot, periodic inspections of joints in CWR track and keep records of these inspections.  Further, track owners are required to identify joint bar cracks as well as to inspect for joint conditions that can lead to the development of these cracks.  Based on the data that FRA will collect through implementation of this rule, FRA will establish a program to review data on cracks in joint bars.  Finally, the IFR encourages railroads to develop and adopt automated methods to improve the inspection of rail joints in CWR track.  This rulemaking is a direct result of a Congressional mandate in the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) and of NTSB recommendations arising out of various accidents involving cracked joint bars.  Currently, FRA is reviewing public comments about this IFR in conjunction with the RSAC, and anticipates issuing a final rule later this year.

              Deployment of  Two Additional Automated Track Inspection Vehicles

              Subtle track geometry defects, such as rails being uneven or too wide apart, are difficult to identify during a typical walking or hi-rail inspection.  That is why FRA has developed automated track inspection and research vehicles to improve the ability to identify problems, and ensure they are repaired, before a train accident occurs.  In May 2005, FRA added the T-18 vehicle to its fleet.  Two more inspection vehicles with similar technology are currently being constructed (one that is self-propelled and one that is towed).  They are expected to be delivered in September 2006 and January 2007.  Once fully operational, they will allow FRA to inspect nearly 100,000 track-miles each year, three times as many as FRA currently inspects.  This additional capability will permit FRA to inspect more miles of major hazardous materials and passenger routes, while also having the ability to follow up more quickly on routes where safety performance is substandard.

Improving Hazardous Materials Safety and Emergency Response Capability

              The railroad industry’s record on transporting hazardous materials is very good.  The industry transports nearly two million shipments of hazardous materials annually, ordinarily without incident.  However, the Graniteville accident in 2005, which alone involved nine deaths as the result of a chlorine release, demonstrates the potential for serious consequences from train accidents.  The agency is actively engaged in a variety of activities intended to reduce the likelihood that a tank car may be breached if an accident does occur, complementing our effort to reduce the likelihood of train accidents.  Realizing that we cannot prevent all accidents, FRA has developed initiatives to ensure that emergency responders will be fully prepared to minimize the loss of life and damage when an accident or release does occur. 

Ensuring Emergency Responders Have Access to Key Information About Hazardous Materials Transported by Rail

              Emergency responders presently have access to a wide variety of information regarding hazardous materials transported by rail.  Railroads and hazardous materials shippers are currently subject to the hazard-communication requirements of the Hazardous Materials Regulations.  In addition, these industries work through the American Chemistry Council’s Transcaer® (Transportation Community Awareness and Emergency Response) program to familiarize local emergency responders with railroad equipment and product characteristics.  PHMSA publishes the Emergency Response Guidebook, with the intention that it may be found in virtually every fire and police vehicle in the United States.

              In March 2005, with FRA encouragement, the Association of American Railroads (AAR) amended its Recommended Operating Practices for Transportation of Hazardous Materials (Circular No. OT-55-H) to expressly provide that local emergency responders, upon written request, will be provided with a ranked listing of the top 25 hazardous materials transported by rail through their community.  This is an important step to allow emergency responders to plan, and better focus their training, for the type of rail-related hazardous materials incident that they could potentially encounter.

              In July 2005, again with FRA encouragement, CSX Transportation, Inc. (CSX), and CHEMTREC (the chemical industry’s 24-hour resource center for emergency responders) entered into an agreement to conduct a pilot project to see if key information about hazardous materials on the train could be more quickly and accurately provided to first responders in the crucial first minutes of an accident or incident.  The project is designed so that if an actual hazardous material rail accident or incident occurs, CHEMTREC watchstanders, who interact with emergency response personnel, will have immediate access to CSX computer files regarding the specific train, including the type of hazardous materials being carried and their exact position in the train consist.  FRA is also working through the AAR to encourage the other major railroads to participate in a similar project.

              Improving Tank Car Integrity through Research and Development

              Prior to the August 2005 enactment of Section 9005 of SAFETEA-LU, FRA had initiated tank car structural integrity research stemming from the circumstances of the 2002 Minot, North Dakota, derailment, which resulted in one death from the release of anhydrous ammonia from a  punctured tank car.  FRA, in collaboration with the railroad industry through the AAR Tank Car Committee, is conducting research involving three major activities:  (1) modeling of dynamic forces acting on tank cars in accidents and assessing the subsequent damage; (2) material testing to determine fracture behavior of tank car steels; and (3) risk ranking to prioritize the tank cars that are perceived to be most vulnerable to catastrophic failure.  DOT’s Volpe National Transportation Systems Center is doing the modeling work now, and FRA will dovetail this ongoing research with the requirements of Section 9005.  The research was originally scheduled to be finished in 2008, and FRA has provided an additional $400,000 to move the target completion date forward to August 2007.  This research will help provide the critical information necessary to guide an FRA rulemaking, also mandated by Section 9005, that will address the design of pressurized tank cars. 

              The first project, modeling of dynamic forces in train accidents, is ongoing and will assess items including train makeup, train speed, configuration of rail car pileup, the effect of having different types of impacting objects (i.e., couplers and wheels) strike different parts of various tank car models, and the effect of various levels of pressurization, among other elements.  It is expected to be completed in August 2007. 

              The second project, material testing for dynamic fracture toughness, is testing the amount of stress required to propagate an existing flaw on the tank car steel and evaluating the ability of the steel to resist fracture.  Researchers are testing 34 steel samples from tank cars, which have been sorted according to the decade in which they were manufactured (e.g., 1960s, 1970s, and 1980s).  In February 2006, actual testing of the samples began at the Southwest Research Institute laboratories located in San Antonio, Texas.  Testing is expected to be completed in August 2006.

              The third project, ranking the vulnerability of hazardous materials tank cars to catastrophic failure, represents the end purpose of this research.  Risk is a complex concept, and  the methods used to rank the factors that affect risk vary in complexity.  Preliminary low-level analyses are ongoing.  Higher-level analysis can be conducted after the research on dynamic forces and testing for fracture toughness have been completed.  The final hazardous materials tank car risk analysis is expected to be completed by September 2007.

              In addition, FRA intends to evaluate an explosive-resistant coating that is being used to enhance the armor protection of military vehicles in Iraq for potential use on tank cars to reduce the likelihood of puncture.  The material also has a self-sealing property that could be useful to seal a hole in a tank car and mitigate the severity of incidents. 

Strengthening FRA’s Safety Compliance Program

              FRA continually seeks ways to direct its inspection and enforcement efforts toward the issues and locations most in need of attention.  To this end, FRA instituted the National Inspection Plan (NIP), an inspection and allocation program that uses predictive indicators to assist FRA in allocating inspection and enforcement activities within a given region by railroad and by State.  In essence, it makes use of existing inspection and accident data in such a way as to identify potential safety “hot spots” so they can be corrected before a serious accident occurs.  In April 2005, Operating Practices, Track, and Motive Power and Equipment became the first FRA safety disciplines to use the NIP since, combined, the corresponding accident causes (human factors, track, and motive power and equipment) account for about 84 percent of all train accidents.  This was followed by the Signal and Train Control and Hazardous Materials disciplines in March 2006.  A reduction in both the number and the rate of train accidents is expected once the NIP has had time to take its full effect and FRA refines its application in response to actual experience.

Fostering Further Improvements in Highway-Rail Grade Crossing Safety

              Deaths in highway-rail grade crossing accidents are the second-leading category of fatalities associated with railroading.   (Trespasser fatalities are the leading category.)  The number of grade crossing deaths has declined substantially and steadily in recent years.  However, the growth in rail and motor vehicle traffic continues to present challenges.

              Issuance of Safety Advisory 2005-03

              In May 2005, FRA issued Safety Advisory 2005-03, which describes the roles of the Federal and State governments and of the railroads in grade crossing safety.  It also specifically reminds railroads of their responsibilities to report properly to FRA any accident involving a grade crossing signal failure; to maintain records relating to credible reports of grade crossing warning system malfunctions; to preserve the data from all locomotive-mounted recording devices following grade crossing accidents; and to cooperate fully with local law enforcement authorities during their investigations of such accidents.  FRA also offers assistance to local authorities in the investigation of crossing accidents where information or expertise within FRA control is required to complete the investigation.  FRA has extensively distributed this advisory through national law enforcement organizations and through contacts with local agencies.

              In addition, FRA will work with the grade crossing safety community to determine appropriate responses to pedestrian fatalities at grade crossings.  Earlier this year, the Transportation Research Board devoted an entire session of its annual meeting to pedestrian grade crossing safety issues in order to capture information on how to improve safety in this area.  Later this year, FRA will publish a compilation of information on existing pedestrian safety devices currently being used in the Nation so that those making decisions on methods to improve pedestrian safety may have resource material available.

              Assisting the State of Louisiana in Developing its Grade Crossing Safety Action Plan

              In June 2004, Secretary Mineta issued an Action Plan for “Highway-Rail Crossing Safety and Trespass Prevention” that sets forth a series of initiatives in the areas of engineering, education, and enforcement to reduce and prevent highway-rail grade crossing accidents.  In March 2005, FRA began working with the State of Louisiana in developing its own action plan for grade crossing safety.  Louisiana has consistently been among the top five States in the Nation in the number of grade crossing accidents and deaths.  The action plan focuses on reducing collisions between trains and motor vehicles at grade crossings where multiple collisions have occurred.  After a delay resulting from last year’s hurricane season, the State approved the action plan in April 2006. 

Passenger Rail Safety Initiatives

              While the National Rail Safety Action Plan focuses on improving the safety of freight railroad operations and grade crossings, FRA has also been making important progress during the past year on the safety of railroad passengers.  Let me summarize some of the agency’s recent passenger rail safety initiatives.

Collision Hazard Analysis

              “Collision Hazard Analysis” is a specific type of safety review that seeks to identify collision hazards and to develop reasonable solutions to address these collision hazards. “Collision hazards” include conditions and activities that increase the risk of collisions between trains or other on-track equipment, between trains and motor vehicles, etc.  FRA strongly believes that the performance of a Collision Hazard Analysis will strengthen the system safety process on commuter railroads that grew out of the combined experience of the agency and the commuter railroads under Emergency Order No. 20. 

              Recently, FRA and DOT’s Volpe National Transportation Systems Center partnered with the American Public Transportation Association (APTA) in an important pilot project regarding Collision Hazard Analysis.  APTA worked in cooperation with FRA and the Volpe Center to train and serve as mentor to the team at Tri-Rail, the South Florida Regional Transportation Authority’s commuter service, which volunteered to be the first commuter railroad to conduct this analysis.  The pilot project with Tri-Rail provided an important opportunity to test FRA’s Collision Hazard Analysis guide, which was published in draft form in December 2005.

              The Tri-Rail project proved successful and serves as a model for all other commuter operators to follow to further improve upon their system safety programs.  In fact, FRA just started working with Virginia Railway Express to perform such an analysis on its property.  FRA strongly advocates that all commuter operators undertake a Collision Hazard Analysis, including New Start rail projects.

Report to Congress on Push-Pull Operations of Rail Passenger Trains 

              FRA is completing the congressionally mandated Report on the Safety of Push-Pull Passenger Rail Operations and anticipates releasing it in the near future.  The report will provide a more comprehensive analysis of push-pull safety data and expand upon the critical passenger rail safety issues highlighted in the preliminary report that FRA issued last year.

Passenger Safety Rulemakings

              FRA is hard at work on several rulemakings specifically designed to improve rail passenger safety.  First, FRA intends to issue a notice of proposed rulemaking for new passenger rail safety standards to improve evacuation of passengers from trains, provide additional ways for rescuers to access the passenger car in case of an emergency, and enhance on-board emergency communication systems.  This is the result of consensus recommendations from the RSAC.  Second, FRA is working on a separate rulemaking through the RSAC on whether to incorporate certain APTA standards into FRA’s regulations.  The standards deal with emergency lighting, the marking of low-location exit paths, and emergency signage.  Third, FRA is also preparing a proposed rule to implement the RSAC’s recommendations on the end strength of cab cars.

Passenger Safety Research and Development

              Crash Energy Management Systems

              In March 2006, FRA successfully conducted the final in a series of full-scale passenger train crash tests at FRA’s Transportation Technology Center in Pueblo, Colorado, to test new crash energy management technology, a technology that FRA has been advancing for many years.   In the final test, a passenger train that had been equipped with crush zones helped absorb the force of a crash, to better protect the spaces in the train occupied by passengers and train crewmembers.  Other devices tested included newly designed couplers, which are built to retract and absorb energy in a collision, to help keep trains upright and on the tracks.  Also tested were new passenger seats with special padding and new tables with crushable edges, to help prevent and mitigate passenger injuries.  Using this integrated crash energy management technology is expected to save lives by more than doubling the speed at which all passengers are expected to survive a train crash. 

Rollover Rig

              In May 2006, FRA unveiled a state-of-the-art Passenger Rail Vehicle Emergency Evacuation Simulator, also known as a “Rollover Rig.”  It has the unique ability to roll a full-sized, commuter rail car up to 180 degrees, effectively turning it upside down, to simulate passenger train derailment scenarios.  The Rollover Rig will enhance the ability of researchers to test strategies for evacuating passenger rail cars and evaluate the performance of emergency systems in the cars, such as emergency lighting, doors, and windows.  In addition, emergency responders nationwide now have a unique training tool to practice effective passenger rescue techniques safely in various derailment scenarios.  The Rollover Rig was developed by FRA at a cost of $450,000.  The commuter rail car used by the simulator was donated by New Jersey Transit Rail Operations, and the Washington Metropolitan Area Transit Authority has agreed to house, operate, and maintain the simulator at its emergency-response training facility in Landover, Maryland. 

Conclusion

              FRA’s approach to enhancing the safety of rail transportation is multi-faceted.  In combination, the strategies for comprehensive safety assurance and hazard mitigation that I have discussed today are providing FRA with an effective and cost-based decision-making process to collect information that FRA believes will make rail operations safer for the public and the rail transportation industry.  I look forward to discussing with the Subcommittee strategies and priorities for making our Nation’s railroad system even safer.  

APPENDIX

The Railroad Industry’s Safety Record

The railroad industry’s overall safety record is very positive, and most safety trends are moving in the right direction.  While not even a single death or injury is acceptable, progress is continually being made in the effort to improve railroad safety.  This improvement is demonstrated by an analysis of the Federal Railroad Administration’s (FRA) database of railroad reports of accidents and incidents that have occurred over the nearly three decades from 1978 through 2005.  (The low point of rail safety in recent decades was 1978, and 2005 is the last complete year for which data--though preliminary--are available.)   Between 1978 and 2005, the total number of rail-related accidents and incidents has fallen from 90,653 to 13,751, an all-time low  representing a decline of 85 percent.  Between 1978 and 2005, total rail-related fatalities have declined from 1,646 to 895, the third-lowest number on record and a reduction of 46 percent.  From 1978 to 2005, total employee cases (fatal and nonfatal) have dropped from 65,193 to 5,582, the record low; this represents a decline of 91 percent.  In the same period, total employee deaths have fallen from 122 in 1978 to 25 in 2005, a decrease of 80 percent.

              Contributing to this generally improving safety record has been a 71-percent decline in train accidents since 1978 (a total of 3,152 train accidents in 2005, compared to 10,991 in 1978), even though rail traffic has increased.  (Total train-miles were up by 5 percent from 1978 to 2005.)  In addition, the year 2005 saw only 36 train accidents, out of the 3,152 reported, in which a hazardous material was released, with a total of only 49 hazardous material cars releasing some amount of product, despite about 1.7 million movements of hazardous materials by rail.

              In other words, over the last approximately three decades, the number and rate of train accidents, total deaths arising from rail operations, employee fatalities and injuries, and hazardous materials releases--all have fallen dramatically.  In most categories, these improvements have been most rapid in the 1980s, and tapered off in the late 1990s.  Causes of the improvements have included a much more profitable economic climate for freight railroads following deregulation in 1980 under the Staggers Act (which led to substantially greater investment in plant and equipment), enhanced safety awareness and safety program implementation on the part of railroads and their employees, and FRA’s safety monitoring and standard setting (most of FRA’s safety rules were issued during this period).  In addition, rail remains an extremely safe mode of transportation for passengers.  Since the year 1978, more than 10.7 billion passengers have traveled by rail, based on reports filed with FRA each month.  The number of rail passengers has steadily increased over the years, and in 2005 there were more than 522 million.  Twelve rail passengers were killed in train collisions and derailments in 2005, including ten that died in the Glendale tragedy.  On a passenger-mile basis, with an average about 15.5 billion passenger-miles per year since the year 2000, rail travel is about as safe as scheduled airlines and intercity bus transportation and is far safer than private motor vehicle travel.  Rail passenger accidents–while always to be avoided–have a very high passenger survival rate.

              As indicated previously, not all of the major safety indicators are positive.  Grade crossing and rail trespasser incidents continue to cause a large proportion of the deaths associated with railroading.  Grade crossing and rail trespassing deaths accounted for 93 percent of the 895 total rail-related deaths in 2005.   In recent years, rail trespasser deaths have replaced grade crossing fatalities as the largest category of rail-related deaths, and last year was no exception.   In 2005, 476 persons died while on railroad property without authorization, and 356 persons lost their lives in grade crossing accidents.  Further, significant train accidents continue to occur, and the train accident rate per million train-miles has not declined at an acceptable pace in recent years.  It actually rose slightly in 2003 and 2004 (to 4.04 and 4.36, respectively) compared to that in 2002 (3.76), although it dropped in 2005 (to 3.99).  As stated in the main testimony, the causes of train accidents are generally grouped into five categories:  human factors; track and structures; equipment; signal and train control; and miscellaneous.  The great majority of train accidents are caused by human factors and track.  In recent years, most of the serious events involving train collisions or derailments resulting in release of hazardous material, or harm to rail passengers, have resulted from human factor or track causes.  Accordingly, the National Rail Safety Action Plan makes human factors and track the major target areas for improving the train accident rate.

Written Statement of

Joseph H. Boardman,
Administrator,
Federal Railroad Administration,
U.S. Department of Transportation,

before the

Subcommittee on Railroads,
Committee on Transportation and Infrastructure,
U.S. House of Representatives

June 13, 2006

Chairman LaTourette, Ranking Member Brown, and other members of the Subcommittee, I am very pleased to be here today to testify, on behalf of the Secretary of Transportation, about “Current Issues in Rail Transportation of Hazardous Materials.”  Safety is our top priority, and the strategy we use to promote safety is, first, to prevent accidents by means of research, regulation, inspection, investigation, and enforcement; and second, to mitigate, by those same methods, the consequences of accidents that do occur.  Recent statistics show that the rail industry’s safety performance, as a whole, is improving.  In particular, the vast majority of hazardous materials shipped by rail tank car every year arrive safely and without incident, and railroads generally have an outstanding record in moving shipments of hazardous materials safely. 

However, some recent train accidents involving the release of hazardous material have highlighted specific issues requiring government and industry attention.  The safe transportation of hazardous materials by rail is necessarily dependent on the safety of the entire railroad system as a whole, and the failure of even a single part of this system can lead to a catastrophic accident.  As I will explain, FRA is targeting the most frequent causes of accidents; focusing our oversight resources on the areas of highest risk; and accelerating research efforts that have the potential to mitigate the largest potential risks and hazards to operating safety and the public.  By improving railroad safety overall, FRA expects to achieve further improvement in the safety of hazardous materials transported by rail. 

Recent Train Accidents Involving Release of Hazardous Material

FRA is concerned with all rail accidents that result in any release of a hazardous material, regardless of the quantity of material released.  Again, the vast majority of hazardous material shipments arrive at their destinations safely; few tank cars have leaks or spills of any kind; fewer still are breached in an accident or incident. 

Considering just chlorine, for example, since 1965 (the earliest data available) there have been at least 2.2 million tank car shipments of chlorine–only 788 of which were involved in accidents (0.036 percent of all the shipments).  Of those accidents, there were 11 instances of a catastrophic loss (i.e., a loss of all, or nearly all) of the chlorine lading (0.0005 percent of all the shipments).  Of the 11 catastrophic losses, four resulted in fatalities (0.00018 percent of all the shipments)–the most recent two of which (Macdona, Texas, and Graniteville, South Carolina) are discussed below.  

For all hazardous materials, in the 12 years from 1994 through 2005, hazardous materials released in railroad accidents resulted in a total of 14 fatalities.  In the same period, hazardous materials released in highway accidents resulted in a total of 116 fatalities.  While even one death is too many, these statistics show that train accidents involving a release of hazardous material that causes death are infrequent and rare. 

It is also important to quantify the risk of any hazardous material release–whether fatal or not–because of a railroad accident.  In the year 2004, for example, there were approximately 1.7 million shipments of hazardous materials by rail, and there were 29 train accidents in which a hazardous material was released.  In these accidents, a total of 47 hazardous material cars released some amount of product.  The risk of a release was a tiny fraction of a percent (47/1,700,000, or 0.0028 percent). 

Nonetheless, three recent train accidents that involved release of hazardous material and resulted in death and injury highlight specific rail safety areas that FRA continues to address to minimize accidents and make all rail transportation safer. 

First, on January 18, 2002, a Canadian Pacific Railway Company (CP) train derailed in Minot, North Dakota, resulting in one death and 11 injuries due to the release of anhydrous ammonia.  The National Transportation Safety Board (NTSB) determined the probable cause of the derailment to be an ineffective track inspection and maintenance program by CP that did not identify and replace cracked joint bars before they completely fractured and led to the breaking of a rail at the joint.  I will discuss later FRA’s research and regulatory initiatives to address joint bar cracks, and FRA’s research concerning the survivability of hazardous material tank cars in accident situations. 

Second, on June 28, 2004, a Union Pacific Railroad Company (UP) train collided with a Burlington Northern and Santa Fe Railway Company (BNSF) train in Macdona, Texas, breaching a loaded tank car containing chlorine and causing the deaths of three people.  Based on initial findings, one train crew’s noncompliance with UP’s operating rules may have been a causal factor.  As a result of this and other accidents, FRA entered into safety compliance agreements with UP on November 12 and December 2, 2004, addressing three geographical UP service units of concern.  The agreements required UP to re-instruct all of the testing managers in these service units on the railroad’s program of operational tests and inspections.  Thereafter, UP was to formulate monthly plans and conduct operational tests and inspections in order to improve its employees’ compliance with the railroad’s operating rules.  Subsequent FRA inspection of UP’s entire southern region indicated that the railroad was making progress implementing the requirements of the agreements.  On its own initiative, the railroad extended elements of the agreements to the balance of its system to strengthen management oversight of its program of operational tests.

Most recently, on January 6, 2005, a Norfolk Southern Railway Company (NS) train collided with a standing train on a siding in Graniteville, South Carolina.  That accident resulted in the breach of a tank car containing chlorine, and nine people died from inhalation of chlorine vapors.  The NTSB determined that the probable cause of the accident was the failure of a train crew to return a main line switch to its normal position.  Hours later, the next train to traverse the main track was misdirected onto the wrong track, where it collided with a standing train.  In response to the Graniteville accident, FRA acted immediately by issuing a formal Safety Advisory on January 10, 2005, strongly urging all railroads to adopt revised procedures to guard against such a human mistake.  As a whole, railroads responded swiftly and favorably by adopting those recommendations.

Again, these three serious accidents were directly caused by general factors in the rail operating environment, e.g., track for Minot and human factors for Graniteville.  Unfortunately, a result of each accident was the catastrophic release of a hazardous material.  While FRA over the years has ordered hundreds of millions of dollars of tank car improvements and will not hesitate to do more when we have the requisite knowledge, the primary strategy for preventing catastrophic releases of hazardous materials is the prevention of accidents.  FRA’s goal is to address the specific factors that directly cause terrible accidents like the three discussed above, as well as to minimize and mitigate the effects of such accidents.  Addressing those most prevalent direct causes of rail accidents will serve to make all forms of rail transportation safer.  As discussed below, FRA has an aggressive and comprehensive action plan to address the root causes of such accidents and to examine and improve the integrity of tank cars used to transport hazardous materials.   

National Rail Safety Action Plan

On May 16, 2005, DOT and FRA launched an aggressive and ambitious National Rail Safety Action Plan.  The Action Plan lays out initiatives in a number of areas, including: 

• Reducing human factor-caused train accidents;
• Improving track safety;
• Enhancing hazardous materials safety and emergency preparedness;
• Addressing the serious problem of fatigue among railroad operating employees;
• Better focusing FRA resources (inspections and enforcement) on areas of greatest safety concern; and
• Improving highway-rail grade crossing safety.

FRA has made substantial progress during the past year to successfully implement the various elements of the Action Plan.  FRA continues to integrate the results of its oversight and research and development to foster the deployment and application of both new technologies and functional procedures by industry to prevent and minimize future accidents. 

Human Factors Initiatives, Including Steps to Prevent Human Factor-Caused Accidents through Technology

Development of Human Factors Rulemaking

The Graniteville accident resulted from human error, and the Macdona accident is under review by the NTSB for an apparent human factor cause as well.  Human factor-caused accidents constitute the largest category of train accidents, accounting for 37 percent of all train accidents over the last five years.  Some human factors are addressed squarely by FRA regulations.  For example, FRA’s regulations on alcohol and drug use by operating employees were the first such standards in American industry to incorporate chemical testing, and they have been very successful in reducing accidents resulting from substance abuse.  FRA also has regulations on locomotive engineer certification, and we enforce the hours of service restrictions, which are wholly governed by statute.  However, FRA has been concerned that several of the leading causes of human factor accidents are not presently covered by any specific Federal rule, and they can have serious consequences.  These leading causes include improperly lined switches, leaving cars in a position that obstructs a track, and shoving rail cars without a person on the front of the move to monitor conditions ahead. 

In May 2005, FRA asked its Railroad Safety Advisory Committee (RSAC) to develop recommendations for a new human factors rule to address the leading causes of human factor accidents.  In February 2006, RSAC reported that good progress on a number of issues had been made; however, it was unable to reach a consensus recommendation.  FRA thanked the members of RSAC for the guidance provided and is now drafting a notice of proposed rulemaking targeted for publication later this year.  As discussed in the RSAC, this regulation will address core railroad operating rules governing the handling of track switches, leaving cars in the clear, and “protecting the point” of shoving movements. 

Issuance of Emergency Order No. 24

In response to an increasing number of train accidents caused by hand-operated main track switches in non-signaled territory being left in the wrong position and the potential for catastrophic accidents, FRA issued Emergency Order No. 24 in October 2005.  This emergency order mandates that railroads retrain and periodically test employees on switch operating procedures and that railroads require increased communication among crewmembers and dispatchers regarding the proper positioning and locking of this type of switch.  A switch position awareness form must be maintained by each employee operating a switch to record when the switch was operated and when it was returned to the normal position (i.e., typically lined for the main track).  This emergency order is expected to remain in place until a final rule regarding human factor-caused accidents is promulgated and becomes effective.

Launch of “Close Call” Pilot Research Project  

FRA is working to better understand “close calls” (i.e., unsafe events that do not result in a reportable accident but could have done so).  In March 2005, FRA completed an overarching Memorandum of Understanding (MOU) with railroad labor organizations and management to develop pilot programs to document close calls.  In other industries such as aviation, adoption of close-call reporting systems that shield the reporting employee from discipline (and the employer from punitive regulatory sanctions) has contributed to major reductions in accidents.  In August 2005, an MOU between FRA and the DOT Bureau of Transportation Statistics (BTS) was signed.  The MOU stipulated that BTS will act as a neutral party to receive the close-call reports and maintain the confidentiality of the person making the report.  In October 2005, a contract to evaluate the close-call data was awarded to Altarum Institute of Alexandria, Virginia.  Four railroads have expressed interest in taking part in this project.  Educational efforts are underway to ensure that key stakeholders (local rail management and labor) at each potential site understand the purpose of the program and what would be required of them.  Specifically, participating railroads will be expected to develop corrective actions to address the problems that may be revealed.  Aggregated data from these projects may also provide guidance for program development at the national level.  An Implementing MOU involving the first site is under discussion, and data collection is expected to begin in the near future.

Addressing Fatigue

Fatigue has long been a fact of life for many railroad operating employees, given their long and often unpredictable work hours and fluctuating schedules.  The hours of service law sets certain maximum on-duty periods (generally 12 hours for operating employees) and minimum off-duty periods (generally 8 hours, or if the employee has worked 12 consecutive hours, a 10-hour off-duty period is required).  FRA’s knowledge of industry employee work patterns and the developing science of fatigue mitigation, combined with certain NTSB investigations indicating employee fatigue as a major factor, have persuaded FRA that fatigue is very likely at least a contributing factor in a significant number of human factor-caused accidents.  FRA is conducting applied research aimed at validating and calibrating a fatigue model that can be used to more precisely determine the role of fatigue in human factor-caused accidents and improve crew scheduling practices by evaluating the potential for fatigue given actual crew management practices.  When the model is properly validated, it will be made available to railroads and their employees as the foundation for developing crew scheduling practices based on the best current science.  A final report is targeted for release in August 2006.

Fostering Positive Train Control (PTC)

PTC is an advanced train control technology that can prevent train collisions with automatic brake applications.  It also provides capabilities such as automatic compliance with speed restrictions and enhanced protection of maintenance-of-way workers.

FRA’s final rule enabling PTC became effective on March 7, 2005.  The rule is a performance standard for PTC systems that railroads may choose to install.  It does not require that PTC systems be installed.  Rather, FRA is promoting the implementation of PTC by sponsoring development of PTC technologies though partnerships with States and railroads; and by helping to provide the Nationwide Differential Global Positioning System (NDGPS), a network of beacons that provides corrections and integrity monitoring to improve the accuracy and reliability of satellite-based positioning.  NDGPS will play an important role in advanced PTC applications.

              Today, Amtrak and other Northeast Corridor railroads have implemented a form of PTC that supports passenger train speeds up to 150 miles per hour.  This system works well; however, it is expensive to operate and maintain and does not offer some operational efficiencies that may be available with newer PTC systems. Therefore, this system does not appear to be appropriate for use outside the Northeast Corridor. 

Several freight railroads are exploring less complex “overlay” systems with a goal of increasing safety and improving operating efficiencies.  The most highly developed of those undergoing testing is the Electronic Train Management System (ETMS) on the BNSF.  CSX Transportation, Inc. (CSX) is working on a Communications Based Train Management System, and UP has recently announced an ambitious set of pilot projects that will use the same core technology being used by BNSF and CSX.  In contrast, NS has indicated that it will proceed with a fully “vital” technology.  The Alaska Railroad Corporation is also working towards implementing a PTC system on its entire territory.

A significant challenge for FRA and the railroads in developing such systems for use in the contiguous 48 States is to ensure that they are interoperable (that is, locomotives from railroad “A” having one kind of PTC system can operate seamlessly on railroad “B” which has a different PTC system).

Identification of Technology to Improve Safety in Dark (Non-signaled) Track Territory

In November 2005, FRA partnered with BNSF in a $1 million Switch Point Monitoring System pilot project.  The main objective of the project is to develop a low-cost system that electronically monitors, detects, and reports a misaligned switch on the mainline track located in dark, or non-signaled, track territory.  Switch position monitoring units are now in place at 49 switch locations on the railroad’s Avard Subdivision in Oklahoma.  If a switch is left other than in the normal position, the dispatcher at the railroad’s operations center is alerted, and corrective action is taken to protect train movements.  A final report is expected in August 2006.  Along with the planned human factor rule, this new switch monitoring system may prevent future train collisions and derailments like the Graniteville accident.

Track Safety Initiatives

Enhancement of Track Defect-Detection Capability and Procedures

The Minot derailment resulted from track defects.  Track-caused accidents are the second-largest category of train accidents, comprising 34 percent of all train accidents over the last five years.  Some of the leading causes of track-caused accidents are very difficult to detect during normal railroad inspections.  Broken joint bars, for example, are a leading cause, but the kinds of cracks in those bars that foreshadow a derailment-causing break are very hard to spot with the naked eye.  Similarly, broken rails account for some of the most serious accidents, but the internal rail flaws that lead to many of those breaks can be detected only by specialized equipment. 

To improve track safety, FRA is developing an automated, high-resolution video inspection system for joint bars that can be deployed on a hi-rail vehicle to detect visual cracks in joint bars without having to stop the vehicle.  In October 2005, a prototype system that inspects joint bars on both sides of each rail was successfully demonstrated.  Testing showed that the high-resolution video system detected cracks that were missed by the traditional visual inspections.  In 2006, the system is being enhanced with new developments to improve the reliability of joint bar detection and to add capabilities to include Global Positioning System (GPS) coordinates for each joint for future inspection and identification.  Additionally, software is being developed and tested to automatically scan the images, detect the cracked joint bar, and send a message to the operator with an image of the broken joint bar.

FRA is also addressing joint bar cracks on the regulatory front.  On November 2, 2005, FRA issued an interim final rule (IFR) requiring track owners to develop and implement a procedure for the detailed inspection of rail joints in continuous welded rail (CWR) track.  Among other things, track owners must perform visual, on-foot, periodic inspections of joints in CWR track and keep records of these inspections.  Further, track owners are required to identify joint bar cracks as well as inspect for joint conditions that can lead to the development of joint bar cracks.  Based on the data that FRA will collect through implementation of this rule, FRA will establish a program to review joint bar crack data.  Finally, the IFR encourages the development and adoption of automated methods to improve the inspection of rail joints in CWR track.  This rulemaking is a direct result of a Congressional mandate in the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) and of NTSB recommendations arising out of various accidents involving cracked joint bars.  Currently, FRA is reviewing public comments about this IFR in conjunction with the RSAC, and anticipates issuing a final rule later this year.

Deployment of Two Additional Automated Track Inspection Vehicles

Subtle track geometry defects, such as rails being uneven or too wide apart, are

difficult to identify during a typical walking or hi-rail inspection.  That is why FRA has

developed automated track inspection and research vehicles to improve the ability to identify problems, and ensure they are repaired, before a train accident occurs.  In May 2005, FRA added the T-18 vehicle to its fleet.  Two more inspection vehicles with similar technology are currently being constructed (one that is self-propelled and one that is towed).  They are expected to be delivered in September 2006 and January 2007.  Once fully operational, they will allow FRA to inspect nearly 100,000 track-miles each year, tripling the number of miles currently inspected.  This additional capability will permit FRA to inspect more miles of major hazardous materials and passenger routes, while also having the ability to follow up more quickly on routes where safety performance is substandard.

Rail Transport of Hazardous Materials: The Safety Record and Safety Initiatives

As noted above, the rail industry’s record on transporting hazardous materials is very good.  The industry transports nearly two million shipments of hazardous materials annually, ordinarily without incident.  However, the Graniteville accident in 2005, which alone involved nine deaths as the result of a release, demonstrates the potential for serious consequences from train accidents.  It is also important to note that although train accidents only rarely result in releases, non-accident releases (NARs), such as releases from stationary tank cars in rail yards or chemical facilities, are a continuing problem.  In 2004, for example, there were 692 NARs from tank cars.  The primary cause of NARs is improper inspection and securement of tank cars by shippers (e.g., loose closures, open valves, defective gaskets) in violation of the Federal Hazardous Materials Regulations (HMR).  Allow me to discuss the HMR and DOT’s role in promulgating and enforcing them for the safe transportation of hazardous materials by rail. 

The HMR are designed to achieve three goals:

• To ensure that hazardous materials are packaged and handled safely during transportation;
• To provide effective communication to transportation workers and emergency responders of the hazards of the materials being transported; and
• To minimize the consequences of an accident or incident should one occur.

Under the HMR, hazardous materials are categorized by analysis and experience into hazard classes and packing groups based upon the risks they present during transportation.  The HMR specify appropriate packaging and handling requirements for hazardous materials, and require a shipper to communicate the material’s hazards through the use of shipping papers, package marking and labeling, and vehicle placarding.  The HMR also require shippers to provide emergency response information applicable to the specific hazard or hazards of the material being transported.  The HMR also mandate training requirements for persons who prepare hazardous materials for shipment or who transport hazardous materials in commerce.  The DOT Pipeline and Hazardous Materials Safety Administration (PHMSA) is responsible for promulgating the HMR, and FRA is responsible for enforcing the HMR in the railroad industry.  Both agencies work cooperatively in carrying out and assisting each other with their responsibilities, combining their expertise and resources to promote the safe transportation of hazardous materials by rail. 

Reducing NARs and the accidental release of hazardous materials in the rail industry is being advanced in particular by the concerted efforts of FRA’s hazardous materials field forces, their diligent follow-up on hazardous materials releases, and FRA’s active enforcement of the HMR against persons who fail to properly package hazardous materials for rail transportation.  In this effort, FRA is utilizing the full array of our enforcement tools—from education and warnings, to safety advisories and orders, to civil penalties and recommendations for criminal prosecution.  The agency is also actively engaged in activities intended to reduce the likelihood that a tank car may be breached if an accident does occur, complementing our effort to reduce the likelihood of train accidents.  Realizing that we are still a ways off from preventing all accidents, FRA has developed initiatives to ensure that emergency responders will be fully prepared to minimize the loss of life and damage when an accident or release does occur. 

Ensuring Emergency Responders Have Access to Key Information About Hazardous Materials Transported by Rail

              Emergency responders presently have access to a wide variety of information regarding hazardous materials transported by rail.  Railroads and hazardous materials shippers are currently subject to the hazard communication requirements of the HMR, as noted earlier.  In addition, these industries work through the American Chemistry Council’s Transcaer® (Transportation Community Awareness and Emergency Response) program to familiarize local emergency responders with railroad equipment and product characteristics.  PHMSA publishes the Emergency Response Guidebook, with the intention that it may be found in virtually every fire and police vehicle in the United States.

              In March 2005, with FRA encouragement, the Association of American Railroads (AAR) amended its Recommended Operating Practices for Transportation of Hazardous Materials (Circular No. OT-55-H) to expressly provide that local emergency responders, upon written request, will be provided with a ranked listing of the top 25 hazardous materials transported by rail through their community.  This is an important step to allow emergency responders to plan, and better focus their training, for the type of rail-related hazardous materials incident that they could potentially encounter.

In July 2005, again with FRA encouragement, CSX and CHEMTREC (the chemical industry’s 24-hour resource center for emergency responders) entered into an agreement to conduct a pilot project to see if key information about hazardous materials on the train could be more quickly and accurately provided to first responders in the crucial first minutes of an accident or incident.  The project is designed so that if an actual hazardous material rail accident or incident occurs, CHEMTREC watchstanders, who interact with emergency response personnel, will have immediate access to CSX computer files regarding the specific train, including the type of hazardous materials being carried and their exact position in the train consist.  FRA is also working through the AAR to encourage the other major railroads to participate in a similar project.

Improving Tank Car Integrity through Research and Development

PHMSA’s and FRA’s efforts to improve tank car survivability have a long and effective history.  Working with industry, all tank cars carrying hazardous materials now have top and bottom shelf couplers, and, as appropriate, tank cars are equipped with head shields, thermal protection, and skid protection for protruding bottom outlets.  Tank cars carrying specific product groups, such as toxic inhalation hazard materials (TIH) and other particularly hazardous substances, are subject to additional requirements which become fully effective July 1, 2006, after a 10-year phase-in period.  In addition, because tank cars are built to standards of high quality and are required to be inspected and re-qualified periodically, DOT has instituted requirements for the maintenance of tank cars using qualified technicians employing qualified procedures and documenting their efforts in a standard format for effective future reference and analysis. 

We continue to look for other ways to improve tank car survivability.  Prior to the August 2005 enactment of Section 9005 of SAFETEA-LU, FRA had initiated tank car structural integrity research stemming from the circumstances of the 2002 Minot derailment.  Current research involves a three-step process to assess the effects of various types of train accidents (e.g., a derailment or collision) on a tank car.  The first phase is development of a physics-based model to analyze the kinematics of rail cars in a derailment.  The second phase is development of a valid dynamic structural analysis model; and the third phase is an assessment of the damage created by a puncture and entails the application of fracture mechanics testing and analysis methods.  DOT’s Volpe Center is doing the modeling work now, and FRA will dovetail this ongoing research with the requirements of Section 9005.

In addition, FRA intends to evaluate an explosive-resistant coating that is being used to enhance the armor protection of military vehicles in Iraq for potential use on tank cars to reduce the likelihood of puncture.  The material also has a self-sealing property that could be useful to seal a hole in a tank car and mitigate the severity of incidents. 

Improving the Safety of Railroad Tank Car Transportation of Hazardous Materials through a Joint PHMSA-FRA Review of Design and Operational Factors

              In response to the recent accidents discussed above, as well as other rail accidents resulting in tank car breaches and loss of product, and concerns expressed by the industry and the public, PHMSA and FRA have initiated a comprehensive review of design and operational factors that affect rail tank car safety.  As part of an effort to solicit public involvement in this ongoing effort, PHMSA and FRA held a public meeting on May 31 and June 1 to address the safe transportation of hazardous materials in tank cars.  The meeting provided interested parties an opportunity to comment on the safety of rail tank car transportation of hazardous materials.  PHMSA and FRA regularly work closely with tank car manufacturers, shippers, and railroads, to gather expertise and input into the development of tank car standards.  FRA is in the process of opening a public docket to receive further information and comment on this issue.  FRA also plans to make a transcript of the meeting available for public review in the docket. 

In conducting this comprehensive review, the two agencies will utilize a risk management approach to identify ways to enhance the safe transportation of hazardous materials in tank cars, including tank car design, manufacture, and requalification; operational issues such as human factors, track conditions and maintenance, wayside hazard detectors, and signal and train control systems; and emergency response.  This initiative with PHMSA complements FRA’s other ongoing safety efforts discussed above. 

A valuable source of tank car expertise lies in the combined resources of the members of the AAR Tank Car Committee (TCC) and its associated working groups.   The TCC is recognized within the HMR as the body exercising ministerial approval of railroad tank car and service equipment designs.  The working groups are comprised of a representative cadre of tank car engineers, railroad operating experts, shippers, and fleet owners. At any one time they are considering many potential safety improvements for tank cars.  FRA has found that the input of all members of the TCC is invaluable in informing FRA’s safety decisions.  FRA participates within the TCC and is active in many of the working groups. 

A major assignment now before the TCC is the development of recommendations to satisfy a charge by top railroad executives to investigate ways to improve the tank car itself.  Born out of the significant accidents at Minot, Macdona, and Graniteville, as described above, the directive to the TCC was to create a tank car design that would reduce the potential for a release from an accident by 65 percent.  This effort relies heavily on a risk analysis prepared by the University of Illinois.  In developing its analysis, the University of Illinois relied heavily on the claims stemming from an engineering analysis conducted by Trinity Industries, Inc., a major builder of tank cars and other transportation equipment, related to a new tank car design developed by Trinity (the Trinity Car).  While the risk analysis uses sound scientific methods, several assumptions were used that cause concern.  Although FRA applauds the industry’s efforts, FRA believes that achieving a 65 percent reduction in the potential for a release from an accident is an unrealistic goal, especially when directed at only one aspect of hazardous materials transportation safety—the tank car transporting the hazardous material.  FRA has made this concern known to the AAR, but continues to support its efforts in seeking safety improvements that provide greater protection for the American public.

Although the Trinity Car design differs in several areas from the Federal tank car safety standards, the car design could yield safety benefits.  In order to permit the manufacture and sale of this new design, FRA prepared an extensive evaluation of the car design and the data submitted in support of this design and referred that evaluation to PHMSA.  While the design raises important questions, PHMSA and FRA believe that, given operational restrictions and inspection requirements imposed by a short-term variance granted by PHMSA, the car can provide a valuable tool for data collection and innovation analysis.  PHMSA’s short-term variance, however, was issued based on a finding that the Trinity car used under the specified conditions provides an equivalent level of safety to current DOT specification cars. 

As is appropriate for an early data collection and evaluation effort, cost-benefit analysis is not yet underway for the use of the Trinity Car across the industry.  It is too early to predict whether the structural integrity research, the data gathered through use of the Trinity Car, or any other ongoing project will lead to regulatory action.  Any rulemaking on tank car improvements will require comprehensive risk and cost-benefit analyses to ensure that any benefit gained by any improvement does not unduly burden rail carriers, shippers, and consumers with exorbitant costs as a result.  The success of long phase-in periods in past rulemakings requiring head shields, thermal protection, shelf-couplers, bottom-outlet protection, and other changes shows that tank car safety is best achieved through deliberate action rather than “overnight” mandates.

Section 333 Conference

                Section 333 of title 49 of the United States Code authorizes the FRA Administrator, as delegate of the Secretary of Transportation, to convene conferences at the request of one or more railroads to address coordination of operations and facilities of rail carriers in order to achieve a more efficient, economical, and viable rail system.  Persons attending a section 333 conference are immune from antitrust liability for any discussions at the conference, and can also receive immunity for any resulting agreements that receive FRA approval. 

                FRA has granted a request by the AAR and the American Chemistry Council to convene a section 333 conference to discuss ways to minimize security and safety risks flowing from the transportation by rail of TIH materials.  FRA is working with the parties on developing an agenda for the conference.  The conference will provide the railroads and chemical manufacturers and shippers with the limited antitrust immunity they need to meet and discuss approaches to reduce the amount of TIH materials moved by rail, and to enhance the safety and security of TIH materials that are moved.  FRA, PHMSA, and representatives from the Department of Justice, the Federal Trade Commission, the Transportation Security Administration, and the Surface Transportation Board (STB) will assist the parties in their discussions.

Initially, efforts of the conference will be focused on chlorine and anhydrous ammonia rail transport because they represent over 80 percent of all TIH rail shipments.  FRA anticipates seeking public input on any agreements proposed by the parties before they are approved by FRA.  In some instances, the projects agreed to at the conference may need the approval of the STB in order to be implemented.

Conclusion

FRA’s approach to enhancing the safety of tank cars and the transportation of hazardous materials by rail tank cars is multi-faceted.  In combination, the comprehensive safety assurance and hazard mitigation strategies that I have discussed are providing FRA an effective and cost-based decision-making process to collect information that we believe will make rail operations and tank car designs of the future safer for the public and the rail transportation industry.  We look forward to discussing strategies and priorities for moving forward towards this end, and we thank the Subcommittee for its willingness to examine this complex issue.

Statement Of

The Honorable Joseph H. Boardman
Federal Railroad Administrator

Before The

Subcommittee on Railroads
Committee on Transportation and Infrastructure
U.S. House of Representatives

March 15, 2006

Chairman LaTourette, Ranking Member Brown and other members of the Subcommittee, it is my pleasure today to represent Secretary of Transportation Norman Y. Mineta to discuss the status of the Federal Railroad Administration’s (FRA) implementation of the Railroad Rehabilitation and Improvement Financing (RRIF) Program.

The RRIF Program in Brief

The current RRIF program was created in 1998 in section 7203 of the Transportation Equity Act for the 21^st Century (TEA-21).  Section 7203 significantly amended the RRIF program created by Title V of the Railroad Revitalization and Regulatory Reform Act of 1976[1] but which had lain largely fallow due to changes in the requirements for Federal direct loan and loan guarantee programs created in the Credit Reform Act of 1990 and the lack of appropriations.   To date, RRIF has been the primary discretionary program available to FRA to provide financial assistance for capital improvements to the rail industry. 

One of the significant features of the Federal Credit Reform Act of 1990 was to require Federal agencies to set aside the estimated long-term cost of providing new credit assistance in the form of direct loans or loan guarantees.   That cost reflects the net present value of the expected cash flows to and from the Federal Government over the life of the loan.  Funds are obligated for subsidy cost at the time the direct loan or loan guarantee agreement is signed, with the cost estimate calculated using the assumptions used to formulate the President’s Budget for that fiscal year, updated to reflect the terms of the loan contract.  When viewed on a program basis, setting aside the estimated long-term cost helps avoid a potentially significant un-budgeted expense at the time of a default. 

After enactment of the Federal Credit Reform Act and until the TEA-21 amendments, the only way that FRA could provide financial assistance through direct loans or loan guarantees was if the Congress appropriated funds to cover the subsidy cost.   The Congress did once, in FY 1994, and earmarked funds for a specific loan guarantee.   The major change resulting from the TEA-21 amendments was that the subsidy cost could be paid by the applicant or other non-Federal infrastructure partner, in the form of a “credit risk premium,” and thus the ability of FRA to provide direct loans or loan guarantees was no longer dependent upon the receipt of an appropriation.   In consideration of the credit risk premium requirement and the ability for it to be paid from non-Federal sources, the program is considered “zero-subsidy” in that the Federal Government does not have to provide appropriations for the initial subsidy cost.  However, the Federal Government bears the risk of cost increases if RRIF loans perform worse than expected.

Under the RRIF program, the Secretary of Transportation (Secretary) (who has delegated responsibility for implementing the program to the Federal Railroad Administrator) provides financial assistance in the form of direct loans or loan guarantees to eligible recipients for the purpose of acquiring, improving, or rehabilitating intermodal or rail freight or passenger equipment or facilities, including track, components of track, bridges, yards, buildings or shops; to refinance outstanding debt incurred for these purposes; or to develop or establish new intermodal or rail facilities.  Operating expenses are not eligible for financial assistance under the RRIF program.  Eligible applicants are State and local governments; interstate compacts consented to by Congress under section 410(a) of the Amtrak Reform and Accountability Act of 1997; government sponsored authorities and corporations, railroads, joint ventures including at least one railroad and, solely for the purpose of constructing a rail connection between a plant or facility and a second carrier, and limited option freight shippers that own a plant or other facility that is served by no more than a single railroad.   Direct loans can be made for up to 100% of the total project cost, for terms up to 25 years and at an interest rate equal to the cost of borrowing for a comparable term based on the current Treasury rate at the time of closing.  Loan guarantees can be made for up to 80% of the cost of a loan, for terms up to 25 years, at a rate the Secretary determines reasonable taking into account prevailing interest rates and customary fees incurred under similar obligations in the private capital market.

Since the current RRIF program was created in 1998, FRA has entered into 13 financing agreements with 12 railroads in the total amount of $517.7 million.  All of this financial assistance has been made through direct loans.  Recipients have included one Class I railroad (Amtrak), two Class II railroads and nine Class III railroads.  A list of these loan recipients is attached as Appendix 1 to this statement. 

Of the amount of financial assistance provided to date, approximately 52 percent has been for infrastructure improvement, approximately 37 percent for railroad acquisition, approximately 4 percent for equipment acquisition and 7 percent for refinancing outstanding debt incurred for eligible purposes.

Steps in the RRIF loan process

There are nine major steps in the evolution of a RRIF loan:

• Preapplication Meetings:  Potential RRIF applicants typically meet with FRA in advance to review the requirements for an application and the likely costs and terms of financial assistance.   Many of the  RRIF applicants have had little past experience with Federal funding programs, thus issues such as the time and cost associated with FRA’s need to comply with the National Environmental Policy Act (NEPA), Section 4(f) of the Department of Transportation Act, and Section 106 of the National Historic Preservation Act may come as a surprise.  So too, at times, is the rigor with which FRA will analyze the business case for the proposed financial assistance and the documentation that will be required for that analysis.  Some railroads have chosen not to proceed with RRIF applications after the preapplication meetings. 

• Applications: Parties interested in seeking financial assistance from FRA submit an application addressing the requirements of an application, as laid out in the regulations implementing the RRIF program (49 CFR 260) and augmented by preapplication meetings.  FRA reviews the material submitted and identifies where additional material will be required to complete the application.  At times this might be updating details of the applicant’s recent financial performance or the basis for the applicant’s projections of future growth in its traffic base, refinement of the cost estimates for improvements to be funded, or more information on the environment of the area where improvements are proposed.

• FRA’s Analysis:  FRA initiates its analysis of applications once sufficient information has been submitted, even though an application might not yet be complete in all respects.[2]  FRA undertakes an independent detailed review of the financial aspects of the proposed project including reviewing the railroad’s past financial performance and the basis for estimating costs (both project and future operating and capital needs) and future revenues.   Where appropriate, FRA reviews the project designs to assure that the project as proposed can reliably accommodate the volume of traffic needed for the railroad to achieve its revenue projections.   As with all other Federal agencies, FRA’s analysis also includes the reviews necessary to comply with NEPA and related environmental laws, regulations and orders, including where necessary, the preparation of an environmental impact statement.  

While FRA’s staff possesses broad technical expertise, conducting the level of analysis required for thorough review of multiple concurrent applications requires access to greater resources, some of which are very specialized.  FRA has used two approaches to acquire the expertise necessary to supplement existing FRA staff in reviewing applications.  Until the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) (Public Law 109-59, August 10, 2005) was enacted, FRA required applicants to fund a “third party” contractor; that is, applicants paid for financial advisors  who received technical direction from FRA to undertake independent reviews of portions of the application.  More recently, FRA has used the opportunity provided in RRIF’s modified statute to assess investigation charges of up to one half of one percent of the proposed financial assistance to fund contractors working directly for FRA to supplement FRA staff in the review of applications.    

Upon completion of the analysis of the application by FRA staff and independent contractors where needed, FRA staff develops a draft recommendation as to how to proceed with the application, i.e., whether to recommend approval, rejection or rejection with suggestions of how a proposal might be amended and improved so that it could move forward at a later date.  FRA staff also prepares a draft calculation of the required credit risk premium using methods approved by the Office of Management and Budget.  A description of the FRA process for calculating the amount of the credit risk premium is attached as Appendix 2 to the statement.

• DOT Credit Council Review:  The proposed direct loan or loan guarantee is presented to the DOT Credit Council.  This Council is composed of nine members including: the Assistant Secretary for Budget and Programs who serves as the chair; the Under Secretary for Policy; the General Counsel; the Assistant Secretary for Transportation Policy; the Federal Highway Administrator; the Federal Transit Administrator; the Federal Railroad Administrator; the Maritime Administrator; and the Director of the Office of Small and Disadvantaged Business Utilization.  The DOT Credit Council reviews the proposed transaction and makes a recommendation to the FRA Administrator about the project’s financial viability and consistency with Departmental policies, including credit policies. 

• Administrator’s decision: The FRA staff recommendations and the Credit Council recommendations are presented to the FRA Administrator.  As provided for by SAFETEA-LU, the amount of time that elapses between the completion of an application and a decision by the Administrator is 90 days or less.

• OMB Review:  At the time the DOT Credit Council recommendations are submitted to the FRA Administrator, FRA’s estimate of the required credit risk premium is submitted to the Office of Management and Budget (OMB) for review and concurrence, as is required under the Federal Credit Reform Act.  Per its Federal Credit Reform Act responsibility for determining subsidy costs, OMB reviews and approves subsidy cost estimates for Federal credit programs.

• Financing Agreement:  Assuming that the Administrator decides to provide the requested financial assistance, FRA notifies the applicant of FRA’s offer of financial assistance, and the terms under which it will be provided (the interest rate and amount of the credit risk premium.)  FRA and the applicant then finalize the terms of the financing agreement and all other necessary legal documents, such as mortgages to secure pledged collateral.  Most of terms of the agreement are standard and are available to the applicant well in advance of this point.   In addition to the standard terms, there may be project specific terms, such as a commitment of improved cash flow from refinancing of an existing debt to a capital improvement program or requirements imposed on the applicant to assure the protection of environmentally sensitive sites.

• Project Implementation:  Once the agreement is signed, funding is made available to implement the project and is provided only as needed.  This helps FRA assure that the project is undertaken in the most timely and cost effective manner possible.  FRA staff with specific expertise, such as track engineers, may monitor the progress of specific major project elements to assure they are being implemented as planned and are progressing on schedule.

• Loan servicing:  FRA staff monitors the repayment of the financial assistance and the continuing financial condition of applicants.

SAFETEA-LU Amendments

Section 9003 of SAFETEA-LU amended the RRIF program in a number of ways.  It has now been seven months since enactment of SAFETEA-LU and I wish to report briefly on FRA’s implementation of the most important of these amendments:

• Expansion of eligible applicants:  SAFETEA-LU effectively expanded the types of entities eligible for the RRIF program to include limited option shippers and commuter railroads.  While FRA has been contacted by several limited option shippers, to date none has filed an application. FRA has recently received, and is currently processing, a loan application from a commuter railroad to fund the acquisition of 50 new passenger cars.    

• Expansion of the list of projects to be given priority consideration:  SAFETEA-LU added to this list projects that “enhance service and capacity in the national rail system” and “would materially alleviate rail capacity problems which degrade the provision of service to shippers and would fulfill a need in the national transportation system.”  Without commenting on any application either pending or that might be filed in the future, I would note that these two types of projects can be viewed as addressing congestion on nationally important rail lines. 

• Expanding RRIF assistance levels:  SAFETEA-LU expanded the total authority for outstanding RRIF financial assistance from $3.5 billion to $35 billion and the amount reserved for small and regional railroads was increased from $1 billion to $7 billion.  The RRIF amendments also provided that the Secretary may not establish any limit on the amount that could be used for one direct loan or loan guarantee.  These changes may have a significant impact on the types and sizes of projects for which applicants may seek financial assistance, and could increase the Federal Government’s risk of loss through greater exposure to the industry and concentration of the portfolio in a smaller number of borrowers. 

• Requirement for Collateral:  SAFETEA-LU provides that the Secretary not require an applicant to provide collateral and that any collateral provided be valued at going concern value after giving effect to the present value of the improvement.   Before the SAFETA-LU amendments, FRA sought collateral to cover at least 100% of the value of the loan but never required any specific amount.  Where the value of collateral is important is in the calculation of the credit risk premium, which must look at the extent to which the Federal Government would be at risk in the event of a default.   By offering collateral, applicants reduce the risk to the Government and thus the credit risk premium they would have to pay.  An applicant now, as before, could propose a project for financial assistance without offering collateral, recognizing that the credit risk premium will be higher than would be the case if the applicant offered collateral to cover a significant percentage of the loan or loan guarantee amount.    In assessing the value of collateral, FRA will use going concern value where it is appropriate.  Some applicants may choose to offer collateral that does not encompass a going concern, such as a locomotive.   These are valued as they would be by any other financial institution, usually at market or net liquidation value.

• Documenting that financing is not available on equivalent terms from other sources:   SAFETEA-LU provides that the Secretary shall not require that an applicant have previously sought financial assistance from another source.  Prior to this change, FRA, consistent with Federal credit policy, sought to encourage private sector financing by requiring that applicants demonstrate that they had sought financing at terms equivalent to those available under the program from a commercial lending institution and been rejected.  No applicant is known to have had a problem demonstrating this, in part because the RRIF program offers applicants long-term financing at Treasury rates, making it unlikely that applicants would find such low-cost financing in the private market. 

• Time limit on approving a complete application:  SAFETEA-LU provides that FRA has 90 days after receipt of a complete application to approve or disapprove an application.  To date FRA has not found this limit to be an operational burden, given the number of applications FRA receives.

• Evaluation charge:  While TEA-21 provided authority to collect an investigation fee, it was found inadequate to authorize the expenditure of funds collected. SAFETEA-LU clarifies that FRA can expend any funds collected under that authority to evaluate an application, including costs for contractors to undertake independent financial, engineering and market analyses of applicants and applications.  This provision has streamlined the application review process significantly.

The Future

Since enactment of SAFETEA-LU, there has been a steady increase in inquiries about the program and railroads expressing their intent to apply in the near future.  Currently, FRA is evaluating eight RRIF applications seeking a total of $2.75 billion in financial assistance.

Any discussion of the future of RRIF should address the President’s FY 2007 Budget, which proposes termination of the program.  In particular, the Administration is concerned about aspects of the RRIF authorization that limit FRA’s discretion in managing the RRIF program and thereby potentially impeding program and risk management.  For example, all railroads, regardless of size, are eligible for RRIF credit assistance, even if they are able to raise funds in the private market.  In addition, the increase in the RRIF program size from $3.5 billion to $35 billion and restrictions on the Department’s ability to limit the size of individual loans in the RRIF portfolio also potentially increase the program’s risk of loss.  Railroads already benefit from 2004 changes to the tax code, including relieving them from paying diesel taxes, further contributing to the Administration’s reservations about the need to extend favorable loan terms to private rail companies.

I urge the Committee’s thoughtful consideration of the merits of the Administration’s FY 2007 proposal.

#

Appendix 1

Outstanding RRIF Loans

Mount Hood Railroad                                       $2.07 million                 2002

Amtrak                                                 $100 million                  2002

Arkansas & Missouri Railroad              $11 million                    2003

Nashville and Western Railroad                        $2.3 million                   2003

Dakota, Minnesota & Eastern Railroad $233 million                  2003

Wheeling & Lake Erie Railway             $25 million                    2004

Stillwater Central Railroad                                $4.6 million                   2004

Iowa Interstate Railroad                                    $32.7 million                 2005

Tex-Mex Railroad                                            $50 million                    2005

The Montreal, Maine & Atlantic Railway           $34 million                    2005

Riverport Railroad                                            $5.5 million                   2005

Great Smoky Mountains Railroad                     $7.5 million                   2005

Iowa Interstate Railroad                                    $9.35 million                 2006

Appendix 2

Calculation of the Credit Risk Premium

The amount of the credit risk premium to be paid by each applicant prior to drawdown of funds is calculated by the FRA using a model developed specifically for this purpose (CRP Model).  This model, which has been approved by OMB, calculates the credit risk premium based primarily on two factors, the financial viability of the applicant and the value of the collateral provided to secure the debt. 

Financial viability is gauged by reviewing the applicant’s historical financial performance over the past five years and the financial projections for the next five years.  The projections are generated by FRA based on a careful analysis of the applicant’s traffic patterns, the economic environment in which the applicant operates and interviews with its largest shippers.  The CRP Model uses the applicant’s historical and projected financial performance and compares it to thousands of private sector companies and their default experience to generate a rating.  If the applicant already has a financial rating from a rating agency, e.g., Moody’s or Fitch, that rating is used in place of the rating generated by the CRP Model.    

The CRP Model then uses that rating and the value of collateral offered by the applicant, if any (valued by a qualified appraiser as a going concern, as required by section 9003(f)(2) of SAFETEA-LU), to adjust projected cash flows from and to the government over the life of the loan.  The net present value of these cash flows, generated using discount rates contained in the Administration’s current year budget, are then used to generate the credit risk premium.   

The calculation of the credit risk premium is reviewed by OMB in the last step of the approval process before the execution of legal documents to finalize the financial assistance to the applicant.

STATEMENT OF

MARION C. BLAKEY,
ADMINISTRATOR,
EDERAL AVIATION ADMINISTRATION

BEFORE THE

COMMITTEE ON COMMERCE, SCIENCE AND TRANSPORTATION,
SUBCOMMITTEE ON AVIATION

ON

THE JOINT PLANNING AND DEVELOPMENT OFFICE

JULY 25, 2006

Good morning Chairman Burns, Senator Rockefeller, and Members of the Subcommittee.   Thank you for the opportunity to testify today about the multi-agency Joint Planning and Development Office (JPDO) and the work we are doing together to develop and deploy the Next Generation Air Transportation System (NextGen) while providing operational and safety enhancements that deliver benefits to our customers today.

Our nation's air transportation system has become a victim of its own success.  We created the most effective, efficient and safest system in the world.   But we now face a serious and impending problem, one that the FAA and this committee are well aware of.   Demand for air services is rising, and could as much as triple over the next two decades.   While the industry downturn following the attacks of September 11 temporarily slowed the growth in the aviation industry that began in the late 1990's, demand is growing rapidly.   And we have to be ready to meet it.

The warning signs are everywhere.   Flight delays and cancellations have reached unacceptable levels.  Other issues, ranging from environmental concerns to the complexities of homeland security are placing additional stresses on the system.  

If we fail to address issues such as increased capacity in a deliberate and focused way, we will suffocate the great engine of economic growth that civil aviation has become.

The FAA and the JPDO have taken a dual track yet complementary approach, keeping our eyes focused on the NextGen Vision while using existing technology to provide important and tangible operational benefits now and in the future to users of the National Airspace System (NAS).  We are finding ways to make existing capacity work more efficiently through advanced technology and operational improvements, with many of these efficiencies not only providing relief today but helping to lay the foundation for the Next Generation System.

The JPDO now serves as a focal point for coordinating the research related to air transportation for agencies across the Federal government, including the Departments of Transportation, Commerce, Defense and Homeland Security, as well as NASA and the Office of Science and Technology Policy.  The initiative achieved important milestones in 2005 towards designing the NEXTGEN system.  The JPDO completed its internal organization and created eight government/industry Integrated Product Teams (IPTs) to break this large and complex project into manageable strategies.  These strategies focus on those aspects of aviation that hold the keys to capacity and efficiency improvements – airport infrastructure, security, a more agile air traffic system, shared situational awareness, safety, environmental concerns, weather and global harmonization of equipage, and operations.  The Teams work closely with our stakeholders to ensure that they have an early window into the planning process and that we take full advantage of their expertise every step of the way.    Further accomplishments to date are highlighted in the recently published “2005 Progress Report to the NGATS Integrated Plan” that was transmitted to Congress on March 10^th as required by Vision 100.

We need the best minds in America across both the public and private sectors working on the task of creating a NEXTGEN system.  To achieve this, we have established a Next Generation Air Transportation System Institute (the NGATS Institute) that allows stakeholders to get directly involved in the transformation process.  And, while the Aerospace Industries Association (AIA) is the host for the Institute, it is co-chaired by the presidents of the Air Line Pilots Association and the Air Transport Association and open for participation by all segments of the industry.

What truly sets this new structure apart is that it minimizes duplication of effort and resources among Federal agencies and maximizes the input of the private sector toward a common goal – the creation of a NextGen system.   

One of the common misconceptions about the NextGen initiative, however, is that we have to wait until 2025 to start seeing the benefits.  FAA is currently implementing a system known as Required Navigation Performance (RNP).  RNP uses on-board technology that allows pilots to fly more direct point-to-point routes reliably and accurately.  RNP is extremely accurate, and gives pilots not only lateral guidance, but vertical precision as well.  RNP reaches all aspects of the flight – departure, en route, arrival, and approach.  For example, in January 2005, in partnership with Alaska Airlines, we implemented new RNP approach procedures at Palm Springs International Airport, which is located in very mountainous terrain.  Under the previous conventional procedures in use at Palm Springs, planes could not land unless the ceiling and visibility were at least 2,300 feet and three miles.  With these new RNP procedures, air carriers with properly equipped aircraft can now operate with a ceiling and visibility as low as 734 feet and one mile.  This lower landing minima has allowed Alaska Airlines to “save” 27 flights between January and November, 2005 - flights which would have otherwise had to divert to Ontario, California—an added distance of at least 70 miles.  Given the current state of fuel prices, savings such as this can mean a great deal to an airline’s bottom line, to say nothing of passengers’ schedules and convenience. 

Establishing an initial Network-Enabled Operations (NEO) capability is a high priority for the JPDO and its member agencies, given its fundamental importance to the success of the NextGen System.  Current efforts focus on identifying the network architecture and enacting standards for information and safety data sharing.  The Department of Defense (DoD) has already invested considerable resources in information technology and telecommunication research focused on NEO and information access and sharing.  FAA, as well as the Departments of Homeland Security (DHS) and Commerce, are committed to developing network-centric information architectures that draw on the lessons learned by DoD.  The opportunity now exists to synchronize these efforts, especially in the areas of data interoperability and compatible network-to-network interface mechanisms, and two on-going DoD initiatives – the synchronization of DoD and DHS classified networks and DoD’s development of its Net-Centric Enterprise Services – will serve as templates for this effort.

The benefits of this technology are clear.  In 2005, the JPDO, FAA and an industry team showed how network-enabled concepts developed for military customers can be applied to Air Traffic Management.  The Joint Network-Enabled Operations Security Demonstration connected seven existing Air Traffic Management and security systems distributed over 12 different locations.  It showed how sharing information in real time across air traffic, air defense, and law enforcement domains could improve coordination and help agencies respond to a security incident more efficiently – thereby lessening the need for evacuations and scrambling fighter jets.  The exciting part of the NEO demonstration is that it enabled communication between agencies’ current networks, eliminating the need to throw out all the individual legacy systems and create a brand new mega-system, which would be prohibitively expensive.  As a part of the “spiral development process” for NEO, an approach to systems development that makes continuous improvements and changes throughout the development process, the JPDO is planning a second joint agency NEO demonstration.  In Fiscal Year 2007, the FAA will participate in the second NEO demonstration under the System Wide Information Management (SWIM) program.  The President’s budget proposal for Fiscal Year 2007 requests $24 million for SWIM.  FAA’s investment in the second NEO demonstration will allow us to apply lessons learned to the acquisition phase of SWIM.   SWIM will provide a secure NAS-wide information web to facilitate a transition toward network-based air traffic operations and allow the FAA to lead and participate system-wide in network-enabled operations with system users, global air navigation service providers and other government agencies.

In its Fiscal Year 2007 budget request, the Administration proposed targeted investments, in addition to SWIM, to promote early implementation of core elements of the NexGen system.  Additional initiatives that will serve as building blocks of the new system will be added to the mix as the Enterprise Architecture is fully developed and system requirements are established. 

One of our most promising initiatives with potential for broad operational applications is Automatic Dependent Surveillance-Broadcast (ADS-B), a technology that could replace ground-based radar systems and revolutionize air navigation and surveillance by providing radar-like separation procedures in remote areas that cannot currently be served by radar; by providing near real-time, in-the-cockpit, aeronautical information such as weather and notices to airmen; by enabling capacity gains by reducing existing separation standards in all domains and airspace classifications; by supporting increased capacity through user-executed airborne spacing, sequencing and separation operations; and by providing improved information for traffic flow management and fleet management – all while reducing our infrastructure costs.  ADS-B uses GPS satellites and ground-based transmitters to allow aircraft to broadcast their positions with greater frequency and accuracy than our legacy radar systems. Moreover, with ADS-B, future pilots will see exactly what the air traffic controller sees.  For FY 2007, the President’s budget includes $80 million for the FAA for the ADS-B program to begin moving toward nationwide deployment. 

The ADS-B system was the key enabling technology for the Capstone demonstration program in Alaska.  Capstone is a technology-focused safety program that seeks near-term safety and efficiency gains in aviation by accelerating implementation and use of modern technology, in both avionics and ground system infrastructure, with the goal of reducing the exceedingly high accident rate in Alaska for small aircraft operations, which was nearly five times greater than the national average.  Through 2005, the program achieved significant safety and efficiency results.  The use of ADS-B information by the Bethel Airport Traffic Control Tower continues to provide benefits to all Bethel operators by enhancing the ability to better balance arrival flows and demand when weather conditions at the airport deteriorate below visual flight rules conditions.  Aircraft equipped with ADS-B have had a consistently lower accident rate than non-equipped aircraft.  From 2000 through 2005, the rate of accidents for ADS-B-equipped aircraft dropped significantly--by 49 percent.  That is real progress, and we will build on this success as we expand the use of ADS-B elsewhere in the country.

One of the first uses of ADS-B technology outside of Alaska will be in the Gulf of Mexico.  We have recently signed a Memorandum of Agreement (MOA) with the Helicopter Association International (HAI), helicopter operators and oil and gas platform owners in the Gulf of Mexico to improve service in the Gulf.  Using ADS-B technology, helicopter operators will transmit critical position information to the Houston Center, enabling unprecedented Air Traffic Control services in the Gulf.  This technology will also develop new air routes with improved separation standards for high altitude airspace.

These new technologies and procedures are vital both to improving our air traffic system today and to building the NEXTGEN system of 2025.  To ensure we deliver these benefits as quickly as possible, FAA is incorporating NEXTGEN goals and targets into the agency’s strategic planning process in a much more comprehensive way.  The draft FAA Flight Plan for 2007-2011, released for public comment just last week, includes several major initiatives that support the transformation to the NextGen system.  And we’ve added the NEXTGEN symbol in the Flight Plan to easily identify each initiative that supports the modernization of the National Airspace System.

As a result, the Flight Plan will now capture explicitly what we must do in the near term through the Integrated Product Teams to achieve the NextGen vision.  In other words, it helps us to identify the pipeline and funding to implement new technologies and incorporate the operational concepts that will serve as the foundation for the NextGen system.  This will provide both an internal process for ensuring commitments are met and an external process for communicating the FAA’s progress to our stakeholders.

We recognize that there are many challenges in converting the JPDO’s vision of the NextGen system into reality.  Because the JPDO is not an implementing or executing agency, the FAA and the other JPDO partner agencies must work closely with the JPDO to develop an implementation schedule for the operational changes required as new technologies are deployed to realize the NEXTGEN vision.  We intend to use the construct of our existing Operational Evolution Plan (OEP) to help us.  However, we will expand the scope of the OEP from a ten-year rolling plan focused exclusively on capacity to a plan that will take us from the configuration of today’s National Airspace System (NAS) to tomorrow’s NextGen system.  In the new Operational Evolution Partnership (OEP),  JPDO transformational operating concepts will be identified, rigorously evaluated, prototyped, and tested so they can be ready for transition into the NAS.  Required operational implementation schedules will be tracked, as well as dates by which initiatives must be funded in order to meet those schedules. 

The NAS and NexGen Enterprise Architectures will provide the backbone of this new OEP by specifying roadmaps for system and certification requirements, operational procedures, program phasing, and prototype demonstrations.  This Operational Evolution Partnership will be the mechanism by which we inform our owners, customers, and aviation community of our plans and progress towards the JPDO vision, while assuring that the JPDO and the FAA are jointly on-track to deliver the NextGen system.

Cost will be a vital factor:  we cannot create a NexGen system that is not affordable.  We are working with the NGATS Institute to hold several workshops with our stakeholders so that the critical assumptions and uncertainties underlying any cost benefit analysis can receive scrutiny and validation for future use.  The first of these workshops, focusing on the commercial aviation sector, was very helpful and has set the stage for a collaborative development of our assumptions on such issues as operations and equipage.   We expect similar such engagement as we meet with representatives from other segments of the industry, such as the General Aviation Community.  Of course, even after we develop the basic assumptions, we will continue to work closely with the industry as we develop the cost models. 

Our vision of the NextGen system is not limited to increased airspace capacity.  Rather, it is one which encompasses the whole air travel experience – from the moment the passenger arrives at the curb of his departure airport to his or her exit from their destination airport.  The NextGen system includes security, safety, and efficiency of passenger, cargo and aircraft operations.  Technology will change the way America flies, and aircraft will be able to use information technology in a more robust way, with enhanced cockpit, navigation and landing capabilities, and far more comprehensive and accurate knowledge of real-time weather and traffic conditions.

The NextGen system will be more flexible, resilient, scalable, adaptive, and highly automated.  The NEXTGEN operational vision is not just related to the air traffic management system alone, but also includes the preservation and growth of airports, heliports, and other future landing and departure facilities to incorporate fully the emerging system’s benefits.  This system will be built on a far more robust information network than anything we have seen to date, ensuring that the right information gets to the right person at the right time, while keeping the nation safe and the flow of traffic running smoothly.  Finally, we will put more information directly into the cockpit of intelligent aircraft through sensors and satellites linked together through network communications.

One of the major products for the JPDO, and indeed, one of the critical elements in defining the NEXTGEN initiative itself, is the development of the Concept of Operations and the Enterprise Architecture.  These documents define each NEXTGEN function, what the requirements will be, and how it will evolve.  They are absolutely essential to the future development of the NextGen system.

The Concept of Operations is a document that provides the basic operational description of how the NextGen system will actually function.  This kind of explanation, offered in one document, will be critical to developing the specific requirements and capabilities that for our national air transportation system in 2025.  In a sense, the Concept of Operations is like an architect’s preliminary drawings - it outlines what the system will look like, how it will function, and what its capabilities will be. 

However, to adequately lay the groundwork and basic plans for the NextGen system requires another step in the process, developed concurrently with the Concept of Operations, and that’s the Enterprise Architecture.  The Enterprise Architecture represents the actual plan for how the NextGen system will be developed, much like a set of blueprints.  This includes the systems that will be needed, the timing for their deployment, and how they will work together.

Both of these documents, the Concept of Operations and the Enterprise Architecture, are essential to defining the NextGen system and will guide the future investment and capabilities, both in terms of research and systems development.  The JPDO has made considerable progress on both products, and I am pleased to say that the first phase of the Concept of Operations was released this week on the JPDO website.  It is now available for review and comment by our stakeholders, and we are anxious to receive their feedback.  Other phases of the Concept of Operations will be released in the next few months, along with the Enterprise Architecture.  We expect the completed versions of each set of documents to be complete by early next year.

The importance of developing this system of the future is also quite clear to policymakers in Europe, where a comparable effort is well underway.  This presents both a challenge and an opportunity to the United States.  Creating a modernized, global system that provides interoperability could serve as a tremendous boost to the aerospace industry, fueling new efficiencies while creating jobs and delivering substantial consumer benefits.  Alternatively, we could also see a patchwork of duplicative systems and technologies develop, which would place additional cost burdens on an industry already struggling to make ends meet. 

We are working to avoid that future by seeking out partnerships with our international counterparts.  This year we have established steering groups with China, Japan, Canada and Mexico to facilitate cooperative activities on the design of the NextGen system.  These groups are moving forward to pursue joint initiatives, such as ADS-B, SWIM, and Enterprise Architecture which are aligned with the required performance-based systems. 

In addition, I just returned from the Farnborough Air Show, where I concluded an agreement with Jacques Barrot, the Vice President of the European Commission, which formalizes cooperation between the NEXTGEN initiative and its European counterpart, the Single European Sky Air Traffic Management Research (SESAR) program.  The FAA and the EC intend to identify opportunities and establish timelines to implement, where appropriate, common, interoperable, performance-based air traffic management systems and technologies.  This coordination will address policy issues and facilitate global agreement within international standards organizations such as ICAO, RTCA and Eurocontrol, and contribute greatly to the success of this critical initiative.

Our overarching goal in the NEXTGEN initiative is to develop a system that will be flexible enough to accommodate a wide range of users -- very light jets and large commercial aircraft, manned and unmanned aircraft, small airports and large, business and vacation travelers alike, while handling a significantly increased number of operations with a commensurate improvement in safety, security and efficiency.  Research will continue to help us find the right balance between a centralized satellite and ground system and a totally distributed system, where aircraft “self-manage” their flight with full knowledge of their environment.

The current technological and operational improvements are positive steps down the road to building the NextGen system.  If we are to see the benefits fully realized, however, it is absolutely imperative that we reform the financing system for the FAA.  Over the next few years we will work to achieve better cost management; determine the best solution for our aging and deteriorating facilities; and, conduct research on convective weather to reduce flight delays associated with summer storms.  We strive to improve efficiency, while searching for innovative ways to provide safer services even more efficiently.  However, we need to establish the financing of our current and future operations based on actual costs and investment requirements that will realize tangible benefits and increasing efficiency.  As we decide how to wisely invest in our future, we will continue to work closely with our customers, our employees, and of course, Members of Congress. 

Mr. Chairman, this concludes my testimony.  I would be happy to answer any questions the Committee may have.

STATEMENT OF

MARION C. BLAKEY,
ADMINISTRATOR OF
THE FEDERAL AVIATION ADMINISTRATION,

BEFORE THE

SENATE COMMERCE, SCIENCE AND TRANSPORTATION COMMITTEE,
SUBCOMMITTEE ON AVIATION,

ON

FAA’S FY2007 BUDGET AND THE VIABILITY OF THE AIRPORT AND AIRWAY TRUST FUND.

MARCH 28, 2006.

Chairman Burns, Senator Rockefeller, Members of the Subcommittee:

I welcome the opportunity to be here today, along with my colleagues from the Inspector General’s Office and the Government Accountability Office (GAO), to discuss the state of the Federal Aviation Administration’s (FAA) financial health, specifically our budget for fiscal year 2007 and the condition of the Airport and Airway Trust Fund (AATF or Trust Fund).  The financial health of the aviation trust fund is closely linked to the stability of the aviation industry.  I understand that today’s hearing will lay the foundation for a hearing in several weeks where future funding options for the FAA will be addressed in detail.  I look forward to returning and discussing the specifics of the Administration’s proposal. 

First let me briefly express appreciation for the dialogue that has begun with our stakeholder community.  Over the past year, under Secretary Mineta’s leadership, we have conducted a broad outreach to the aviation community to explore funding options that would be in the long-term best interest of the traveling public, the aviation industry and the FAA.  We held a public forum last April and have conducted numerous group and individual briefings with our stakeholders.  To inform the dialogue we published detailed industry activity data as well as a set of principles which we thought should underlie and guide the discussion.  In my view the thoughtful comments we have received have greatly informed our decision making.  We at the FAA have listened intently and have benefited from a wide range of expert views. 

As I’ve often stated over the past year during our outreach, our belief in the need for funding reform for the FAA is not fundamentally about generating more money for the FAA.  It is about creating a more rational, equitable and stable system that provides appropriate incentives to users and to the FAA to operate more efficiently and facilitates modernization of the aviation system on an assured and predictable basis. 

Fiscal Year 2007 Budget Proposal

I would like to address the FAA’s budget in the near term.  As you know, the FAA operates 24 hours a day, 7 days a week, 365 days a year.  We run a multi-billion dollar air traffic control system that in FY 2005 served 739 million passengers and over 39 billion cargo revenue ton miles of freight.  We operate and maintain a system comprised of more than 70,000 facilities and pieces of equipment.  There are FAA-operated or contract towers at 500 airports, and we are also responsible for inspection and certification of about 220,000 aircraft and 610,000 pilots.  We have some 43,000 dedicated government employees working to serve the traveling public and the businesses that depend on the air transportation system. 

When Congress mandated the FAA to realign our operations and manage more like a business, we rose to the challenge.  The FAA’s efforts over the past three years have paid real dividends, not just to the flying public but to the taxpayer as well.  By implementing improved management tools, including better cost-accounting systems and instituting a pay-for-performance program, we have been able to make better use of our resources.  The tangible results are reflected in our FY 2007 budget request of $13.7 billion.  The request upholds our commitments to increase the safety, capacity, and efficiency of the national aviation system.

The FY 2007 budget provides $8.4 billion for our Operations account and reflects the rising labor costs and challenges the FAA faces.  This year, we completed the largest A-76 competition in government and will see the first installment of cost savings --$66 million-- in FY 2007.  This contract not only saves money; it also commits the vendor to modernize and improve the flight services we provide to general aviation pilots.  The agency’s emphasis on bottom-line results has not been easy.  The FAA has slashed costs where possible and slowed the rate of growth of our labor costs through productivity improvements.  We also continue to apply effective management and financial principles to our labor negotiations.  The simple fact of the matter is that we cannot and will not sign a contract that the taxpayer cannot afford.  Since 1998, the first year of the current NATCA contract, the increasing imbalance in compensation between NATCA and the rest of the agency has cost the taxpayer $1.8 billion.  Neither the FAA nor the taxpayer can afford a repeat performance.  As a result, future labor agreements will be fair, affordable and protect management’s rights.  We have been negotiating with NATCA for more than eight months, and I am hopeful that we will be able to reach a voluntary agreement, particularly now that both sides have been working with the help of a federal mediator during the last few weeks.  Both sides recently agreed to a short extension of the mediation, and I anticipate this will come to closure shortly, hopefully by a voluntary deal. 

Long-term affordable pay structures are only a part of the equation.  In addition, we are taking steps to achieve savings of 10 percent by FY 2010 in controller staff costs through productivity improvements.  We achieved the first 3 percent of this goal in FY 2005 and, overall we avoided approximately $23 million in costs last year.  This fiscal year and in FY 2007, we project a minimum of a 2 percent productivity improvement each year.

We expect a continuous wave of controller retirements over the next 10 years, as 72 percent of our air traffic controllers become eligible to retire.  Bringing aboard new controllers is a complex process and it takes several years to train a controller.  Our budget request supports our hiring needs for both air traffic controllers and safety inspectors.

For Facilities and Equipment (F&E), we are requesting $2.5 billion to improve and modernize the airspace system.  We are also scrutinizing our capital investments; revisiting business cases and weeding out programs whose benefits no longer justify the costs; and we are increasing our emphasis on programs that will save the agency money.

We are making similar inroads with equipment.  In FY 2005, we removed 177 navigation aids from service, which saved the taxpayer about $2.7 million.  This year, we plan to remove 100 more, followed by another 100 in 2007.  We are taking steps to save wherever possible.  In fact, our five-year strategic plan, the FAA Flight Plan, sets cost savings and productivity improvement goals for all organizations in the agency.

Our resources and activities are closely linked with the dynamic industry we oversee and serve.  The pace and depth of change in aviation is unparalleled.  Business models evolve as rapidly as the technology changes:  markets once dominated by wide body aircraft are now giving way to smaller jets.  Entrepreneurs now are marketing microjets, which may one day become the “personal taxi” of the sky.  Fractional ownership is making it easier for businesses to own and operate aircraft. 

Even with the financial shake-up in the airline industry, all major forecasts project that the demand for air travel will outstrip existing capacity.  After a very slight decline in projected operations at airports with FAA or contract towers, we forecast an average annual growth of two percent and forecast a three percent annual growth for en route operations (from 2005-2017).  Air travel now exceeds pre-September 11 levels and remains on track to carry more than 1 billion passengers by FY 2015. 

The future portends a wide range of aircraft with divergent infrastructure, air traffic management, regulatory, and procedural requirements.  We must be prepared to support a system that includes the A380 and the microjet (and everything in between).  We must be able to support airlines, large and small, national and regional.  Recognizing that aviation represents about nine percent of the America’s Gross Domestic Product, we must provide this infrastructure in time to keep the U.S. economy growing while controlling the costs of that system. 

Safety

Safety remains our number one priority and our number one success story, with the trends in both commercial and general aviation showing consistent improvement.  The safety record we have achieved for air carriers is a remarkable accomplishment, which our entire workforce—inspectors, engineers, technicians, and controllers—shares with the broad aviation community.  Over the past four years, 3 billion people have traveled safely in the air transportation system---that’s ten times the population of the U.S. 

The FY 2007 budget reflects the agency’s steadfast commitment to safety.  Out of a total request of $13.7 billion, about 70 percent, or $9.6 billion, will contribute to our efforts to improve our already historic safety record.  This includes further progress in reducing commercial and general aviation fatality accidents, the numbers of runway incursions, and HAZMAT incidents.  Our overarching goal is to measure and achieve the lowest possible accident rate, while constantly improving safety.

Grants-in-Aid to Airports

In today’s challenging budget environment, we have been forced to take a long hard look at our funding requirements.  Our FY 2007 budget request for Grants-in-Aid to Airports is $2.75 billion which is lower than recent authorized and enacted levels.  Nevertheless, under our proposed budget, FAA will be able to support all high priority safety, capacity, security and environmental projects.  There will be adequate funds to meet all current and anticipated Letter of Intent (LOI) commitments, which relate to high priority, multi-year projects within the national system.  The President’s Budget includes support of major capacity projects such as the Chicago O’Hare redesign, new runway at Washington Dulles International Airport and major projects at Atlanta-Hartsfield International.  We will also be able to fund projects to meet the FAA’s Flight Plan goal for improving runway safety areas (RSAs), help airports meet their Part 1542 security requirements, and continue work on phased projects. 

Technology for the future

We are laying the foundation for our future with a commitment to increasing the system’s capacity to accommodate the air transportation system’s predicted growth.  We will meet these future needs by harvesting new technologies that will support the Integrated National Plan for the Next Generation Air Transportation System (NGATS).  This Plan, submitted to Congress in December 2004, brings together six cabinet-level groups in the Joint Planning and Development Office (JPDO) to eliminate duplication and wasted resources.  The Plan is a roadmap that will leverage federal funds and allow us to provide the national aviation system that can handle the safety, capacity and security needs of the future.

For the FAA, the Plan has already been integrated into our budget.  Our 2007 budget begins to build this new infrastructure by, for example, supporting two promising technologies:  Automatic Dependent Surveillance – Broadcast (ADS-B) and System Wide Information Management (SWIM).  The capabilities of ADS-B are already proven in the field.  ADS-B provides: (1) automatic broadcast of aircraft position, altitude, velocity, and other data; (2) enhanced “visibility” of aircraft and vehicle traffic for pilots and air traffic controllers; and (3) use of Global Positioning Systems, allowing us to reduce our reliance on ground-based infrastructure.  SWIM makes advanced information distribution and sharing capabilities possible.  Every year, FAA builds applications for air traffic management systems that require unique interfaces between the new application and existing systems.  SWIM will replace those unique interfaces with a reusable interface and provides many operational benefits.

The above overview of our FY 2007 budget is how we propose to meet the challenges over the near term for the FAA, and also provide for the long-term with our Integrated National Plan for NGATS.  At the same time, we are also planning for the next reauthorization of our programs and how those programs will be funded.  Critical to that endeavor is an examination of the status and outlook of the Airport and Airway Trust Fund and what that means for the FAA’s long term financial picture. 

The Airport and Airway Trust Fund

The Airport and Airway Trust Fund was created in 1970 to provide a dedicated source of funding for the aviation system.  Before there was a Trust Fund, a 5% tax on passenger airline tickets, a general aviation fuel tax, and a tire and tube tax were deposited in the General Fund.  Today Trust Fund revenues are generated by a combination of taxes that were last authorized in 1997:  a domestic passenger ticket tax of 7.5% of the price of a ticket, a domestic flight segment tax of $3.30 per segment per passenger, an international departure/arrival tax of $14.50 per international passenger, an Alaska/Hawaii departure tax of $7.30 per passenger traveling between these states and the continental U.S., a 6.25% waybill tax on domestic cargo and mail, a general aviation (GA) jet fuel tax of 21.8 cents per gallon, a GA aviation gasoline tax of 19.3 cents per gallon, and a commercial fuel tax of 4.3 cents per gallon.  The domestic segment tax, international departure/arrival tax, and Alaska/Hawaii tax rates are indexed to the Consumer Price Index and have increased each year for the last four years, but the airline ticket tax is a fixed percentage of the ticket price, so it is dependent on changes in airline ticket prices rather than general inflation.  These taxes and fees are scheduled to expire in September 2007, which also coincides with the end of the current authorization for FAA programs under Vision 100. 

Each year, the FAA is funded by annual appropriations drawn both from the aviation Trust Fund and from the General Fund.  There has been a long history of funding a portion of the FAA’s operating costs out of the General Fund due to recognition that aviation provides benefits to the non-traveling public and to our economy as a whole.  However, the ratio of General Fund versus aviation Trust Fund financing has varied over the years.  The General Fund share of total FAA appropriations has been as high as 59 percent (in FY 1984) and as low as zero (in FY 2000).  The trend, however, is not in question.  On average over the last 15 years, the portion of operating costs coming from the General Fund has declined steadily.  In FY 2005, about 20 percent of the FAA’s total budget came from the General Fund and 80 percent from the Trust Fund; this year it’s 18 percent and 82 percent, respectively. 

In recent years, appropriations from the Trust Fund have been funded not only from the annual revenue going into the fund and interest posted to the Trust Fund, but also from drawing down the AATF’s balance, which was over $7 billion as recently as 2001.  A gap exists when you compare the revenue going into the Trust Fund with the level of our costs, and this gap is quickly eroding the Trust Fund.  Since the start of FY02, the uncommitted balance[*] of the Trust Fund has declined by more than $5.4 billion, or an average of 28% per year.  When there is no relationship between the level of revenue being raised to the costs being funded from the Trust Fund, factors such as fluctuating ticket prices that do not raise enough revenue, volatile demand so there are fewer passengers paying for travel, and fundamental changes in the airline industry such as the decreasing size of aircraft being used for commercial transport, lead to a revenue shortfall that has been funded by drawing down the Trust Fund balance.  With the increasing pressures on the budget to fund military and national security needs, the Trust Fund remains a critical necessity in closing the funding gap.  Last year (FY05), the uncommitted balance at the end of the fiscal year was $1.9 billion and, this fiscal year, the President’s budget projects that it will dip to approximately $1.7 billion at the end of the fiscal year. 

The FY2006 projected level of the uncommitted balance is sobering because it leaves only a small “cushion” in the Trust Fund balance.  In addition, our ability to rely on an increased General Fund contribution to bridge any gap is in question due to competing budget pressures as well as the effort to reduce the federal deficit. 

As we look to the future, we see a complicated air traffic control system and workload.  As noted above, scheduled commercial passenger demand, which dipped severely in the wake of 9/11, exceeded pre-9/11 levels last year reaching a record 739 million passengers, up from 690 million in FY 2004.  We expect that domestic passenger totals will continue to grow at approximately three percent per year with the international sector growing five percent per year. 

Low-cost carriers and regional carriers (using smaller jets) are continuing to redefine the market.  Revenue passenger miles(RPM) for the regional carriers are expected to grow almost seven percent per year, and we forecast annual RPM growth of almost eight percent for low-cost carriers.  We forecast that regional carriers will increase their share of the U.S. domestic market from 22 percent last year to more than 25 percent by 2017.  In FY 2005, commercial activity at 23 of our 35 major airports exceeded FY 2000 (peak) activity levels.  Las Vegas (37%); Ft. Lauderdale (33%); Salt Lake City (30%); and Minneapolis (30%) experienced the greatest increases in operations.    

It is of course very good news for the aviation industry that demand is back, but it is back in different ways than before.  While low fares are good news for the passenger, they spell trouble for the Trust Fund with its heavy reliance on the ticket tax as its primary source of revenue.  Approximately 50% of the Trust Fund revenue currently comes from the 7.5% tax on domestic airline tickets.

Industry changes also have implications for the FAA’s workload.  The airlines are trying to control costs by using increasing numbers of smaller aircraft.  This trend adds to the workload of air traffic controllers without increasing tax revenue commensurately.  Regional jets normally carry fewer passengers than the larger airliners, so the movement toward smaller passenger aircraft contributes to the decline in the Trust Fund revenue per flight.  If an airline carries a given number of passengers (paying the same fares) on two regional jets instead of one larger jet, ticket tax revenue does not change, but controller workload approximately doubles.  Our latest forecasts indicate that the growth in the number of smaller aircraft is expected to continue, driving down the average number of seats of a domestic aircraft through 2011.  Plainly, our revenue is not tied to the cost of the service, which means that there is no nexus between actual workload and how it’s paid for. 

Increased air traffic operations are not the only source of increased workload for the FAA.  In recent years the industry has also seen more new entrant carriers.  While this is good news for competition, it also has workload implications for our agency.  Right now, there are 10 applications in the queue awaiting review and certification by our safety staff, and each of these new operators will bring additional pilots and crew into the system.  Also, with regard to our airport grant program, Vision 100’s increase in funding for the Airport Improvement Program (AIP) coupled with a new entitlement formula apportionment for non-primary airports increased our workload in processing grant applications by fifty percent. 

Knowing what is happening with Trust Fund revenues and how the changes in the aviation industry affect our workload is only part of the equation.  We know we must also continually work very hard to control our costs--to make changes and become more efficient, more business like.  We are changing the agency’s structure with a major shift to a performance-based organization, and, as I noted above in discussing our budget proposal, making tough choices with our funding.  We have implemented a cost accounting system in the ATO that provides our managers and executives with the information they need to identify and eliminate wasteful spending, hold or reduce operating costs, and better link financial performance to mission objectives.  That cost accounting system is being extended throughout the FAA this year to help us better assess and control our costs.

I’ve already mentioned our cost savings measures by the ATO, our challenges with our labor negotiations and with future controller hiring.  We are also faced with an aging and deteriorating inventory of facilities and equipment.  The average condition of the FAA’s 21 en route air traffic control centers is poor and getting worse each year.  As this Committee well knows, modernization of the air traffic control system is critical if the agency is to keep up with what aviation brings tomorrow.  The price tag for these facilities and equipment alone is $2 billion per year in capital funds just to maintain current services.

In addition to maintaining the current infrastructure, the JPDO is planning for the emergence of the next generation of the air transportation system out to 2025, charting the course for satellite based navigation, handling new aircraft classes, on-demand services, and the increasing growth in air traffic.  However, the move to a modern, efficient and technology-driven aviation system is going to require sustained, multi-year investments.  We will need to invest resources in order to make the transition to a new system that will significantly reduce operating costs and better serve our customers in the long run.

What I have outlined above—the condition of the aviation Trust Fund in the context of the growth in demand and industry restructuring, and the fact that FAA’s future funding requirements will significantly outpace revenue from aviation taxes--clearly highlights a couple of issues.  During the most recent reauthorization cycle for the current aviation excise taxes (1996-1997), Congress allowed the authority for those taxes to expire twice, which resulted in a $5 billion loss in revenue to the Trust Fund.  We cannot afford to let that happen again.  Two, the FAA needs a stable source of funding that is based both on our costs and the services we provide so that we can meet our mission in an extremely dynamic business environment.  Airline ticket prices are not related to any real measure of productivity for the FAA.  Regardless of how many operations we run through the national airspace system or how quickly we can certify new aircraft products and technologies, or how we continue to drive down the already low accident rate, the primary source of Trust Fund receipts is linked to the price of a ticket.  That approach will not sustain us into the future.

Tying funding to the cost of providing service protects both FAA and the customers who use FAA services by not subjecting our ability to provide a certain level of service to unrelated factors like ticket prices.  A stable, cost-based revenue stream can also ensure funding for long-term capital needs.  We also believe that a cost-based revenue structure would provide incentives to our customers to use limited resources efficiently and to the FAA to operate efficiently, as stakeholder involvement can help us ensure that we are concentrating on services that the customer wants and is willing to pay for.

Conclusion

We believe that the revenue stream that currently funds the FAA is not tied to the cost of the services and that there is a need for funding reform.  FAA’s workload continues to increase.  The current system, largely based on the ticket tax, provides no nexus between the actual workload of controlling flights and providing other services and how they are paid for.  It is time for change.

Mr. Chairman, ten years after the NCARC recommendations, we are tackling probably the hardest part of reform:  how the aviation transportation system will be financed in the next decade and beyond.  Our proposal for funding reform for the FAA is now under review within the Administration.  As I noted at the outset, it is the product of extensive public outreach, analysis, and a lot of creative thinking.  It will propose a cost-based funding structure which will ensure that our costs and revenues are aligned and that our stakeholders are treated equitably.  The details will come soon in the form of a legislative proposal, which I hope will be the basis for ongoing dialogue with this Committee and others in Congress, our colleagues in the aviation community, and the public. 

I look forward to the debate and expect that the discussions will be frank, open and spirited.  We have an opportunity in the near future for positive change, to correct the faults of the current system that threaten our ability to meet future demand.  Change is always unsettling and difficult and requires patience and hard work, but to be ready for tomorrow we must begin today.  It is the only way that we will be able to continue to operate and maintain the world’s safest system with the capacity our economy needs. 

That concludes my testimony.  I would be happy to answer any questions you may have.

Statement Of

VADM Thomas J. Barrett, USCG (ret.)
Administrator
Pipeline And Hazardous Materials Safety Administration
U.S. Department Of Transportation

Before The

Subcommittee on Energy and Air Quality
Committee on Energy and Commerce
United States House Of Representatives

July 27, 2006

I.INTRODUCTION

Chairman Hall, Ranking Member Boucher, members of the Subcommittee, thank you for the invitation to appear to discuss your draft proposal to reauthorize the pipeline safety program. I appreciate the Subcommittee’s stewardship on pipeline safety and I am pleased to provide my first testimony before this subcommittee on ways to improve an already forward leaning safety program, and to build upon PHMSA’s progress to date. 

I believe your proposal embodies key concepts that will help us reach our goal of eliminating pipeline safety incidents and provide a foundation for the energy transportation infrastructure we need to continue our strong economic growth into the future.

Americans depend on pipeline transportation for the safe movement of critical energy supplies. This dependence makes it crucial to keep the system safe and reliable. Over 97 percent of the nation’s transportation energy needs are met by petroleum products, and 64 percent of these energy products are moved through America’s pipeline networks. The system is near capacity all the time.  In times of emergencies, this lack of redundancy and system capacity makes it important for PHMSA to work along with our state partners to assure that energy product transportation is not interrupted.  In the years to come, we hope to contribute to increasing the resiliency of this infrastructure.

“The Pipeline Safety Improvement Act of 2002” which you sponsored and the President signed into law was a most important milestone.  The Act reinforced the importance of integrity management, operator qualification, public education, research, mapping, construction damage prevention and other initiatives, including one national number for One-Call.  Most importantly in my view, the Act set the stage in law for a systems approach to managing and reducing pipeline risks.  Over the past five years we have seen a steady decline in the leading causes of pipeline failures and the serious accidents in which people are injured or the environment is harmed. We need to stay the course and step up our efforts.  

In the past few years, PHMSA has taken a hard look at incidents, their causes and what can be done to prevent them. One thing is crystal clear-the leading cause of incidents in which people are hurt or killed is construction-related damage causing an immediate rupture or damage which later grows to failure. This occurs most often on the distribution systems which run through the neighborhoods where people live and work. This part of the pipeline system, the distribution network, is almost entirely under the jurisdiction of states, our foremost partners in pipeline safety.

II.Administration Proposal

The Secretary of Transportation recently submitted to Congress the Administration’s legislative proposal to reauthorize and improve pipeline safety and protection for the environment, and also to enhance infrastructure reliability.  The proposal, the “Pipeline Safety and Reliability Improvement Act of 2006” looks to build on our progress in achieving the mandates of the 2002 Act by placing more emphasis on damage prevention, enhancing state programs’ oversight of pipelines, and clarifying our responsibilities and emergency waiver authority during natural disasters and other emergencies.

Managing pipeline safety based on system risk clearly suggests we must minimize damage to pipelines associated with construction-damage. Construction damage is almost always preventable and we have worked to find practices that will eliminate this problem. The challenge is managing this activity without damaging a very crowded underground infrastructure – one that gets more crowded every day, not just with pipelines but new telecommunications, electric, water and sewer, and other infrastructure.

Several states including Virginia and Minnesota have led the way with strong damage prevention programs and seen up to 50% reductions in this type of damage. We need to prioritize the resources for pipeline safety to be sure that our state partners have more resources to share responsibility with us in getting this job done.  The Committee’s proposal recognizes this need by adopting important concepts which the Administration forwarded, including new civil enforcement authority, incentives for states to improve their damage prevention programs, technology grants to advance the safety and efficiency of the one call notification process, and more funding for state pipeline safety programs.

The following chart from a PHMSA report gives a picture of the progress possible with a strong enforcement program. There are degrees of success with enforcement and two model states, Virginia and Minnesota both have fewer than 3 damages per 1,000 one call tickets by enforcing the practice of calling before digging.

Our proposal addresses this concern by establishing a state grant program to provide more incentives to states to develop effective damage prevention programs.  State agencies and PHMSA would also gain authority to conduct civil enforcement actions against anyone who fails to contact “One-Call” prior to digging, with our focus being on state enforcement.

Ensuring the safety of 2.3 million miles of pipelines is an enormous task. Our state partners oversee 90 percent of operator compliance with pipeline safety regulations.  We seek to raise the cap on grants provided to state pipeline agencies over 6 years from 50 percent to 80 percent to offset the increasing cost of the programs they execute, consistent with the programs of the Department.  State agencies do utilize PHMSA’s national regulatory pipeline safety standards to inspect the majority of the pipeline infrastructure and we increasingly invest in state training and decision support as we function as a coordinated workforce.  We need them and they need our help to be most effective. 

Last year’s devastating Gulf Coast storms also taught us lessons about the vulnerability of pipelines to natural and man-made disasters.  In the wake of last years storms, PHMSA’s inspectors deployed to State emergency operations centers, operator control rooms, and to critical pumping stations across Louisiana and Mississippi to monitor operator efforts to work to keep energy moving without standard electric power.

To assist with recovery of the pipeline infrastructure during future emergency events, the Administration’s proposal provides for specific regulatory authority to use emergency waivers when necessary to help operators anticipate or respond expeditiously to national or regional disasters at the earliest possible time. We believe this can help to minimize pipeline system disruption while maintaining safe operations.

Like you, I strongly favor a systems-based approach to assessing and managing risk, especially as the risks to large infrastructure systems like pipelines often change over time.  I expect to see an effective systems risk management approach, which this subcommittee helped devise, getting positive results for pipeline safety.  The integrity management program has focused operators on making the best use of information as it becomes available.  But this must be a dynamic process in which the operator is able to deploy attention and resources against the greatest risks, worst first.  Reliance on stipulated retesting intervals, as established in current law, is inconsistent with a systems approach and a disincentive to continuous reevaluation and readjustment.

Reliance on stipulated retesting intervals as established in current law seems a disincentive to the continuous evaluation and readjustment of a dynamic systems approach.  It is a basic element of an ongoing “whole-health” review of a pipeline system.  The goal is to regularly and systematically utilize the most current information about the pipeline system so that it may be maintained to operate safely in the best condition for the longest amount of time.

These reauthorization concepts have been generally supported across our stakeholder community, including the federal and state family, and we are pleased to see many of the same priorities reflected in the Committee’s proposal.

III.Conclusion

I assure the members of this Subcommittee, that the Administration, Acting Secretary Cino, and the dedicated men and women of PHMSA share your strong commitment to improving safety, reliability, and public confidence in our Nation’s pipeline infrastructure.

Like you, we understand the importance of our mission to the safety of our citizens and the energy security and continued economic growth of our great Nation.

Thank you.

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