STATEMENT OF

CATHERINE M. LANG,
ACTING ASSOCIATE ADMINISTRATOR FOR AIRPORTS,
FEDERAL AVIATION ADMINISTRATION,

BEFORE THE

HOUSE OF REPRESENTATIVES,
COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE,

ON

Residential Through-the-Fence Agreements at Public Airports: Action to Date and Challenges Ahead.”  

SEPTEMBER 22, 2010.

Chairman Oberstar, Ranking Member Mica, Members of the Committee:

Thank you for inviting me here today to discuss the Federal Aviation Administration’s (FAA) proposed policy regarding access to airports from residential property.  Since the 1930’s, the United States has pursued the development of a national system of airports to meet the nation’s air transportation demands.  When Congress created the first airport development program, it tasked our precursor agency, the Civil Aviation Authority, with ensuring that airports that receive monies from the Airport and Airway Trust Fund be available for public use and to serve a variety of public purposes.  As the aviation industry has evolved, there have been many changes, from the types of aircraft and aeronautical users to the way we plan, build, and develop airports to ensure the highest possible levels of safety.  However, one thing has remained constant: when we invest in an airport, Congress has mandated certain guarantees to ensure both the longevity and the public nature of that investment. 

We apply this principle in two ways.  First, we indentify the airports critical to our national system because out of the 21,000-some airports and landing strips in the United States, only 3,332 are designated as a part of the “national system of airports,” and therefore eligible for Airport Improvement Program (AIP) grants.  From the inception of this program, a guiding principle in the selection of airports as part of the national system has been the ability of an airport to be expanded and adapted to meet both current and future needs of the public air transportation system. 

Second, it is a long-standing principle that with the expenditure of any federal grant funds certain conditions attach, such as non-discrimination requirements.  In keeping with this principle, every time we make a financial investment at an airport, the sponsor agrees to 39 federal assurances, the vast majority of which are explicitly Congressionally mandated.  These assurances are designed to protect the public aeronautical characteristics of the airport, encourage good airport management, and impose conditions to protect the public purpose for which the investment of taxpayer dollars was made. These conditions include requirements pertaining to fair and reasonable rates and charges, airport layout plans, maintenance and operation consistent with safety standards, and prohibitions on discrimination and revenue diversion.  We may not always be able to predict where demand will grow and drive future capacity needs, but we can make long-term investments and through the assurances require airport operators to ensure a solid foundation to serve the needs of future aeronautical users.  These principles and assurances have for 60 years protected and expanded the most robust system of airports in the world.

Today, I’ll be discussing the FAA’s proposed policy regarding access to airports from residential property.  Although the vast majority of residential through-the-fence agreements involve general aviation airports, this policy applies to all airports in the NPIAS.  I’d like to explain why we decided to initiate a policy review earlier this year, how we conducted that policy review, and what we learned.  My testimony will be confined to airport compliance and capacity issues and will not address any potential security issues.

In order to frame this discussion properly, let me first explain what a public use airport is and how it differs from a private airpark.  Our national plan of integrated airport systems (NPIAS) is comprised of public use airports that must be open to all aeronautical users, must be sufficiently expandable and adaptable so as to accommodate new aircraft types, and must develop in a way that meets FAA safety standards. These airports are eligible for federal Airport Improvement Program grants.  Conversely, private airparks are financed and maintained by the aviation community that uses them and are free to set their own standards for use, access, and safety.

Through-the-fence access agreements create a right to taxi an aircraft from adjacent or nearby private property across the airport boundary through an established access point. Historically, FAA’s national policy did not focus on residential through-the-fence access to federally obligated airports.  Rather, the principal focus was commercial though-the-fence access.  In general, we discouraged commercial through-the-fence arrangements in most instances.  To promote self-sustainability of an airport (a statutory grant condition), it is a preferable business practice that airports promote on-airport commercial tenants, and airport layout plans include land for such purposes.  However, airports sometimes lack sufficient space for all commercial interests, and in those limited cases we acknowledge the need for commercial through-the-fence arrangements.  In light of these limited exceptions, we have not banned these types of agreements. 

Operating on the prima facie assumption that residences are inconsistent with the values for expandability and adaptability, we did not consider it necessary to put out guidance explicitly banning residential through-the-fence.  However, ambiguity in the language with regard to commercial through-the-fence agreements left insufficient guidance for field staff.  Our lack of awareness and consideration of this issue was further exacerbated by our heavy reliance on our state aviation partners to conduct land use inspections at GA airports. 

In 1999, the Government Accountability Office issued a report titled “General Aviation Airports Unauthorized Land Use Highlights Need for Improved Oversight and Enforcement.”  This report cited serious deficiencies in the way the FAA monitored sponsor compliance with regard to land use and recommended on-site inspections.  As a result, in 2001, we began conducting land use inspections in each of the FAA’s nine regions, as agreed to with GAO. 

Shortly thereafter, the Wendell H. Ford Aviation Investment and Reform Act for the 21^st Century established a specific grant program for general aviation airports.  These nonprimary entitlements (NPE) have had a profound effect on the FAA’s relationships with, and expectations from, GA airports.  In working more closely with GA sponsors, we realized that some had a better understanding of their federal obligations than did others.  As a result, we have sought to educate GA sponsors and promote our principles for long-term investment by helping GA airports engage in master planning to identify both immediate and long-term needs.  Since the NPE program started, the FAA has issued $132,483,327 in master planning grants at 1,005 GA airports.

The FAA’s increased involvement with GA airports led to increased knowledge about their facilities and activities. It was shortly after initiating the NPE program that FAA staff in the field began alerting headquarters about proposals to develop residential housing near, and in some cases, on airport property.

In the mid-2000’s, the Airport Compliance Division responded to several on-airport residence and residential through-the-fence proposals from airport sponsors and developers.  In light of the national policy of constructing and operating aviation facilities so as to minimize current and projected noise impacts on nearby communities, as well as the agency’s experience with noise abatement and residential encroachment, residential through-the-fence arrangements were viewed as being in conflict with policies on compatible land use planning.  We responded to each request, citing actual and potential violations of the sponsor assurances that could occur as a result of these plans.  In 2007, we issued a Director’s Determination, which stated that residential development adjacent to airport property is an incompatible land use.  We also started training our staff in the field about the need to better educate airport sponsors and to mitigate residential through-the-fence problems.  Unfortunately, the ultimate result was mixed.  Some airport sponsors heeded our advice while others did not, and some FAA regional offices sought to identify and mitigate all existing residential through-the-fence access agreements while others chose to wait until an actual grant assurance violation had already occurred.

As these inconsistencies became apparent, we recognized that a more comprehensive approach was warranted.  At that time, we were in the process of updating our Airport Compliance Manual and used that opportunity to clarify our policy residential through-the-fence arrangements.  New Order 5190.6B states: “under no circumstances is the FAA to support any ‘through-the-fence’ agreement associated with residential use since that action will be inconsistent with the federal obligation to ensure compatible land use adjacent to the airport.”  While this Order is internal guidance and binding only on FAA employees, we realize that it is a widely used reference within the airport community.  Although not required to do so, we made the Order available for public comment for a period of six months. 

FAA then followed up the Order by issuing for comment Draft Compliance Guidance Letter 2009-1 - Through-the-Fence and On-Airport Residential Access to Federally Obligated Airports.  The Draft Compliance Letter reiterated our views, in more detail, with regard to through-the-fence access and offered some additional suggestions to FAA staff working with airports with such arrangements.  We received a number of comments from through-the-fence homeowners and other interested parties on both documents.  Neither the updated Order nor the Draft Compliance Guidance Letter offered much discussion with regard to what steps the FAA expected airports with existing through-the-fence arrangements to take.  We now realize that vacuum created a very uncertain environment for what we believe to be approximately 75 of the 2,829 GA airports in the continental United States included in the NPIAS.

In January, the Administrator asked the Office of Airports to review its policy on residential-through-the-fence access.  We quickly assembled a policy review team, which began detailed analysis of a core sample of residential through-the-fence arrangements.  In the course of eight months, the policy review team met with a wide variety of interested parties, including aviation associations, state officials, airport sponsors, and impacted residents. The team also conducted site visits at five airports with residential through-the-fence access.  Additionally, staff reviewed the approximately 250 comments filed in response to FAA Order 5190.B, Airport Compliance Manual and the Draft Compliance Guidance Letter, and began compiling an inventory of federally-obligated airports with known residential through-the-fence access arrangements.

During its site visits, the policy review team observed a number of concerning conditions first hand.  First, we noted the diversity and complicated nature of the various residential through-the-fence arrangements.  We also learned that while some of these arrangements were entered into over the FAA’s objections; others were erroneously approved by FAA field staff.  Finally, we observed that the residential through-the-fence arrangements we visited had compromised one or more of the inherent features of public use airports that taxpayer-funded projects are expected to support. To be clear, these conditions would make these airports ineligible for inclusion in the NPIAS, were they to be considered today.

Conversations with interested parties also provided a wealth of information.  Perhaps the most important, and most disconcerting, observation the staff made was the intense protectiveness homeowners feel toward “their” airport and the preservation of their access from their private residence.  At many of the sites we visited, the fundamental distinctions between public use, public purpose airports and private airparks have begun to blur.  While private airparks serve an important and cherished purpose for members of the aviation community, AIP funds must be used strategically and responsibly at NPIAS airports that serve public purposes and retain those characteristics expected from public use airports. 

We are particularly concerned by incidents in which adjacent residents, both with residential through-the-fence access and their neighbors, have attempted to prevent an airport sponsor from preserving its rights and powers regarding airport property or future development, a key grant assurance any recipient of AIP funds must agree to meet. As an example, at one location that we visited the airport sponsor lacks full control of the access points.  When the sponsor proposed a fencing project to rectify this situation, adjacent homeowners objected to the placement of the fence, even though the fence was being placed on airport property. Although we now understand that the project is finally moving forward, we believe the influence adjacent homeowners have had over the airport in the process is inappropriate and creates the potential for additional future problems.  An airport sponsor must retain sufficient autonomy and authority to make crucial planning decisions that ensure the long-term usefulness of the airport and to protect the airport’s role as part of the national system.

The agency’s statutory charge to invest in a national aviation system for the long-term, coupled with the fact that residential through-the-fence arrangements continue to compromise the ability of some airports to serve the broader public purpose expected of federally-obligated airports, led us to the policy we are proposing.  This policy is two-fold.  While we establish minimum requirements that airports with existing residential through-the-fence access must meet, we are also proposing to amend Grant Assurance 5, Preserving Rights and Powers, to prohibit sponsors from entering into new arrangements.

Airports with existing access, as defined in the proposed policy, would be required to develop access plans to address general authority for control of airport land access, the safety of airport operations, cost recovery, airspace protection, and compatible land use.  To ensure the appropriateness and adequacy of the mitigation components in these access plans, we would consider the nature and parameters of the sponsor’s agreement with the property owner or homeowners on a case by case basis.   These plans will be approved by the Manager of Airport Compliance in headquarters, and sponsors will have approximately two years to develop their access plans.  While these arrangements continue to be undesirable, we believe this will address our more serious concerns, while offering a common-sense and fair solution for the communities involved.

Additionally, the policy would require sponsors with through-the-fence access arrangements to immediately depict the access points on their airport layout plans using a “pen and ink” change.  They will have additional time to formally update this document – three years from the date the FAA accepts their access plan.

Based on what we’ve learned over the last nine months, most of the airports with existing access agreements should be able to satisfy the bulk of our concerns associated with the legal terms and conditions associated with receiving AIP grants.  If the sponsor cannot address these minimum requirements, it will be necessary to reexamine that airport’s role in the NPIAS and evaluate if it should remain in our national airport system.  We would also determine what type of AIP investments continue to be appropriate.  If an airport sponsor refuses to develop an access plan, the FAA may consider initiating an investigation.

There are currently several airports that have through-the-fence arrangements that are in noncompliance for specific grant assurance violations.  To date, we have not put any sponsors into a noncompliant status solely because they have a through-the-fence arrangement.   This proposed policy will not have a significant impact on the eight noncompliant sponsors.  They will be required to continue working with local FAA staff to develop a corrective action plan to address their grant assurance violations.  Once the FAA accepts that corrective action plan, it will become their residential through-the-fence access plan.

The proposed policy also establishes a process for renewing or extending existing residential through-the-fence access arrangements as well as addressing the rare circumstance in which an airport with existing access might need to develop a new access point or allow a new homeowner to use an existing access point.  We refer to this limited development of new access points as “additional” access.  For an airport to propose “additional” access, it must have had existing access as of September 9, 2010.  In light of the fundamental concerns that are guiding the new policy, any additional access would be subject to stringent requirements to ensure the new access will not limit the airport’s ability to fulfill its role in the NPIAS.  This is also why we propose to limit additional access agreements to twenty years.  We use twenty years as a natural planning horizon, and it’s also used to define the useful life of most capital grants.

The proposed policy is currently out for public comment, and the comment period will remain open until October 25, 2010.  My office has worked extremely hard to arrive at a policy that addresses the concerns and needs of state and local governments and of the general aviation community while fulfilling our obligation to protect the role that NPIAS airports play in the national system.  I encourage those users to comment and look forward to receiving their input.  I believe our staff has given full and fair consideration to all the ideas and feedback we have received up to this point in the process, and I assure you that we will continue to be open minded as we review the public comments on our draft policy.

The FAA’s Office of Airports appreciates the important role general aviation plays in our national aviation system.  GA airports play a vital role in the NPIAS, as well as in their local communities.   For communities all over the country, GA airports have for decades been where we train our pilots, have provided medical and law enforcement response, enabled aviation to be at the front lines of response to natural disasters, been the backbone of agricultural communities, and enabled deliveries to remote locations.  It is for these purposes that Congress enacted the Airport Improvement Program, and it is these purposes that are protected by grant assurances. 

As a result, part of the FAA’s responsibility is to safeguard the general aviation infrastructure in this country.  Based on our experience and observations, we believe that residential through-the-fence arrangements have the potential to do far greater harm than good.  If the control exercised by an airport sponsor is compromised, harm is done.  If an airport that was selected for inclusion in the NPIAS based on a strategic long-term vision no longer has the ability to grow and fulfill its role, harm is done.  If public monies can be spent to correct deficiencies or problems caused by residential through-the-fence arrangements, harm is done.

The FAA takes seriously its responsibility to make wise, value-maximizing investments with its AIP grant funds. I believe our proposed policy regarding access to airports from residential property reflects the long view this Committee expects us to take when we invest $3.5 billion in our airport system annually. This responsibility must also include the continued advancement of the principles that have built the strongest national aviation system in the world.  We may not be able to predict where the demand will grow or how our capacity needs might change, but we must use every available tool we have to ensure the airports selected to serve in our national system remain flexible enough to expand and adapt.

Mr. Chairman, Congressman Mica, Members of the Committee, this concludes my prepared remarks.  I would be happy to answer any questions that you might have.

Department of Transportation

Statement of the

Acting Maritime Administrator
David T. Matsuda

Before the

Sub-Committee on Coast Guard and Maritime Transportation
United States House of Representatives

Hearing on

Foreign Vessel Operations in the U.S. Exclusive Economic Zone

June 17, 2010

Good afternoon, Mr. Chairman and Members of the Committee.  Thank you for the invitation to testify regarding offshore oil exploration, production, and support vessels and the U.S-flag merchant marine. 

President Obama has said that the oil spill in the Gulf Coast is the worst environmental disaster of its kind in our nation's history.  From the start of this crisis the Maritime Administration (MARAD) has supported the ongoing relief effort and monitored the impact on the maritime industry.  MARAD is committed to working with the federal departments and agencies on the front lines of the response effort and providing them with whatever assistance they may need.  We activated our command center as well as provided personnel to assist at the United States Coast Guard National Incident Command center, the Interagency Solutions Working Group, and with Marine Transportation System Recovery Units along the Gulf Coast.  Fortunately, this spill has not significantly impacted the nation’s marine transportation system – commerce and trade have continued, but with a navigator’s watchful eye to avoid fouled Gulf waters.  MARAD continues to monitor the impacts so that our nation’s marine transportation system stays one step ahead of the oil.

I would like to express my condolences to the families of the eleven Deepwater Horizon crew who did not survive the explosion.  We mourn their loss and we, like our sister agencies, are working diligently to make sure that this type of event does not occur again.

The Maritime Administration family was touched first hand by the tragic fire that overwhelmed the Deepwater Horizon.  Two graduates of the United States Merchant Marine Academy were on board and both are heroes. Darin Rupinski, from Stony Point, New York, is a 2008 U.S. Merchant Marine Academy graduate.  He was aboard the Deepwater Horizon when the explosion occurred and he helped lead the evacuation of the platform.   After the fire, he credited the training he received from Kings Point with saving his and the lives of many others.[1]  James Mansfield, who is a member of the U.S. Merchant Marine Academy Class of 2000 from Pipe Creek, Texas, was also aboard and was injured.  Our thoughts remain with him through his recovery.

Among the first vessels to respond to the distress call of the Deepwater Horizon was the Damon Bankston, a vessel that was built in the United States, documented in the United States, and crewed by United States mariners.  As her  crew began pulling members of the Deepwater Horizon’s crew from the Gulf she was joined by other U.S.-flag vessels that battled the blaze and saved a majority of the 126 crew who had to abandon the stricken oil rig.  In the weeks that have passed since the sinking of the Deepwater Horizon numerous U.S.-flag vessels have responded to the crisis. 

I want to emphasize that the Administration is committed to making certain that every asset possible is available to address this catastrophe.  As this Committee knows well, the Jones Act requires that all cargoes transported between U.S. points must move aboard vessels that are U.S.-flag, U.S.-built, U.S.-owned and crewed by U.S. mariners.   

Under certain circumstances, exceptions can be made to the Jones Actrequirement.Through the authority of the Secretary of the Department of Homeland Security, U.S. Customs and Border Protection (CBP) is the agency responsible for granting or denying any requests for a waiver to the Jones Act.  This is made after the Department of Defense, U.S. Coast Guard, and Department of Energy determine that it is not against U.S. national security interests to grant a waiver.  As a threshold, however, such a determination is made only after the Maritime Administration finds that there are no U.S.-flagged vessels available for operation.  There are also times during an event such as the Deepwater Horizon oil spill where the United States Coast Guard Federal On-Scene Coordinator can make an exception to U.S. cabotage laws to ensure that specific oil spill response vessels (OSRV) receive urgent attention and processing. [2]

When the Maritime Administration receives notification from either the Coast Guard Federal On-Scene Coordinator or CBP that it has received a request, the agency immediately queries industry for available U.S.-flagged mariners and vessels.  MARAD and CBP are bound by a Memorandum of Understanding that requires MARAD to respond to CBP within 48 hours with a determination on the availability of U.S.-flag vessels. 

In one situation during this oil spill response, a company tried to hire specialized foreign-built barges that could assist in the oil spill response and requested a waiver of the Jones Act.  As is practice in all Jones Act waiver requests, CBP asked MARAD to determine if U.S.-flag barges were available that could meet the requirements of the operator.  MARAD was able to locate many available equivalent U.S. –flag vessels and so informed CBP.

There are more than 100 U.S. firms that own and operate over 1,830 coastwise qualified offshore marine service vessels.  These vessels include crew boats that transport workers to and from the U.S. to the offshore facilities as well as tugs, barges, and supply boats that carry every commodity required to operate and maintain the oil rigs.  According to the Offshore Marine Service Association these vessels employ more than 12,000 U.S. mariners and support the offshore oil and gas industry that has a payroll of over $1.2 billion. 

During the current situation in the Gulf of Mexico, U.S.-flag vessels have been used in every situation where U.S. vessels and crew are available.  Seventy-seven percent of the vessels providing oil spill response in the Gulf are U.S.-flagged.  For example, the extremely large cofferdam containment structure that was lowered in the early attempt to cover the spill on May 7, 2010 was transported to the site by a highly capable U.S.-flag vessel, the Joe Griffin, operated by Edison Chouest Offshore.   

Even though twenty-three percent of the vessels responding to the oil spill are not U.S.-flag, none of these are known to be in violation of any U.S. law or regulation.  Vessels that do not call upon points in the United States are not in violation of the Jones Act.  There are also situations, especially in the energy exploration industry, where a vessel is so specialized and expensive to build and operate that there are only a few in the world like it.  When a U.S.-flag vessel is not available or there is not a U.S. vessel with the equivalent capabilities of a foreign flag vessel, the operator may apply for a waiver of the Jones Act.

Recently, President Obama placed a 6-month moratorium on new offshore oil drilling in waters deeper than 500 feet until we can be sure it can be undertaken safely.  This temporary moratorium will not impact deepwater port facilities licensed by MARAD as they are fundamentally different from the Deepwater Horizon facility.  The Deepwater Horizon facility is an offshore rig intended for domestic oil drilling exploration and production.  Deepwater ports, which are licensed by MARAD, are intended to facilitate the importation of Liquefied Natural Gas (LNG) and petroleum products into the United States by specially designed tankers.  Deepwater LNG ports are not used in the exploration for, or production of, oil, gas or other mineral resources in the Outer Continental Shelf of the United States.

In the past 8 years, three deepwater ports have been licensed and constructed for the importation of LNG.  These facilities have been specifically designed to minimize and mitigate adverse impacts on the marine and air environment.  LNG spill risks are localized and confined to the deepwater port and its immediate surroundings.  The construction of deepwater port terminals enhances safety and security by isolating terminals away from congested population areas and reducing the need for large tanker ships to enter congested land-side port areas.

In closing,  I would like to again commend the work of our nation’s heroic merchant mariners.  Just as the U.S. merchant marine has capably served as a naval and military auxiliary in time of war, the Jones Act has ensured that we have a merchant marine that is capable of responding in time of national emergency in our coastal waters.  While there are foreign-flag vessels operating in the U.S. exclusive economic zone in the Gulf of Mexico due to specific circumstances that require their unique services, they are not in violation of the Jones Act.

Thank you again for the opportunity to testify today.  As always, the Maritime Administration will continue to work closely with the Committee to support the United States merchant marine and provide jobs to U.S. mariners.  I look forward to working with you on advancing maritime transportation in the United States, and am happy to respond to any questions you and the members of this Committee may have.

STATEMENT OF

DAVID T. MATSUDA
MARITIME ADMINISTRATOR
MARITIME ADMINISTRATION

BEFORE THE

HOUSE ARMED SERVICES COMMITTEE
SUBCOMMITTEE ON SEAPOWER AND EXPEDITIONARY FORCES

JULY 14, 2010

Good afternoon Chairman Taylor, Ranking Member Akin, and Members of the Subcommittee.  Thank you for the opportunity to discuss the Maritime Administration’s (MARAD) priorities and initiatives.  I am pleased to appear before you to provide a general update on our activities to sustain a U.S. Merchant Marine, including the Maritime Security Program, the Title XI shipbuilding loan guarantee program, and improvements we are making at the U.S. Merchant Marine Academy.

One of MARAD’s primary missions is to develop and maintain a vital and viable U.S. merchant marine for domestic and international commerce and to support the Nation in times of natural or manmade disasters and threats to our national security.  Specifically, MARAD supports the U.S. military’s sealift needs by administering programs to ensure a readily-available pool of U.S. ships and skilled crewmembers.  The Nation’s sealift readiness is provided through both commercial- and Government-owned vessels that are crewed by civilian merchant mariners.

MARAD’s programs help ensure the readiness of sealift capacity to respond to national and international crises and Department of Defense (DOD) mobilizations.  The Maritime Security Program (MSP) sustains a small U.S.-flag fleet of 60 commercial vessels engaged in international commerce that has proven capabilities to meet national security and emergency response requirements.  The MSP also ensures that we have a pool of highly-trained mariners ready and willing to support the activation of the Government surge fleet.  A companion sealift readiness program, the Voluntary Intermodal Sealift Agreement (VISA), provides assured access to ships and related intermodal infrastructure and qualifies participants for priority award of DOD cargoes over non-participants.  MARAD also owns, administers, and operates the Ready Reserve Force (RRF), a fleet of 49 vessels structured primarily to transport Army and Marine Corps unit equipment and to provide the initial re-supply for U.S. military forces.  The U.S. Merchant Marine Academy and six State Maritime Academies educate and graduate merchant marine officers ready to serve the maritime industry at sea in a wide range of opportunities or in uniforms of the Armed Services.  Finally, MARAD works with the maritime industry to support transport of Government impelled preference cargoes on U.S.-flag ships.

The capabilities supported by these programs were underscored recently with two major emergencies that gripped the Nation this year – the Haiti earthquake and the Deepwater Horizon oil spill in the Gulf of Mexico.  The U.S. maritime industry has responded to both in an unparalleled manner, underscoring the notion that maritime resources matter for disaster response.

MARAD initially activated a total of seven Government vessels in anticipation of providing support to the disaster relief efforts for Haiti, including five RRF vessels and two Title XI-financed high-speed ferries.  Of these vessels, two of the RRF ships and one high-speed ferry were sent to Haiti to provide humanitarian assistance as part of the interagency effort.   Overall, at least 25 U.S.-flag commercial and Government vessels were used to actively support Haiti relief operations by carrying United States Agency for International Development (USAID) food aid and DOD cargo/supplies obtained under the military universal services contract, and by providing ferry service for response workers.  In all, nearly one thousand U.S. merchant mariners participated in the U.S. response effort (Operation Unified Response), crewing U.S. Government and commercial ships.

MARAD has also been active in the Deepwater Horizon oil spill response. Before I continue, I would like to take a moment to express my condolences to the families of the eleven Deepwater Horizon crewmembers who did not survive the explosion. We mourn their loss.  In addition, two United States Merchant Marine Academy graduates, Darin Rupinski and James Mansfield, were aboard.  Both are heroes.

From the beginning of the disaster response, MARAD offered the National Incident Command (NIC) and National Response Team access to our vessels and equipment, and have shared extensive information about industry resources for skimmers, tankers, and the like. Of the estimated 7,000 vessel flotilla involved in the spill response, the vast majority are U.S.-flag commercial vessels with U.S.-citizen crewmembers.  Similarly, of the hundreds of vessels engaged in oil skimming, the vast majority are vessels documented in the United States.  Furthermore, at the center of the response site, at least 18 U.S.-flag ships, assisted by foreign vessels, are combating the spill at the source. 

MARAD today is in close contact with our Federal agency partners as a part of this massive response, completing prompt surveys of the U.S. maritime industry for specific resources needed for the oil spill response effort.  At the local level, MARAD is involved with the Marine Transportation System Recovery Units.  At the NIC level, MARAD assists in legal matters and helps to develop interagency solutions to spill-related requirements and problems.

UNITED STATES MERCHANT MARINE ACADEMY

Improving the profile and prestige of the U.S. Merchant Marine Academy (Academy) is one of Secretary of Transportation LaHood’s top priorities.  This past March, the Capital Improvements Advisory Panel that Secretary LaHood charged with providing insight into the needs of the Academy’s facilities released an in-depth report.  In response to this report and other information, President Obama’s budget proposal requested $100 million for the USMMA in fiscal year 2011, an increase of $26 million above the 2010 level.  This increase will support capital improvements, operational funding for necessary IT upgrades and academic program enhancements, and compensation for Midshipman Fee overcharges.

Of the President’s 2011 request, $15.9 million above the fiscal year 2010 budget is for capital improvements.  These improvements include the priority renovation of the Delano Hall midshipman galley (where the Regiment receives all of its meals) and architecture and engineering studies for future renovation of Cleveland Hall and Rogers Hall (the two remaining Midshipmen barracks in need of major renovations).   In addition, the Academy will install a new tug and barge simulator to improve educational opportunities for the Academy’s midshipmen.  There is also a need for critical IT infrastructure improvements required to meet Federal Information Security Management Act (FISMA) and Clinger-Cohen requirements and to enhance wireless campus capabilities.  Further improvements and enhancements to the Academy’s instruction program are also necessary, including four new instructor positions, upgraded classrooms and learning environment, and an initiative to improve diversity through recruitment.

MARAD is also developing the plan needed to repay students who attended the Academy during the past six years for possible Midshipman Fee overcharges. Through this plan, the Secretary will establish compensation levels that represent fair payments for the affected students and alumni. 

The Government Accountability Office (GAO) released its own report with recommendations for action to correct the financial conditions at the Academy.

Providing support and oversight to restore and strengthen USMMA programs and financial controls is a MARAD and U.S. Department of Transportation (DOT) management imperative.  MARAD is making significant progress in implementing management and process improvements responding to the recommendations from the GAO audit report and from the Advisory Panel.  Our plan is to successfully address all 47 GAO recommendations by the end of FY 2010.  As of June 30, we have completed actions addressing 32 of the recommendations and are on target to implement the 15 remaining recommendations.   We believe the improvements in fiscal management and physical plant at the Academy will help restore the USMMA to its place as a preeminent Federal Academy.

State Maritime Academies

In addition to management of the Academy, MARAD provides financial support and training vessels to the State maritime academies. MARAD’s partnership with the six State maritime academies consists of (1) annual direct payments to each of the academies, (2) the Student Incentive Payment (SIP) program, and (3) payment of maintenance and repair costs for the training ships (school ships) that are on loan from MARAD to the State academies. The State academies regard the SIP Program as an important recruiting tool available to encourage State Maritime Academy cadets to pursue careers in the U.S. merchant marine.  Cadets enrolled in the SIP program receive $8,000 annually, for a maximum of four years, to partially defray the cost of their education.  In return, these cadets commit to the following post-graduation requirements: remain employed in the maritime industry for three years, maintain their U.S. Coast Guard license for six years, become an active member of a U.S. armed forces reserve unit for a minimum of six years, and report annually to MARAD.

MARAD also provides for the maintenance of the training ships in use by the USMMA at Kings Point, New York, and by each of  the six State Maritime Academies (California Maritime Academy, Vallejo, California; Maine Maritime Academy, Castine, Maine; Massachusetts Maritime Academy, Buzzards Bay, MA; New York Maritime College, Fort Schuyler, Bronx, NY; Texas Maritime Academy of Texas A&M University at Galveston, TX; and the Great Lakes Maritime Academy of Northwestern Michigan College, Traverse City, MI).

The level of funding necessary to maintain the schoolship fleet in good repair and in compliance with statutory requirements for nautical schoolships can be expected to increase.  Costs will escalate on the schoolships as they age, as regulatory bodies impose closer inspection requirements, and as new environmental protection processes are mandated.  This will result in components and systems requiring greater maintenance, replacement, and upgrade.  Recapitalization requirements of the training ships will be impacted by safety and environmental systems mandated by the Environmental Protection Agency (EPA), the International Maritime Organization (IMO), the treaty on Safety of Life at Sea (SOLAS), and the International Convention for the Prevention of Pollution from Ships (MARPOL) rules and regulations.  Meeting these requirements will permit the training ships to comply with current IMO, MARPOL, EPA, State and local requirements regarding effluent discharges and air emissions.  Ever-increasing portions of the world’s oceans are now “zero-liquid discharge” and “zero-waste discharge” zones.  Furthermore, MARPOL Annex VI limits sulphur and nitrogen oxide emissions from ship exhaust systems and prohibits the emissions of ozone depleting substances.  Existing diesel engine propulsion and power generation plants will require re-engining with new diesel engines that meet these new standards.  In addition, steam propulsion plants and boilers will require modifications to the fuel oil and storage tank to permit the utilization of low sulfur diesel fuel in order to reduce stack emissions.  As part of these recapitalizations, “Green Initiatives” will demonstrate MARAD’s dedication to environmental stewardship.

The EMPIRE STATE will exceed 50 years of age in 2012.  In the near term, it will not be cost effective to accomplish necessary repairs and overhauls to retain the vessel to safe and reliable service.  To meet the requirements of SUNY Maritime College, a replacement vessel, converted to meet Federal Regulations concerning Public Nautical School Ship requirements, must be identified and converted.  Several potential vessels within the existing Navy and MARAD National Defense Reserve Fleet (NDRF) inventories are currently being evaluated for a replacement vessel with a 750-person capacity to support the school’s requirements.

Maritime Guaranteed Loan Program (Title XI)

Title XI offers loan guarantees for shipyard modernization projects and for building vessels in U.S. shipyards.  This funding supports infrastructure investment and economic growth.  The program provides approved applicants with long-term financing at stable interest rates, sustains efficient facilities for shipbuilding and ship repair within the U.S., improves system capacity, and sustains U.S. jobs. 

The Title XI Loan Guarantee Program sustains jobs because it has the effect of leveraging a relatively small commitment of Federal budget authority ($17.5 million in FY 2009) to generate a much larger amount of direct spending from loans ($310 million in FY 2009).  When added to additional private spending ($44 million in FY 2009) associated with the loan guarantee projects, the FY 2009 Title XI program helped to support a total of $354 million in business for U.S. shipyards – including 2,400 job-years associated with the shipbuilding industry and its suppliers and almost 1,400 job-years occurring within the broader economy.[1]

As of June 30, 2010, MARAD’s current Title XI portfolio was approximately $2.1 billion.  This portfolio consists of 60 loan guarantee contracts for more than 300 vessels and two shipyard modernizations.  All of the outstanding loan guarantees have been approved since 1993, subsequent to the Federal Credit Reform Act of 1990, with 41 of the guarantees issued since FY 2000.  During the last five years (since FY 2005), MARAD has approved only four transactions – Hawaii Superferry in FY 2005, Vessel Management Services and Canal Barge in FY 2009, and Foss Maritime Company in FY 2010. 

MARAD is currently processing six applications for loan guarantees in excess of $1.6 billion in total loan amounts.  The six pending applications involve 11 shipyards in 9 States and are for a variety of vessels and projects including articulated tug barges, shuttle tankers, drill rigs, and platform supply vessels.  MARAD currently has $76.6 million in budget authority to cover the subsidy costs of the above loan requests.  This amount would support approximately $1.1 billion in new loan guarantees.  Should the number of qualifying loan applications exceed this amount, MARAD regulations would require it to give priority to vessels that are capable of serving as a naval auxiliary in time of war or national emergency.  Priority is also given to projects that would finance vessels or equipment less than one year old.  Finally, MARAD cannot lawfully approve an export project if it would deny the funds for a domestic project. 

Since 1993, the Title XI program has experienced a total of 13 defaults, including two defaults in FY 2009 (AQ Boat LLC and Riverbarge Excursions Lines) and two in FY 2010 (Hawaii Superferry, Inc. and AHL Shipping Company).  Over the last decade, DOT and MARAD have implemented various actions to reduce the risk of loan default to the Government.  Among these actions, a Department Credit Council was established in 2004 to provide oversight and policy guidance for all DOT credit programs, including the Maritime Loan Guarantee Program, and to make recommendations as to the financial viability of proposed projects or changes to existing projects.  The Council is chaired by the Deputy Secretary of Transportation. MARAD also receives a first preferred mortgage on the vessels or shipyards as the primary collateral for the Title XI financing, and now requires that additional collateral be provided in the event that the company is not meeting their required financial tests.

Due to the strict financial requirements that applicants must meet, MARAD has found that it is difficult to guarantee the loans of vessels and projects associated with small or new companies that do not have the financial strength of larger companies.  The ability to support these smaller companies could promote innovative services and ensure fairer access to Federal assistance.  MARAD is exploring avenues to provide federal credit assistance for smaller vessel construction projects.

Maritime Security Program

The Maritime Security Program (MSP) is the Agency’s largest appropriated program.  The primary purpose of the MSP is to provide the Department of Defense (DOD) with assured access to commercial U.S.-flag ships and related intermodal systems, as well as a pool of trained U.S. mariners available to support national security requirements during war or national emergency.  MSP vessel participants also deliver cargoes supporting overseas deployments of U.S. forces, and to date 72 MSP ships have contributed to Operations ENDURING FREEDOM/IRAQI FREEDOM. 

The DOD Surface Deployment and Distribution Command reports that since September 11, 2001, U.S.-flag commercial ships have delivered more than 500,000 twenty foot equivalent units (TEUs) of containerized equipment and supplies to support U.S. troops in Iraq and Afghanistan.  MSP ships have also supported the rebuilding of Iraq.  For fiscal year 2011, MSP will fund 60 ships in the MSP fleet at the authorized level of $2.9 million per ship.  MARAD’s MSP program enables the industry to maintain a U.S.-flag international trade merchant fleet crewed by U.S. citizens to serve the Nation’s national security needs. 

Since 1996, the MSP fleet has adapted to meet changing DOD sealift requirements while expanding from 47 to 60 ships.  The commercial industry has answered the call to provide DOD with access to more roll-on/roll-off (RO/RO) vessels, tankers, and heavy lift ships. The RO/RO fleet has grown from 3 to 18 RO/ROs, adding more than 2.7 million square feet of cargo capacity.  The number of MSP containerships has grown from 36 to 38 with an additional 13,000 TEUs of capacity. 

MSP vessels are held to strict age requirements and MARAD has leveraged that program feature to increase military usefulness of the fleet.  Since reauthorization of the MSP in FY 2006, the industry has replaced older MSP vessels with 28 newer and more efficient ships, resulting in an increase of more than 756,000 square feet and 400 TEUs.  In addition, a number of commercial operators have added non-MSP vessels to the U.S. registry using procedures established by MARAD and the U.S. Coast Guard, under which ships determined to be MSP-eligible are given expedited consideration for reflagging to U.S. registry.  A benefit to the Government from this reflagging procedure is a commitment to enroll those vessels in the VISA program with a pledge to apply for any future MSP vacancies.  This benefit has resulted in 12 vessels entering the fleet.  Those vessels employ more than 500 U.S. citizen mariners.

READY RESERVE FORCE

The Ready Reserve Force (RRF) was initiated in 1976 as a subset of the NDRF to support the rapid worldwide deployment of U.S. military forces.  The RRF is a key element of strategic sealift and MARAD’s strategic mobility responsibility in DOT.  The RRF is specifically structured to transport Army and Marine Corps unit equipment and to provide the initial re-supply for U.S. military forces deploying anywhere in the world during the critical period before adequate numbers of commercially available ships can be marshaled to deliver equipment to the zone of action.  The RRF is owned, administered, and operated by MARAD under the terms of a Memorandum of Agreement between DOT/MARAD and DOD’s U.S. Transportation Command (USTRANSCOM).  It is funded by the National Defense Sealift Fund, which is administered by the Navy.

The RRF is maintained, crewed, and operated by nine commercial firms which compete for multi-year ship manager contracts.  Most of the 49 vessels assigned to the RRF are maintained in Reduced Operating Status (ROS), which requires activation within five days at their outport layberth sites.  Two lower priority ships are maintained without crews in a ten-day readiness status. 

As a result of the lessons learned during Operation Desert Shield and Operation Desert Storm, substantial investments in the RRF were made to improve readiness and reliability and to increase capacity.  The RRF began its highest operational tempo in its 30-year history supporting Operations ENDURING FREEDOM and IRAQI FREEDOM (OEF/OIF) beginning in October 2002.  Since then, the RRF has accumulated almost 14,000 ship operating days at 99 percent reliability.  The initial wave of OEF/OIF activations and deployments involved 40 RRF ships.  Over the years there were numerous repeat activations bringing the total RRF ship activations to 118.  The initial activation included all 27 current RRF RO/RO ships and the activations in subsequent years mostly involved RO/ROs.

The investments made in RRF readiness and capacity have proven to be highly valuable, while maintaining the most cost effective source of Government-owned sealift.  MARAD and USTRANSCOM have discussed the need to acquire newer ships for the RRF program, so it can continue to meet strategic mobility needs in the future.  USTRANSCOM finished the Mobility Capabilities Requirements Study this year, and the study results identify a continued requirement for the RRF and in particular for RO/RO ships, thereby suggesting a need for cost effective recapitalization of the RRF.

One recapitalization option being explored involves designing a dual-use vessel for strategic mobility and commercial use.  These concepts come together well in MARAD’s America’s Marine Highway initiative where DOD enhancements to small vessels can be used for military contingencies.  In the future, this concept could help to provide a limited portion of RRF recapitalization capability.

MARAD also maintains two ships in RRF-like condition for the Missile Defense Agency (MDA).  The PACIFIC COLLECTOR and the PACIFIC TRACKER were converted from NDRF ships awaiting disposal into cost effective platforms for the MDA. 

MARITIME INDUSTRY AND THE ECONOMY

Maritime transportation contributes more than $10 billion per year to the national economy, and the industry comprises more than 265,000 jobs.  This includes economic activity related to both U.S.- and foreign-flag ships.  MARAD’s work with commercial shipping, shipbuilding, port operations, and vessel operations supports the maritime industry.  MARAD’s Title XI and Small Shipyard Grant (Assistance to Small Shipyards) programs provide loan guarantees and grants, respectively, supporting the industry, which can be an engine for efficiency and capacity improvements and economic growth.  America’s Marine Highways help to move freight more efficiently and contribute to reducing transportation’s environmental footprint.

Assistance to Small Shipyards

A strong shipbuilding industry is the backbone of sea power. To support capital improvements to qualified shipyards, Congress created an important new program, the Small Shipyard Grant Program, in the National Defense Authorization Act of 2006.  Congress first funded the program with $10 million through the Consolidated Appropriations Act of 2008, followed by $117.5 million in funding through the Omnibus Appropriations Act of 2009 ($17.5 million) and American Recovery and Reinvestment Act of 2009 (ARRA) ($100 million), and $15 million in funding in the Consolidated Appropriations Act of 2010.  This program is intended to improve the ability of domestic shipyards to compete for domestic and international commercial ship construction.  In FY 2010, MARAD received about 160 applications and awarded 17 grants covering the coastlines of the United States.  Overall, for the three years of the program, MARAD has awarded a total of 120 grants to 105 different shipyards.  These shipyards are located in 28 different States plus one U.S. territory. Grants have been used to fund floating drydock construction and modernization, acquisition of large Travelifts (up to 1,000 tons), material handling equipment such as cranes and forklifts, steel working machinery, shipyard infrastructure improvements, and training of shipyard employees.

America’s Marine Highway

Another of MARAD’s goals is to help make our national transportation system more environmentally sustainable and economically competitive. For too long, America has overlooked the economic and environmental benefits of moving domestic goods on the water – but, we are changing all that with our America’s Marine Highway Program initiative.  As reported in May by Secretary LaHood, we are currently in the process of identifying marine highway corridors and project designations. Congress has provided strong support for this initiative in the Energy Independence and Security Act of 2007, the National Defense Authorization Act for Fiscal Year 2010, and the Consolidated Appropriations Act of 2010.

MARAD has completed several major steps in implementing the America’s Marine Highway Program in FY 2010.  On April 9, MARAD published the Final Rule for the program, superseding the previous Interim Final Rule published in October 2008.  On April 15, 2010, MARAD issued a formal call for Marine Highway Project applications by public agencies.  MARAD will issue a Notice of Funding Availability for eligible Marine Highway Project’s in a separate Federal Register notice to be published in July 2010.  This latter notice will implement a new initiative, “America's Marine Highway Grants” as authorized under the National Defense Authorization Act for Fiscal Year 2010.  The initial $7 million funding for the grants is provided in the Consolidated Appropriations Act of 2010.

On February 17, 2010, the anniversary of the ARRA, DOT announced $1.5 billion in Transportation Investment Generating Economic Recovery (TIGER) Discretionary grants for fiscal year 2010.  Of this amount, $120.4 million has been designated for seven seaport and maritime-related projects, most of which will be supplemented by State and local funds.  MARAD will administer these seaport-related grants under the oversight of the Office of the Secretary.  These grants will support new marine highway services, add capacity to ports, and improve shoreside linkages to inland markets. 

ENVIRONMENT

MARAD environmental programs are aimed at reducing pollution and the adverse environmental effects of maritime transportation and facilities on communities and livability; focusing on obsolete vessel disposal, reducing marine air emissions, and treating ballast water. 

Environmental Programs

The impact of marine transportation on the human and natural environment has become more evident in port and coastal communities, which chiefly incur the environmental quality impacts from marine transportation activities.  At the same time, marine transportation is expected to grow considerably due to increased use of our nation’s waterways for freight and passenger movement.  Marine-related environmental impacts will therefore become more significant unless actions are taken in a timely manner to mitigate their adverse impacts, potentially affecting the Nation’s economic growth and the quality of life of our seaport and seaside communities.

The three most pressing environmental issues facing the maritime industry are invasive species in ballast water, energy use, and air emissions.  MARAD has been called upon by industry and Government agencies to provide technical advice and expertise, data, and assistance for the development of policy, regulation, research, and studies in these areas. MARAD, working closely with other DOT operating administrations and the Environmental Protection Agency, will continue to support industry efforts toward improving the environmental sustainability of the maritime industry.  The MARAD environmental program promotes critical multi-modal transportation research to reduce environmental pollution, advance a ballast water discharge standard, infrastructure and methodologies for certifying and verifying ballast water technology, improve vessels emissions data, and reduce MARAD’s carbon footprint.

Ship Disposal

MARAD continues to work on disposal of obsolete ships in the National Defense Reserve Fleet.  The President, Secretary LaHood, and I are committed to the proper disposal of these ships.  In fiscal year 2009, for the first time in three years, ships began to leave the Suisun Bay Reserve Fleet in California and even more have left this year.  The latest non-retention ship to leave Suisun Bay for recycling is the TALUGA, which left on July 1, 2010 – this is the 10^th ship to have departed the fleet this year.  MARAD plans to continue this work over the next year towards the goal of removing an additional 15 ships from the inventory, utilizing domestic dismantling contracts, artificial reefing, deep sinking, vessel sales, and donation opportunities.

Mr. Chairman, I wish to express my appreciation for the opportunity to present and discuss MARAD’s programs and for the Committee’s continuing support for MARAD and the U.S.-flag maritime industry.  We will continue to keep this Committee apprised of the progress of our programs in these areas in the coming year, including our efforts to improve processes and internal controls at the USMMA. 

I will be happy to respond to any questions you and the members of this Committee may have.  Thank you.

Department of Transportation

Statement of the
Maritime Administrator
David T. Matsuda

Before the

Sub-Committee on Coast Guard and Maritime Transportation
United States House of Representatives

On the

State of the United States’ Merchant Fleet in Foreign Commerce

September 29, 2010

Good afternoon, Mr. Chairman and Members of the Committee.  Thank you for the opportunity to testify before you today on the state of the United States’ Merchant Fleet in foreign commerce.

Three weeks ago, the President laid out a bold vision for renewing and expanding our Nation’s transportation infrastructure – in a plan that combines a long-term vision for the future with new investments today.  The President has called for a 6-year authorization of surface transportation programs and, with the current state of the economy in mind, the Administration proposes that $50 billion – a significant share of the new investments – be frontloaded in the first year.  The new transportation program envisioned by the President needs to be part of a long-term framework that reforms the infrastructure investment process and expands our levels of investment so that we can have a truly world-class transportation system. 

On July 20th, we met to begin to discuss the major challenges facing our ships operating in foreign trade and the requirements of U.S. registry.   As I testified then, the state of the U.S. flag fleet in foreign trade has decreased over time – from 980 ships in 1947 to just 115 today.  It is clear these challenges have existed for many years. 

At the request of the Subcommittee, I have focused my testimony today on a continuing examination of U.S.-flagged vessels in U.S. foreign trade.  I will particularly discuss the challenges of operating under the U.S.-flag, and the Maritime Administration’s implementation of Congressional mandates to support U.S.-flag ships operating in foreign trade.

Our foreign trade fleet is subject to the full range of applicable U.S. laws covering business, financial, environmental, and employment regulations. 

The Maritime Administration (MARAD) administers the laws enacted by Congress to support the continued existence of a U.S.-flag fleet in international trade.  The major programs affecting the foreign trade fleet are the Maritime Security Program (MSP), Voluntary Intermodal Sealift Agreement (VISA), and Cargo Preference programs.  These programs support the U.S.-flag fleet, providing the Department of Defense (DOD) with assured access to the sealift capacity essential to support ongoing mobility requirements.

The MSP program sustains militarily useful vessels, while cargo preference covers a broader range of vessels.  The MSP and Cargo Preference fleets combined carry about two percent of U.S. foreign trade.  These ships employ approximately 5,000 mariners.   In 2008, in addition to the commercial cargoes that support our economy, under cargo preference requirements, these vessels carried over 1 million metric tons of petroleum for the military; delivered over 8 million tons of general and containerized cargo for DOD; approximately 84,000 military household moves; over 60,000 military privately-owned vehicles; and about 2 million metric tons of humanitarian food aid worldwide.

For various reasons that we are exploring, U.S.-flag operations is more expensive than foreign operations.  Investors who are considering the costs and benefits among the various vessel registry alternatives can find better opportunities using international and open registries.  Today, over 80 percent of the ships in international commerce fly open-registry flags.  Although open registries differ in their requirements, common elements are that there are generally no taxes on profits or no fiscal controls and  the shipping company is free to recruit its crews internationally, although these elements are not the only ones that affect the differences in the cost structures compared to the U.S.-flag fleet.

Challenges of Operating Under the U.S.-Flag

Many of the challenges facing the operators of U.S.-flag ships are due to the higher costs of operating ships under the U.S.-flag.  First, there are higher costs for ship operations.  Based on rough estimates, we believe that overall, U.S. costs are approximately three times higher than the global maritime fleet average.  The range of cost differences vary primarily by ship type, age, and other factors. 

The greatest difference in operating costs is accounted for by mariner labor costs.  U.S.-flag ships must use U.S. crews, including riding gangs.  For several reasons, wage costs for mariners are significantly higher in the United States than many other countries that provide mariners to the world fleet.  For example, under U.S. law, companies hiring U.S. mariners pay the cost of payroll taxes, medical, pension, and other benefits.  In addition, the salary and benefits packages must be competitive with shore-side positions, and also provide for training and certification requirements and compensation for the sometimes dangerous conditions and arduous work schedules that we expect of our mariners.  Open-registry ship operators generally pay lower wages, and often are not required to provide for continuing training and education of mariners. 

Further, wages paid to U.S. mariners are subject to U.S. income tax.  In other countries, such wages are often exempt from taxation.  Several proposals have been made to address this difference.  Legislation to exempt a portion of mariner wages from income tax was introduced by Chairman Oberstar in 2001, but was not enacted by Congress.  Similar legislation was considered by the Senate in 2004, but did not become law.  H.R. 1798, the Working American Competitiveness Act, introduced by Congressman Gregory Meeks, would amend the IRS code to exempt from taxes foreign earned income by a broad group of qualified individuals. 

Beyond vessel operating costs, there are other U.S. requirements that result in increased costs for U.S.-flag carriers.For example, carriers that repair their vessels in foreign shipyards are required by federal law to pay a 50 percent ad valorem duty on those repairs before entering a U.S. port.The amount that is added varies, based on the cost of the repair.Another major area of cost differential is potential exposure to legal liability, which U.S.-flag carriers have identified as one of the most significant differences in separating U.S.-flag from non-U.S.-flag costs. Potential exposure to personal injury and environmental claims is generally higher in the United States, as the rights of injured victims and level of expected environmental responsibility are generally more rigorously enforced in the U.S. than in many other countries.This may also impact insurance rates for U.S.-flag vessels.

We have limited information submitted by carriers on their operating costs.  We do not have comprehensive, consistent information on the broader range of impediments to the use of the U.S.-flag registry.  In order to further expand our basis for analyzing the factors that limit the attractiveness of the U.S.-flag registry, the Maritime Administration is undertaking a study to survey a sample group of carriers and strengthen our analytical assessment of the U.S. flag fleet. 

MARAD Administration of Congressional Mandates

The Maritime Administration manages the programs enacted and funded by Congress to support the U.S. foreign trade fleet.  As previously mentioned, the three major program areas we administer, the MSP, VISA, and Cargo Preference, are interlocking mechanisms to sustain a fleet aligned with military sealift requirements, Government-financed export cargoes, and commercial cargo.  U.S.-flag operators have consistently emphasized the importance of these programs, and their reliance on these programs to alleviate some of the differential between U.S. and foreign flag operating costs.  

Maritime Security Program   

One of my primary goals as Maritime Administrator is to strengthen the Merchant Marine to better align our sealift programs with the needs of our country.  The MSP program goes a long way toward that goal with enrollment of over half of the U.S.- flag ships in foreign commerce.

Each MSP Operating Agreement specifies that the vessel covered by that agreement must operate in U.S. foreign commerce for not less than 180 days in any Fiscal Year.  Carriers must have sufficient cargo to operate competitively in U.S. foreign commerce. 

The MSP provides the United States with a core privately-owned and -operated U.S.-flag fleet in international trade that is also available to support U.S. national security requirements.  The MSP was established as a ten-year program in 1996 and reauthorized for another ten years from 2006 through 2015.  To assure retention of these ships under U.S-flag and their immediate availability for defense purposes, carriers in the program receive an annual retainer fee, not a differential subsidy.  The amount of the payment, currently $2.9 million per ship per year, is set by Congress.  This subsidy does not cover the per ship crew costs for an average containership in the program, which are on average $4.5 million higher than similar open registry containership.

With the MSP, the U.S. gains assured access to a vast global network of support and infrastructure, including logistics and operational expertise.  The benefits of this enhanced readiness have been most notably demonstrated in the Northern Distribution Network that three MSP carriers established to support the transportation of goods and supplies to Afghanistan in support of military operations.  The MSP carriers established a custom door-to-door intermodal transportation service to streamline the delivery of military goods and supplies across multiple borders and difficult terrain.  One DOD study estimated that the complete replacement of the MSP fleet with Government-owned assets would cost in excess of $7 billion for initial construction and would require an annual expenditure of $1 billion for operation and maintenance of the fleet.  However, this estimate does not address whether the current set of programs is the most cost-effective way to achieve national security objectives related to the merchant fleet.

There are currently 60 ships in the MSP.  The program is fully subscribed.  Since the program was reauthorized for the ten-year period of fiscal years 2006 through 2015, companies participating in the program have replaced some of their MSP ships with newer, more modern, and more capable ships that are available to meet national requirements.  For example, in the last five years (2006 – 2010), 36 vessels have utilized the “expedited” MSP flag-in process, which also gives them immediate access to Government sponsored cargoes.  Twenty-four of these vessels are currently receiving MSP payments.  Twelve vessels are MSP-eligible and are currently registered as U.S. documented vessels, but are not receiving payments since the program is already fully subscribed. 

This fast track to gain access to Government-impelled cargoes provides an alternative to the three-year wait under the Cargo Preference statutes.  It is an example of how the MSP, as leveraged by the Maritime Administration, DOD, and the industry, can provide a dynamic and forward-looking environment to encourage additions to the U.S.-flag fleet, and avoid the negative impact of policy disparities that may result from the provisions of other statutes.

During the same time period, 18 MSP or MSP-eligible vessels have flagged out without needing to request further MARAD approval.  Fourteen of these vessels were previously in the MSP, but were allowed to transfer to foreign flag after being replaced in the MSP with newer and more efficient vessels.  Four MSP-eligible vessels were returned to foreign registries.

The MSP is making available crews, containerships and Roll-on/Roll-off vessels.[1]   The Maritime Administration ensures that the intermodal infrastructure DOD needs is also available, as required by law.  A 2009 evaluation of the MSP stated that the commercial shipping and inland commercial transportation in the Middle East has been crucial for execution of Operations Enduring Freedom and Iraqi Freedom.[2]

President Obama’s FY11 budget proposed that the MSP should be extended through 2025.  In May 2010, Representative Ike Skelton, recognizing the importance and effectiveness of the MSP, introduced HR 5136, the FY 2011 DOD Authorization Bill, which included extension of the MSP under Title XXXV from FY 2016 through FY 2025.  The Maritime Administration has already made significant progress this year in working with stakeholders and our Federal partners to gather information on the future needs and potential of the program.

In anticipation of the end of the current program authorization, MARAD, the United States Transportation Command (USTRANCOM), and the maritime industry have had several discussions on a follow-on program.  There are indications from USTRANSCOM that the size of the MSP fleet may need to be increased by four to six ships to meet new requirements identified by DOD this past year.  

Voluntary Intermodal Sealift Agreement Program

The U.S. commercial emergency preparedness sealift program, VISA, is sponsored by the Maritime Administration and DOD and was implemented in 1997.  This program provides DOD with assured access to U.S.-flag vessel capacity in the event of war or other national emergency.  MSP companies are required to commit all of their MSP dry cargo vessel capacity to VISA.  Non-MSP ship operators also commit capacity to the VISA program in order to receive priority consideration for DOD peacetime and wartime cargoes. 

During Operations Iraqi and Enduring Freedom, 124 VISA vessels including 78 current and former MSP vessels supported U.S. military operations and Iraqi rebuilding efforts.  The VISA fleet has delivered over 500,000 twenty-foot equivalent units of containerized cargoes to support U.S. troops since September 2001.  As of September 1, 2010, 49 U.S.-flag operators were enrolled in the VISA program.  The VISA fleet currently includes 135 ships and 213 barges, tugs, and other miscellaneous vessels.  Over 165,000 twenty-foot equivalent units and 3.9 million square feet of capacity are committed to the VISA program.  The MSP fleet commits approximately 75 percent of the total capacity to VISA.

Cargo Preference

The Government’s cargo preference programs ensure a certain amount of cargo can be competed for by U.S. vessels, helping them to remain under U.S. flag.  The Maritime Administration implements the Cargo Preference programs for civilian agencies.  In addition, MARAD has provided information to DOD to assist them in enforcing the Military Cargo Preference Act of 1904.   For example, MARAD assisted DOD in taking enforcement action in Guam that resulted in a construction company receiving the equivalent of a $380,000 penalty for shipping crushed rock from South Korea to Guam on a foreign-flag ship when a U.S.-flag ship was required for the DOD project. 

Since 2000, GAO has prepared several reports on U.S. Food Aid Programs including ones that examine the impact of Cargo Preference laws.  These reports have generally noted that while there is continued support for cargo preference, however, it makes sense as part of the ongoing policy review to look at ways to make the program more cost-effective and to reduce its impact on Federal deficits.  There are ongoing discussions among Government agencies and the carrier community about how greater efficiencies might be achieved.  Among the improvements that should be considered is the modernization of ocean transportation.  The Government agencies continue to work on achieving consensus on these complex matters. 

Cumulative Effect of MSP, VISA and Cargo Preference on the U.S.-Flag Fleet

The interlocking MSP, VISA and Cargo Preference programs help to retain, and even attract, ships to the U.S.  Each of the programs provides an element of the base cargo that carriers rely upon in their aggressive pursuit of commercial cargoes for their ships.  Without this base, carriers simply cannot survive in an international marketplace dominated by open registries.  Although MSP is essential, by itself it is not sufficient to support an active, privately-owned U.S. flag commercial fleet.  The VISA program, with its guaranteed access to Government cargoes, is an incentive for ships, which are principally those in the MSP program, to remain under U.S.-flag.  The Government Cargo Preference programs provide an important source of income.  With the expected decline in DOD shipments after the withdrawal of combat forces in Iraq and Afghanistan, carriers have expressed to you, and to us, that they need more cargo to try to remain competitive in international trade. 

Additional Initiatives to Leverage Program Results

Although the foreign trade fleet is the focus of this hearing, I want to mention how a primarily “domestic” program is being maximized to also support DOD sealift requirements.  Recently, MARAD awarded a contract to further develop the design of ships particularly suited for use in the American Marine Highway system.  The study will include identifying owner’s requirements through discussion with perspective marine highway owner/operators, surveying the current status of marine highway design development, and the development of a matrix of concept designs covering a range of marine highway ship design solutions.  Particular emphasis will be placed on developing ship characteristics and design features that will enable a vessel to be attractive for DOD sealift needs.  The study is being conducted in coordination and with cooperation of the U.S. Navy as part of the interagency Dual Use Vessel Development plan.

Developing a robust U.S.-flag fleet in domestic trade is a fundamental underpinning of a strong U.S.-flagged fleet in the U.S.-foreign trade.  A solid domestic fleet of U.S.-flagged vessels can provide the home-grown mariners we need for international trade.  It can also help revitalize our U.S. shipyards, whose specialized industrial base is essential for the construction and maintenance of our military fleet of ships and U.S. commercial vessels vital to our military sealift capacity.  This U.S. fleet can also provide jobs that by law cannot be outsourced, through direct employment in marine transportation and shipbuilding, as well as other industries that support our marine transportation system.  Additionally, ensuring that we have a robust domestic fleet that utilizes America’s Marine Highway system will also assist our efforts to stop the decline in vessels engaged in foreign commerce.  These domestic vessels perform the valuable function of moving inland export cargoes to our seaboard ports, and making them available for vessels engaged in foreign commerce.    

Two weeks ago, Secretary LaHood announced Marine Highway Grant awards for specific projects and studies.  These funds are being maximized to ultimately place more vessels into service and increase the capacity of several Marine Highway operations. This will trigger limited shipyard activity, create jobs afloat and ashore, and long-term employment potential for our maritime workforce. 

MARAD also plays a key role in the application of uniform laws and policies to protect the environment, and has been actively involved in the areas of invasive aquatic species and air emissions reductions.  MARAD partners with other Federal agencies through policy efforts, research, and practical technology applications, as well as with international organizations to help achieve sound environmental stewardship.

Testing of ballast water treatment technologies takes place aboard MARAD vessels, and has grown to a multi-state and multi-agency cooperative effort that includes the development of protocols for technology testing and verification, and the development of independent testing facilities to provide data for certification of technologies to International Maritime Organization  and U.S. Coast Guard standards.  We have also provided ship platforms for testing, as well as scientific, technical, engineering, and marine architectural support and year-end funding in this area, and worked to coordinate development of facilities for testing and verification of technologies.  

MARAD has also played a role in decreasing port and vessel air emissions.  Our cooperative efforts have included testing of fuel switching technologies for low sulfur fuel, air emissions treatment technology testing on vessels, port and vessel air emissions technology evaluation and transfer with Pacific Rim ports such as Shanghai; development of standards for natural gas fuel on ships; developing models for analyzing and comparing air emissions of vessels, trucks, and trains to allow for various multi-modal freight analysis and planning; and cold ironing and shoreside power. 

Piracy

I would now like to turn to an area of great concern to the U.S. merchant fleet in foreign commerce:  Pirate attacks in the Horn of Africa (HOA) waters off the coast of Somalia.  These attacks threaten commercial shipping transiting vital trade routes.  Over the past year, Somali pirates have unsuccessfully attacked the HARRIETTE, the LIBERTY SUN, and the MAERSK ALABAMA (twice).  At any given time, approximately six to eight U.S.-flag ships are in the region, of the approximately 200 that are in the area, on average. These ships are carrying DOD cargo bound for Operations New Dawn and Enduring Freedom or humanitarian cargoes destined for East Africa. 

Together with the USCG, MARAD leads Working Group 3 of the Contact Group on Piracy off the Coast of Somalia.[3] The Working Group focuses on shipping self awareness and interaction with industry.  MARAD is uniquely qualified for this role because of the agency’s specialized knowledge of sealift vessels; our established relationships with the shipping community, maritime unions, the marine insurance community, and global maritime industry associations; and our oversight of Government impelled cargoes transiting the Horn of Africa.  We have been a leader in promoting international action to combat the piracy crisis.  Since 2008, we have conducted outreach and interaction with industry and other Federal agencies, and focused on best management practices to counter piracy and on industry concerns.  Although the number of U.S.-flag vessels transiting the HOA region is relatively small, the potential for risk to our ships and seafarers demands that we take effective action to ensure our fleet is well protected. 

The Working Group has been involved in the development and dissemination of Best Management Practices (BMPs) on self-protection measures that ship owners can incorporate into their operations.  In addition to continual refinement of BMPs, the Working Group plans to focus on anti-piracy training and other issues related to human factors.

This MARAD initiative, and the dedication of the global maritime industry and their governments, has successfully diminished successful attacks on ships and the implications for freedom of navigation in the HOA.  We will continue our commitment to help assure the safety of our vessels and mariners transiting the area.

I am dedicated to achieving the strongest and most viable U.S. flag fleet possible.  Our statutory authority and resources drive our efforts to achieve an effective maritime policy and a fleet that meets our national security needs and supports our economic interests.  I pledge to you that I will do my utmost to ensure that our policies and programs are effective.

At this time, I will be pleased to answer any questions you may have.  Thank you.

Hearing to

Review Federal Government’s Response to Marijuana Legalization as it Pertains to Transportation Policy

Statement of

Associate Administrator of Research and Program Development
Jeff Michael
National Highway Traffic Safety Administration

House Oversight and Government Reform Subcommittee on Government Operations

July 31, 2014

Good morning, Mr. Chairman, Ranking Member Connolly and Members of the Subcommittee. I appreciate this opportunity to testify before you on the National Highway Traffic Safety Administration’s research on drugged driving.

U.S. Roadway Safety

NHTSA takes tremendous pride in our 40-year record of protecting Americans by partnering with the States to enforce strong highway safety laws and by working to make vehicles safer.  Since 1970, highway fatalities have declined by 36 percent.  Traffic deaths have fallen by 22 percent just in the last decade.  But, with more than 30,000 fatalities on America’s roadways each year, we must continue looking at new and innovative ways to save lives while maintaining support for education and enforcement efforts that we know deliver results.

Working with our State partners and other safety organizations we have made substantial progress with critical safety behaviors including drunk driving and seat belt use, and have applied the same successful approaches to emerging concerns such as distracted driving.  The legalization of marijuana under state laws poses new concerns and we are actively working from our foundation of experience to understand the risks and develop appropriate countermeasures.    

Research on Drugged Driving

Available evidence indicates that alcohol is the most common source of driver impairment.  In 2012, more than 30 percent of all traffic deaths involved a driver with a blood alcohol level at or beyond the legal limit of 0.08 percent.  With more than 40 years of research, several decades of data collection and a well-established criminal justice process, traffic safety professionals have a good understanding of the scale and the nature of the drunk driving problem. 

Much more research is needed to gain a good understanding of the effects of drugs other than alcohol on safe driving and their role in crashes.  Our research explores four overarching issues:

1. Determining the Prevalence of Drug Use by Drivers;
2. Examining the Crash Risk Associated with Drug Use;
3. Developing Improved Detection and Enforcement Methods; and,
4. Examining New Drug Testing Technology.

Determining the Prevalence of Drug Use by Drivers

In 2007, we obtained the first nationally-representative information on the prevalence of drug use by drivers by including drug testing in our National Roadside Survey.   Although this survey had been used to track driver alcohol use for several decades, this was the first time that information on drug use was collected.  This survey, based on information from voluntary and anonymous participants, found that about 12 percent of weekend drivers were alcohol-positive, and about 9 percent were marijuana-positive.  Other drugs were found at lower levels, including cocaine at about 4 percent and methamphetamine at 1 percent.   We repeated the National Roadside Survey of Alcohol and Drug Use by Drivers in 2013 and are in the process of analyzing those data.

To understand how state-level legalization might affect the prevalence of marijuana use by drivers, we partnered with the State of Washington at their invitation this spring to conduct a similar roadside survey.  This is a two-phase study that will assess the change in marijuana use by drivers before and following the date at which the State allowed retail sale of the drug.   

Examining the Crash Risk Associated with Drug Use

In addition to prevalence research, we need information on the degree of risk associated with drug use.  We are in the process of completing a new study which compares the crash risk of drivers using drugs to those with no drugs in their system.  This study uses the same methodology which has been used to understand the crash risk odds at various levels of alcohol impairment.   This is the first such investigation of drug crash risk in the United States and more research of various types is needed to get a full understanding of the role of drugs in crashes.  

Findings of prior studies using a similar methodology have been inconsistent with regard to the crash risk associated with marijuana.  These varying findings may reflect differences in study design such as the selection of subjects or the degree of certainty regarding drug presence.   Our new study incorporates lessons learned in prior research and incorporates methods that we believe will improve the precision of drug crash risk odds calculations.  As we prepare to release the results, we plan to reach out to stakeholders, including Committee staff, to inform them of the findings.      

Following a complementary research approach, NHTSA is also working with the National Institute on Drug Abuse (NIDA) and the Office of National Drug Control Policy (ONDCP) on a study of driver impairment using the National Advanced Driving Simulator to assess the effects of inhaled cannabis, both alone and with alcohol, on driving performance. 

Developing Improved Detection and Enforcement Methods

Strong laws and law enforcement are cornerstones of our efforts to address alcohol-impaired driving and we are looking to the same solutions for drugged driving.   We have worked closely with the law enforcement community in developing a network of more than 7,000 Drug Recognition Experts across the nation.  NHTSA supported the development of detailed protocols and training that prepare these officers from State and local jurisdictions to identify signs and symptoms of drug use.  Their services significantly facilitate the successful prosecution of drugged driving cases.  We recently partnered with the Office of National Drug Control Policy to introduce a new Advanced Roadside Impaired Driving Enforcement (ARIDE) curriculum that is being used to educate a broader group of law enforcement officers on detecting potentially drugged drivers and also enhance utilization of the highly trained drug recognition experts.  

We continue to refine these programs and are currently evaluating the ARIDE program and assessing the predictive validity of the protocols used by the Drug Recognition Experts to detect drugged drivers.

Examining New Testing Technology

We are looking closely at procedural barriers to effective drugged driving law enforcement and recognize the challenges presented by current drug testing methods.   While the prosecution of alcohol-impaired driving cases is complex, evidential testing for alcohol can typically be done at the jurisdiction by local officials with a moderate amount of training.  Testing for drug presence among suspected impaired drivers is often far less convenient, requiring that a blood sample be drawn and sent to a remote lab for analysis by highly trained personnel.  The cost and delay of such testing can be a disincentive for criminal justice officials to pursue a drugged driving charge.

NHTSA and ONDCP convened a roundtable of drug testing and criminal justice experts in 2012 and have since initiated a demonstration program to explore the feasibility of using portable saliva testing devices for drugged driving law enforcement purposes.  If the demonstration program produces positive results, we would then provide guidance on drug testing that could streamline the criminal justice process.   

Conclusion

In conclusion, NHTSA is committed to reducing both alcohol and drug impaired driving.   We support the development of effective education and enforcement programs with guidance for state officials based on sound research.  Much progress has been made since the agency began its work on this issue more than 40 years ago.  However, impaired driving still claims more than 10,000 lives per year. 

Further progress, particularly in the area of marijuana and driving, will require new research and a better understanding of how the drug affects individuals and how these effects translate into driving performance and traffic risk.  State officials are anxious for guidance, but need sound evidence which can support effective policies.  We will continue to work with State and local officials to test promising strategies and collect information that will help address drug and alcohol impaired driving.   

For further background information we have attached a compendium of prior agency research concerning drugs and driving. 

Thank you again for inviting me to testify before the committee and I am happy to take any questions that you may have.

NHTSA OFFICE OF BEHAVIORAL SAFETY RESEARCH

RESEARCH ON DRUGS AND DRIVING

Extracted from NHTSA’s Compendium of Traffic Safety Research Projects 1985-2013, DOT HS 811 847

Drug Use and Drug Impairment Studies

The Incidence of Driving Under the Influence of Drugs 1985: An Update of the State of Knowledge

December 1985, DOT HS 806 900

This project reviewed literature published from 1980 through 1985 to update a previous "state of knowledge" report produced in 1980.  The project found that drugs other than alcohol are detected in 10% to 22% of crash-involved drivers, and that drugs alone (i.e., without alcohol) are found in 3% to 15% of crash-involved drivers.  It was also found that the majority of drug-using drivers have high levels of alcohol in combination with the drugs.  The reviewers cautioned that most of the available studies did not provide unbiased representative samples of crash-involved drivers, and tested for only a limited sample of drugs. 

Author:  Richard P. Compton, Theodore E. Anderson

Feasibility Assessment of Chemical Testing for Drug Impairment

September 1985, DOT HS 806 920

The study examined existing data on the concentrations of a variety of drugs in drivers to assess the feasibility of establishing chemical tests to detect drug-impaired driving.  It was concluded that urine testing would be suitable for establishing the need to obtain and analyze blood specimens for THC (the active ingredient in marijuana), while saliva offered more promise for presumptive screening for other drugs.  The study also found that, at the present state of knowledge, blood was the only body fluid that may serve in a limited manner to relate drug levels to impaired driving. 

Author:  R. E. Willette

Feasibility Assessment of Chemical Testing for Drug Impairment: Final Summary Report

September 1985, DOT HS 806 888

This project examined existing data on concentrations of marijuana, secobarbital, diazepam, diphenhydramine, and methaqualone in blood, saliva and urine to assess the feasibility of establishing chemical tests for police use in detecting drug-impaired drivers. The study employed pharmacokinetic methods to relate urine and saliva concentrations to blood levels, which were related to measures of behavioral impairment in laboratory tasks.

Author:   Robert E. Willette

Use of Controlled Substances and Highway Safety:  A Report to Congress

March 1988, DOT HS 807 261

The report reviewed the literature on the relationship of drug use to highway safety.  It was found that substantial numbers of people sometimes drive after using drugs other than alcohol and between 10 and 22% of crash-involved drivers may have used drugs, often in combination with alcohol.  Drugs appearing to have the greatest potential to be serious highway safety hazards were tranquilizers, sedative hypnotics, and marijuana.

Author:  Richard P. Compton

Test Drives in the Daimler-Benz Driving Simulator with Drivers Under Diazepam

May 1990, DOT HS 807 569

The research investigated the influence of diazepam on the driving performance measured in the Daimler-Benz Driving Simulator. Test subjects were male students; 20 received a medium, and 20 received a high dosage of diazepam. A third group of 20 students served as a control group without diazepam. The test drive involved ten standardized driving tasks (scenarios) which either required a normal everyday response or represented an “emergency situation” with greater demands on the driver. No significant differences were found between the three groups. In all scenarios the individual differences within groups were higher than differences between the groups.

Author:   B. Friedel, S. Joo, K. Reker, W. Kading, P. Klostermann, K. S. Saturnus, V. Schneider

Test Drivers in the Daimler-Benz Driving Simulator with Drivers under Diphenhydramine

January 1991, DOT HS 807 668

This study investigated the influence of diphenhydramine on driving performance as measured in the Daimler-Benz Driving Simulator.  Subjects received either a placebo, medium, or high dosage of diphenhydramine. The test drive involved standardized driving tasks which either required a normal response or represented an emergency situation.  No significant differences were found between the three groups.  For all tasks, the individual differences within groups were higher than differences between the groups.  Based on the results, the hypothesis was derived that compensatory mechanisms may take effect in particular dosage ranges.

Author:  B. Friedel, S. Joo, K. Reker, W. Kaeding, P. Klosterman

The Incidence and Role of Drugs in Fatally Injured Drivers

October 1992, DOT HS 808 065

This study examined drug presence in blood specimens from nearly 2,000 drivers killed in motor vehicle crashes.  Alcohol was found in slightly more than half of the specimens, other drugs in about 18% of the specimens.  In about two-thirds of the drug cases, alcohol (usually at high levels), was also present.  Analysis of crash responsibility suggested that drugs other than alcohol are most likely to present a hazard when combined with alcohol or other drugs.

Author:  K. W. Terhune, C. A. Ippolito, D. L. Hendricks, J. G. Michalovic, S. C. Bogema, P. Santinga, R. Blomberg, D. F. Preusser

Marijuana and Actual Driving Performance

November 1993, DOT HS 808 078

Volunteer subjects participated in several sessions in which they were dosed on alcohol, marijuana, or a placebo, then drove motor vehicles in various controlled on-road traffic situations (e.g., closed interstate highway).  Dual-controlled vehicles were used, and a researcher was always along to take control if warranted.  Marijuana was found to have a performance impairment effect equivalent to an alcohol blood alcohol concentration (BAC) level between .04 g/dL and .08 in lane maintenance performance measures.

NHTSA Project Manager: James F. Frank

Author:  Hindrik Robbe, James O'Hanlon

Driving after Drug or Alcohol Use: Findings from the 1996 National Household Survey on Drug Abuse

December 1998, DOT HS 808 838

This report contains findings from questions included in the 1996 National Household Survey on Drug Abuse (NHSDA). The data presented describe the prevalence and patterns of driving following drug use and/or alcohol use respondents representing over 166 million drivers age 16 and older in the United States. Results showed that 5% of drivers, representing approximately 8.9 million people, reported driving within two hours of drug use, with or without alcohol, in the past year. An additional 23% of drivers, representing approximately 39 million people, reported driving after alcohol use only.  Results are presented in detail.

NHTSA Project Manager: Paul Tremont, Richard Compton

Author:  Tara N. Townsend, Julie Lane, Carolyn S. Dewa, Angela M. Brittingha

Marijuana, Alcohol and Actual Driving Performance

July 1999, DOT HS 808 939

The purpose of this study was to determine separate and combined effects of low doses of marijuana and alcohol on visual search while driving.  Sixteen volunteer subjects were given weight-calibrated doses of marijuana (THC) and alcohol, or placebos for one of both substances.  It was concluded that THC alone in 100 to 200 micrograms per kilogram (ug/kg) doses impairs fundamental road tracking ability with the degree of impairment increasing as a function of the dose. The impairment from THC alone does not diminish and may even increase for up to 21 hours after marijuana smoking, regardless of the THC dose. Furthermore, THC in 100 to 200 ug/kg doses, in combination with alcohol sufficient for producing blood alcohol content (BAC) at 0.04 grams per deciliter (g/dl), severely impairs road tracking ability with the degree of impairment again increasing with the THC dose. THC and alcohol effects on road tracking ability appear to be additive in a pharmacological sense, but the risk of driving off the road increases exponentially with the combined drug effect.

Author:  Hindrik Robbe, James O'Hanlon

Visual Search and Urban City Driving Under the Influence of Marijuana and Alcohol

March 2000, DOT HS 809 020

The purpose of this study was to empirically determine the separate and combined effects of delta-9-tetrahydrocannabinol (THC) and alcohol on visual search and actual city driving performance. On separate evenings, 16 subjects were given weight-calibrated doses of THC and alcohol, or placebos for one or both substances. The test was conducted over a fixed route within the city limits of Maastricht, The Netherlands. An eye movement recording system was mounted on the subjects' head. Visual search frequency of these subjects did not change when treated with alcohol or marijuana alone. However, when treated with the combination of alcohol and marijuana, the frequency of visual search dropped by 3%.

Author:  C. Lamers, J. G. Ramaekers

Field Test of On-Site Drug Detection Devices

October 2000; DOT HS 809 192

This study reports the findings of a field evaluation of five-on-site drug screening devices used by law enforcement to screen for illicit drugs among drivers suspected of driving under the influence (DUI) of alcohol or other drugs. Detailed drug screening device performance is presented and implications for the uses of on-site devices by law enforcement for assessing illicit drug use by drivers are discussed.

NHTSA Project Manager: James F. Frank

Author:  Rebekah K. Hersch, Dennis J. Crouch, Royer F. Cook

State of Knowledge of Drug-Impaired Driving

August 2003, DOT HS 809 642 

This report presented an examination of the current state of knowledge of drug-impaired driving. The review covers a broad range of related research, including the detection and measurement of drugs in drivers, experimental research on the effect of drugs on the performance driving-related tasks, drug prevalence in various populations of drivers, drug-crash risk, and countermeasures for drug-impaired driving. The review covers scientific literature published since 1980.

NHTSA Project Manager: Amy Berning, Richard P. Compton

Author:  Ralph K. Jones, David Shinar, J. M. Walsh

Antihistamines and Driving-Related Behavior: A Review of the Evidence for Impairment

May 2004, DOT HS 809 714

This was a review of the literature on antihistamines and driving-related skills. For each H1-antagonist generation, five drugs were evaluated: chlorpheniramine, clemastine, diphenhydramine, hydroxyzine and tripolidine for the 1st-generation, and astemizole, cetirizine, fexofenadine, loratadine and terfenadine for the 2nd-generation. Findings included:   1) There is some evidence of a connection between antihistamine use and traffic collision rates. However, studies were done primarily when only 1st-generation (but not 2nd-generation) antihistamines were prevalent. 2) There was overwhelming evidence from the experimental literature that the 1st-generation antihistamines produce objective signs of skills performance impairment as well as subjective symptoms of sedation. 3) While 2nd-generation antihistamines represent a triumph in reducing potential side effects, there still remains some evidence that all antihistamines, even the 2nd-generation drugs, may cause sedation and objective skills impairment at least in some cases and for some individuals. 4) Within both the 1st- and 2nd-generation antihistamine groupings, there is variation in objective evidence of impairment and in subjective effects such as sedation. Thus, there clearly are drugs that are to be preferred for use to avoid side effects such as sedation and driving-related performance impairment. 5) Methodologically, it is apparent that among the many diverse techniques for investigating driving-related impairment, some methods and behavioral domains are more sensitive to the effects of antihistamines. Future studies of antihistamines, therefore, must utilize the most methodologically-sound techniques so as to permit a better comparison between different drugs.

NHTSA Project Manager:  Richard Compton

Author:   Herbert Moskowitz, Candace Jeavons Wilkinson

Drugs and Human Performance Fact Sheets

June 2004, DOT HS 809 725

This report presented fact sheets on the impact of drugs on human performance. Based on a panel of international experts, the impact of 16 drugs on human performance was examined. The selected drugs included over-the-counter medications such as dextromethorphan and diphenhydramine; prescription medications such as carisoprodol, diazepam and zolpidem; and abused and/or illegal drugs such as cocaine, GHB, ketamine, LSD, marijuana, methadone, methamphetamine, MDMA, morphine, PCP and toluene.

NHTSA Project Manager:  James F. Frank

Author:  Fiona J. Couper, Barry K. Logan

Pilot Test of New Roadside Survey Methodology for Impaired Driving

January 2007, DOT HS 810 704

This study developed and tested procedures to enhance roadside survey procedures to include collecting and analyzing oral fluid and blood samples from the nighttime weekend driving population. Roadside surveys involve collecting information from a random sample of drivers. The findings indicated that this form of expanded roadside survey was practicable in the United States. The intent of this Pilot Test was to develop and test procedures that would be used in the next full-scale national roadside survey.

NHTSA Project Manager:  Amy Berning

Author:  John H. Lacey, Tara Kelley-Baker, Debra Furr-Holden, Katharine Brainard, and Christine Moore

Priorities and Strategies for Improving the Investigation, Use of Toxicology Results, and Prosecution of Drug-impaired Driving Cases: Findings and Recommendations

January 2007, DOT HS 810 708

This publication presented the findings and recommendations of expert panel meetings on drug-impaired driving. This group convened by the National Safety Council’s Committee on Alcohol and Other Drugs (CAOD) included toxicologists, drug recognition experts and prosecutors. The panel was charged with identifying problems with the current system of prosecuting drug-impaired driving cases, from detection through adjudication. This report focused on the recurrent themes and major issues identified. The panel was also encouraged to identify solutions to the problems, and to assign responsibility for follow-up.

Author:  Barry K. Logan

Results of the 2007 National Roadside Survey of Alcohol and Drug use by Drivers: Research Note

July 2009, DOT HS 811 175

[see also 2007 National Roadside Survey of Alcohol and Drug Use by Drivers:  Methodology , December 2009, DOT H 811 237; 2007 National Roadside Survey of Alcohol and Drug Use by Drivers:  Alcohol Results, December 2009, DOT HS 811 248; 2007 National Roadside Survey of Alcohol and Drug Use by Drivers: Drug Results, December 2009, DOT HS 811 249]

National Roadside Surveys have been conducted approximately every 10 years since 1973 to estimate the prevalence of alcohol-positive driving on US roads. The methodology of the 2007 survey was enhanced to also, for the first time, estimate the prevalence of drug-positive drivers. This Research Note summarizes the results from survey. Over 9,000 randomly-selected on-road drivers participated, and data was collected across 60 sites representative of the US. There was a downward trend in alcohol-positive drivers from past decades. Using the combined results of either or both oral fluid and blood tests, 16.3% of the nighttime drivers were drug-positive.

Author:  Richard Compton, Amy Berning

A State-by-State Analysis of Laws Dealing With Driving Under the Influence of Drugs

December 2009; DOT HS 811 236

This study reviewed each State statute regarding drug-impaired driving as of December 2008. There is a high degree of variability across the States in the ways they approach drug-impaired driving. Current laws in many States contain provisions making it difficult to identify, prosecute, or convict drug-impaired drivers.

NHTSA Project Manager: Maria Vegega and Dereece D. Smither

Author:  J. Michael Walsh

Drug-Impaired Driving: Understanding the Problem and Ways to Reduce It:  A Report to Congress

December, 2009 DOT HS 811 268

This report summarizes a series of studies by the National Highway Traffic Safety Administration to address the general problem of drug-impaired driving.  The report describes the research conducted on prevention, detection, and prosecution of driving under the influence of drugs; issues associated with determining what drugs impair driving; difficulties in relating blood levels of drugs and impairment; lack of information about what drugs are frequently used by drivers and what drugs elevate crash risk; problems in obtaining representative data about current enforcement, prosecution, and adjudication of drug-impaired driving; training for law enforcement officers in recognizing drug-impaired drivers; review of drug-impaired driving laws; and what is known about the role of drugs as causal factors in traffic crashes.  It highlights the need for further research and concludes with recommendations to better address the problem of drug-impaired driving.

Author:  Richard P. Compton, Maria Vegega, and Dereece Smither

2007 National Roadside Survey of Alcohol and Drug Use by Drivers:  Methodology

December 2009, DOT HS 811 237

[see also, Alcohol-Impaired Driving: 2007 National Roadside Survey of Alcohol and Drug Use by Drivers: Alcohol Results December 2009, DOT HS 811 248; 2007 National Roadside Survey of Alcohol and Drug Use by Drivers: Drug Results, December 2009, DOT HS 811 249; Results of the 2007 National Roadside Survey of Alcohol and Drug Use by Drivers, Research Note, July 2009, DOT HS 811 175]

This report presented the methodology from the 2007 National Roadside Survey of Alcohol and Drug Use. Over 9,000 randomly-selected on-road drivers participated. Data was collected across 60 sites representative of the U.S. Drivers were requested to provide breath, oral fluid, and blood samples. Lab analyses were then conducted to determine the prevalence of alcohol- and drug-positive drivers in the U.S.

NHTSA Project Manager:  Amy Berning

Author:  John H. Lacey, Tara Kelley-Baker, Debra Furr-Holden, Robert Voas, Christine Moore, Katharine Brainard, A. Scott Tippetts, Eduardo Ramirez, Pedro Torres, and Amy Berning

2007 National Roadside Survey of Alcohol and Drug Use by Drivers: Drug Results

December 2009, DOT HS 811 249

[see also 2007 National Roadside Survey of Alcohol and Drug Use by Drivers: Methodology, December 2009, DOT HS 811 237; 2007 National Roadside Survey of Alcohol and Drug Use by Drivers: Alcohol Results, December 2009, DOT HS 811 248; Results of the 2007 National Roadside Survey of Alcohol and Drug Use by Drivers, Research Note, July 2009, DOT HS 811 175]

This report presented results from the 2007 National Roadside Survey of Alcohol and Drug Use.  Over 9,000 randomly-selected on-road drivers participated.  Data was collected across 60 sites representative of the U.S.  Based on the oral fluid results, more nighttime drivers (14.4%) were drug-positive then were daytime drivers (11%).  Based on the blood test results which were administered only at nighttime, 13.8% of the drivers were drug-positive.  Using the combined results of either or both oral fluid and blood tests, 16.3% of the nighttime drivers were drug-positive.

NHTSA Project Manager:  Amy Berning

Author:  John H. Lacey, Tara Kelley-Baker, Debra Furr-Holden, Robert B. Voas,

Eduardo Romano, Anthony Ramirez, Katharine Brainard, Christine Moore, Pedro Torres, Amy Berning

Drug Per Se Laws: A Review of Their Use in States

July 2010, DOT HS 811 317

This report summarizes a study of the implementation of drug per se laws in 15 States. These laws generally make it an impaired-driving offense to drive with a measurable amount of certain drugs in one’s system. The specific prohibited drugs vary by State. The laws are generally integrated into the States’ overall impaired-driving statute. Though all 15 States were studied to some degree, deeper study of the process was conducted in 6 States. This involved discussions with government officials and law enforcement officers, and a series of structured discussions with prosecutors. This study was not an impact evaluation of drug per se laws on crashes, but rather an attempt to gain an understanding of how the drug per se laws are implemented and perceptions about the law of those charged with implementing the law. It was initially intended that the study would also assess the effect of passing driving under the influence of drugs (DUID) per se laws on the volume of DUID arrests and on conviction patterns, but data to directly address those issues were not available. A general consensus among law enforcement officers we held discussions with was the adoption of drug per se laws did not necessarily make enforcement easier, but did have a positive effect on prosecution. This general perception was shared by prosecutors we interviewed. Because the drug per se laws have typically been adopted as a component of States’ impaired-driving statutes, one difficulty of this study was obtaining accurate data on volume of arrests and conviction rates for the DUID component of the impaired-driving law was problematic. Recommendations include developing a procedure where impaired-driving citations indicate drugs, alcohol, or both, but also adopting procedures ensure information is integrated into computerized data systems of both law enforcement agencies and courts.

NHTSA Project Manager:  Amy Berning

Author:  John Lacey, Katharine Brainard, and Samantha Snitow

Drugged Driving Expert Panel Report:   A Consensus Protocol for Assessing the Potential of Drugs to Impair Driving

March 2011, DOT HS 811 438

This report presented the discussions and conclusions of expert panel meetings on the impact of drugs on driving. Convened in 2008 and 2009, the panel was composed of an international group of behavioral scientists, epidemiologists, pharmacologists, toxicologists, and traffic safety professionals to examine the impact of drugs on driving.  Discussions included prescription medications, as well as over-the-counter medications and illicit drugs.  Panel conclusions included agreement that the lack of a common, standardized protocol for assessing the impairing potential of drugs is a major barrier. The panel recognized the need for a structured, standardized protocol for assessing the driving impairment risk. This would lead to better classification of drugs in terms of driving impairment risk. The report also provided a description of the proposed protocol, and examples of its use.

NHTSA Project Manager: Dereece D. Smither

Author:  Gary G. Kay, Barry K. Logan

The Drug Evaluation and Classification (DEC) Program

Identifying Types of Drug Intoxication: Laboratory Evaluation of a Subject Examination Procedure

May 1985, DOT HS 806 753

The project studied the ability of drug recognition experts (DREs) to determine if volunteer subjects were impaired, and if so, to identify the type of drug the subject had ingested.  Results indicated that the DRE examination procedure was basically valid. Subjects assessed to be impaired had almost always ingested some drug, and DREs usually correctly identified the type of drug taken.

Author:  G. E. Bigelow, W. E. Bickel, I. A. Liebson, P. Nowowieski

Field Evaluation of the Los Angeles Police Department Drug Detection Procedure

February 1986, DOT HS 807 012

This project compared Drug Recognition Expert’s (DREs) assessments of actual arrested suspects with independent analyses of blood samples drawn from the suspects. Findings showed that DREs correctly identified at least one drug type in 87% of suspects assessed as drug impaired.  A standardized curriculum was developed to train other officers to employ the Los Angeles Police Department procedure in a national program called "drug evaluation and classification" (DEC).

Author:  Richard P. Compton

Evaluation of the Impact of the Drug Evaluation and Classification Program on Enforcement and Adjudication

December 1992, DOT HS 808 058

This study examined the effect of the drug evaluation and classification (DEC) program on impaired driving enforcement and adjudication.  Eleven police agencies in five states with DEC programs were compared with similar police agencies without DEC.  Prior to DEC implementation, arrests for drugged driving were very rare.  After initiating the program, DEC sites showed increased drugged driving arrests and convictions while there were no similar increases in the comparison communities.  In the DEC sites, drugged driving arrests were 1-2% of all impaired driving arrests.  Overall, 1,842 suspects were evaluated in the DEC sites; drug presence was confirmed by chemical tests for most of the suspects accused of drug use; and most of the confirmed suspects were convicted.

NHTSA Project Manager: Richard P. Compton

Author:   David F. Preusser, Robert G. Ulmer, Carol W. Preusser

STATEMENT OF

BRANDON NEAL
DIRECTOR, OFFICE OF SMALL AND DISADVANTAGED BUSINESS UTILIZATION
U.S. DEPARTMENT OF TRANSPORTATION

BEFORE THE

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM
SUBCOMMITTEE FOR GOVERNMENT MANAGEMENT, ORGANIZATION, AND PROCUREMENT
U.S. HOUSE OF REPRESENTATIVES

September 22, 2010

Good Morning Chairwoman Watson and members of the Committee.

Thank you for inviting the U.S. Department of Transportation (DOT) here today to discuss our efforts to comply with government-wide Contracting Requirements For Minority Owned Business Programs.

My name is Brandon Neal and I am the Director of the Office of Small and Disadvantaged Business Utilization (OSDBU).

DOT has been a strong advocate for ensuring the participation of small businesses, including small disadvantaged, women-owned, HubZone, veteran, and service-disabled veteran owned small businesses, in its procurement process at both the prime and subcontracting levels.  Under the leadership of Secretary LaHood, our commitment is to ensure that opportunities created by our nation’s investment are shared by all Americans.  The objective is for each operating administration (OA) within the Department to work to provide small businesses a fair chance to participate in transportation projects.

 DOT Small Business contracting opportunities are available through our direct federal contracting program and through recipients of DOT financial assistance via the Disadvantaged Business Enterprise (DBE) program.  DOT has demonstrated its commitment to small and disadvantaged businesses by designing a successful program to increase the number of competitively awarded direct federal contracts to small businesses by maximizing opportunities and promoting use of small businesses in DOT contracts. 

Small Business Strategy – Direct Contracting

Small businesses are the backbone of our economy, employing about half of all private sector employees, and paying for nearly 45% of the total U.S. private payroll.  Cognizant of this reality, DOT has implemented a successful small business program designed to ensure opportunities for small businesses to participate in DOT contracts and subcontracts.

In Fiscal Year 2009 DOT received an “A” scorecard rating from the U.S. Small Business Administration for meeting its direct contracting small business goal achievements, which is the highest rating an agency can receive. In Fiscal Year 2009 DOT spent $1.9 billion in direct contracting, of which $752 million (39 percent) went to small and disadvantaged, women owned, Historically Underutilized Business Zone (Hub Zone), and service disabled veteran-owned businesses.

The OSDBU program is supported at the highest level of the organization and reflected in the DOT strategic and performance plans.  The Transportation Acquisition Manual and the Transportation Acquisition Regulations reinforce written policies and procedures for use by the OAs to implement small business contracting activities.  Each OA has at least one small business specialist to assist small businesses seeking contracting opportunities with DOT.

Small Business Strategy – Financial Assistance Programs

The history of the DOT DBE program began with a 1980 DOT rule. The program has been specifically authorized by statute since 1983, and is intended to provide a level playing field for businesses owned and controlled by socially and economically disadvantaged individuals.  In response to strong evidence of continued effects of discrimination against women and minority business owners in federal transportation contracting, Congress has enacted DBE or similar program requirements as part of every highway/transit authorization act since 1983, and similar requirements for airport programs were codified in 1987.   Three major DOT operating administrations are involved in the DBE program.  They are the Federal Highway Administration, the Federal Aviation Administration and the Federal Transit Administration. 

The Department is committed to strong oversight of the DBE program.   Our objectives are to foster equal opportunity in DOT-assisted contracts, improve the flexibility and efficiency of the DBE program, and reduce burdens on small businesses.  To this end, the Department held a series of stakeholder meetings to bring together prime contractors, DBEs, and state and local government representatives.  Additionally, the Department recognizes the need to address the continuing effects of discrimination in our programs, as identified, for example, by recipient’s disparity studies and testimony before the House Transportation and Infrastructure Committee in March 2009.  As is made clear in those studies and testimony, DBEs continue to face discrimination in business lending, exclusion by networks of prime contractors, and less favorable treatment by suppliers, among others problems.  In response, the Department has implemented program improvements and will continue to seek guidance to help all participants better understand and carry out their responsibilities.

The Department created a high level Task Force to look at the DBE program and develop long and short term recommendations to improve the administration of the DBE program.  The Task Force is chaired by me and is composed of the heads of the General Counsel’s Office, Government Affairs, Office of Civil Rights, Federal Highway Administration, Federal Transit Administration, Federal Aviation Administration, Federal Railroad Administration, and their respective DBE program directors.  The Secretary and Deputy Secretary have personally participated in many of the Task Force meetings.

Secretary LaHood sent a letter to each governor and state DOT administrator indicating the Department’s commitment to work together to provide small and disadvantaged businesses an opportunity to participate in transportation projects.  Secretary LaHood also emphasized the need to take existing equal opportunity programs and resources to create innovative strategies to provide opportunities for small and disadvantaged businesses.  Additionally, FAA, FHWA, and FTA Administrators sent a similar letter to their recipients stressing the importance of setting and meeting goals for DBE participation that reflect the level of DBE participation that would be expected absent discrimination, and indicating that they will be closely monitoring states that do not meet goals.

In a May 2010 notice of proposed rulemaking (NPRM), we proposed several important improvements in the DBE program.  Some of the main provisions of this proposed rule include:

1. Accountability for state DOT recipients with respect to good faith efforts to meet overall goals.
2. Modifying and updating certification requirements.
3.  Adjusting the personal net worth (PNW) threshold for inflation.
4. Providing for expedited interstate certification.
5. Adding provisions to foster small business participation and 
6. Improve post-award oversight.

The comment period for this rulemaking has closed, and we received over 160 comments.  We anticipate issuing a final rule within the next few months.

Implementation of Recovery Act

DOT quickly disbursed contracts funded through the American Recovery and Reinvestment Act (ARRA).The projects include bridge and pavement improvements, safety/traffic management and other transportation infrastructure projects.These projects continue to provide contracting and subcontracting opportunities for small businesses.

Our current reporting data indicates FHWA funded $24.5 billion in ARRA funded contracts and $1.7 billion (7 percent) in commitments to DBEs.  FAA reports $1.1 billion in ARRA obligations and $92 million (8.4 percent) committed to DBEs.  FTA will be unveiling a new web-based DBE reporting module to their Awards Management System.  A sampling of data from FTA’s largest 50 ARRA recipients indicates of $2.8 billion awarded in contracting opportunities, with over $380 million awarded to DBEs (13 percent).

One of the major goals for the DBE Task Force is to have consistency and transparency in our data reporting.  Projected improvements in our reporting mechanism will enhance DBE data collection including the number of jobs created.

We recently implemented a Bonding Education Program in partnership with The Surety and Fidelity Association of America to get small businesses bond ready.  Becoming bondable is a major obstacle for many disadvantaged businesses, and this pilot program aims to address the issue and help these businesses grow by becoming bond ready. 

Small Business Strategy – Increased Opportunities

The OSDBU developed and implemented several strategies to increase opportunities for small businesses. These strategies include working with each OA, small business organizations, and the minority small business community across the country. 

Some examples of our efforts and strategies in the past year were:

• We conducted over 170 outreach activities, including webinars, DOT/OSDBU Small Business Days, and participating in major events like the Hispanic National Veterans Conference sponsored by the US Department of Veterans Affairs, Congressional Black Caucus Legislative Conference and the Minority Business Enterprise Development Conference. We have also participated in more than 70 congressional and community based events to ensure information is disseminated at all levels.
• The OSDBU is participating in the White House Interagency Task Force on Federal Contracting Opportunities for small businesses.  The task force’s mission is to coordinate the efforts of Federal agencies to improve capital, and business development opportunities for small businesses. I served as co-chair, along with Ginger Lew of the White House National Economic Council, of a working group entitled “Enabling Small Business Contracting through Training, Outreach, Bonding, and Access to Capital.
• In March 2010 DOT hosted the inaugural Small Business Summit entitled, “The Road to Recovery.” More than 700 business leaders and representatives from the small disadvantaged business community came together to discuss the demands and challenges presented by today’s economy, opportunities under the Recovery Act, and ways to grow businesses in the future.
• We hosted major vendor outreach days with a focus on veteran owned small businesses and women owned small businesses and each attracting over 500 small businesses.  These special vendor outreach events provided small businesses an opportunity to have one-on-one sessions with representatives from each of our operating administrations and to learn about DOT small business programs.
• Our Minority Business Resource Center loan guarantee program, formerly referred to as the   Short Term Lending Program, continues to help small businesses gain access to the financing they need to participate in transportation contracts.
• We increased our Small Business Transportation Resource Center program to 11 centers across the country.  These centers offer a comprehensive delivery system of business training, technical assistance, and dissemination of information targeted toward transportation related small business enterprises.
• We established a "Pilot Entrepreneurial Training and Technical Assistance Women and Girls Program," a partnership with Spelman College in Atlanta, GA to encourage girls to pursue careers in science, engineering, and technology and help women in the field to achieve their goals. As part of our overall efforts to introduce students to such careers, this program provided internships and mentoring for young women as well as entrepreneurial training for women owned small business owners.  This program is part of a broader effort, led by the White House, to ensure that federal programs and policies take into account the distinct needs and concerns of women and girls.
• The Pilot Entrepreneurial Training and Technical Assistance internship program has been very successful, and we just announced the expansion of the program through our Small Business Transportation Resource Centers – each of our 11 centers will now offer an internship program for female colleges students based on the Spelman model, allowing young women from all across the country to pursue careers in transportation.
• The Federal Highway Administration in conjunction with Federal Transit Administration and the OSDBU office are conducting a series of community workshops across the country to bring together all stakeholders in the contract process, including prime and subcontractors, federal, state, and local transportation agencies, unions, trade associations, and faith-base and civic groups – to discuss opportunities for DBE, set goals and develop plans to meet these goals.  Also, the Federal Aviation Administration has conducted three national conferences, and has partnered with major trade associations to conduct other workshops and conferences to provide stakeholders the tools they need to implement a robust DBE program.
• We developed an internal committee for women owned small businesses and a committee for service disabled veteran owned small businesses – each to promote, coordinate and monitor DOT procurement plans and programs towards continued achievement of our procurement goals.
• DOT leadership has met with the representatives from the Tri-Caucus/Transportation and Infrastructure Committee to discuss our efforts to ensure that small and disadvantaged businesses have equal opportunities to benefit from DOT programs. 
• Last month Secretary LaHood announced the award of $11.6 million in grants for minority and women-owned businesses.  The grants from the Federal Highway Administration’s Disadvantaged Business Enterprise/Supportive Services program provide federal aid to state DOTs for DBE firms to improve their ability to compete for and fulfill federal highway contracts.

But more is needed to address the barriers that DBEs continue to face in the marketplace and to ensure that they receive fair access to federal contracting opportunities.  As a result, DOT will robustly implement its DBE program and is continuously looking at ways to increase opportunities for small and disadvantaged business contracting.   Thank you for the opportunity to appear before you today.  I will be happy to answer any questions.

STATEMENT OF

THE HONORABLE JOHN D. PORCARI
DEPUTY SECRETARY OF TRANSPORTATION

BEFORE THE

HOUSE COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

FEBRUARY 23, 2010

         Chairman Oberstar, Ranking Member Mica and Members of the Committee I want to thank you for the opportunity to appear before you today to discuss the Department of Transportation’s (DOT) accomplishments in implementing the American Recovery and Reinvestment Act of 2009 (Recovery Act).  February 17^th marks the one-year anniversary of this hallmark legislation and I am pleased to report that much has been accomplished to improve transportation infrastructure throughout the Nation.  

         Overall, the Recovery Act provided $48.1 billion for transportation programs to be used for improvements to our Nation’s highways and bridges, transit systems, airports, railways, and shipyards.  To date we have obligated $36 billion on more than 13,600 projects nationwide.  Nearly 25% of these funds have already been expended as projects get underway and move towards completion – creating jobs throughout the transportation sector.   This is substantial progress in a relatively short amount of time – made possible in part because of the Recovery Act’s reliance on DOT’s existing formula-based structures and authorities.   

Improving Highways

         The single largest investment of Transportation Recovery Act dollars – $27.5 billion – was targeted at improving highways and bridges.   As we approach the one-year anniversary, the Federal Highway Administration (FHWA) has approved 11,981 highway projects in total.  More than 2,160 of these projects have been completed and over 7,600 are currently underway. 

         Many of these projects will have a direct impact on the safety of our highways.  For example, the Doyle Drive Replacement project in San Francisco, California will help improve the safety for nearly 91,000 drivers every day. When completed in 2013, this billion-dollar project, which relies on more than $100 million in Recovery Act funding, will replace the 73-year-old Doyle Drive protecting the route – a key economic artery for the Bay Area – against earthquake damage.

On the east coast, safety on Connecticut’s Merritt Parkway is also being improved. Nearly $70 million in Recovery Act funding will widen shoulders and install or update guard rails along 9.3 miles of one of the East Coast’s most congested commuter routes. Such improvements will enhance the safety for the estimated 60,000 drivers who use the parkway daily.

The Caldecott Tunnel near Oakland, is using $197.5 million in Recovery Act funds to add a fourth tunnel to ease congestion in its existing three tunnels – which carry an estimated 160,000 daily drivers on six lanes. This $420 million project will significantly reduce traffic congestion in the Bay area by adding a new tunnel to carry two new lanes as well as numerous safety features like emergency walkways and escape passages.

The Recovery Act was based on the need to help spur economic recovery, which is at the heart of San Bernardino’s I-215 Widening Project. This $800 million project relies on $128 million in ARRA funds to add two new lanes to I-215 in downtown San Bernardino, which will improve access to local businesses. It will also ease congestion on a route serving an estimated 83,000 daily drivers currently – but predicted to grow to 130,000 drivers in the next 20 years. 

            These projects represent more than infrastructure improvements – these are employing people in communities throughout the Nation.  Already FHWA has funded $722 million in contractor payroll from Recovery Act projects.

Improving Transit Systems

         The Recovery Act provided $8.4 billion for to improving transit systems.  During the past year, the Federal Transit Administration (FTA) has approved the purchase of more than 11,000 bus and rail vehicles.  Many of these will replace buses and other vehicles that have surpassed their useful life.  At the same time, these purchases support American manufacturing jobs.  FTA has also approved construction of 1,637 bus and passenger shelters and the construction and renovation of more than 850 transit facilities and stations.          

Many of these grant awards advance the President's "Green Economy" objectives as well as produce new jobs.  Link Transit, which operates in economically distressed counties in north central Washington State, is the first public transit agency in the nation to receive funding from the Recovery Act for a new generation of clean-fuel buses and other equipment.  On February 4th, Secretary LaHood announced that the Federal Transit Administration made a $3 million award as part of a $100 million competitive transit grant program funded by the Recovery Act.  The program enables transit agencies to invest in projects that reduce greenhouse gases and put more energy-efficient buses on the road.  Link Transit’s award will put cutting-edge technology for battery-powered, zero-emission circulator buses and charging stations in operational use.  These charging stations will be built locally, providing jobs for folks in central Washington State hard-hit by the recession.

Over the past year, FTA has spent $622 million of its Recovery Act funds on preventative maintenance which has maintained public transit service and transit jobs.  For example, Recovery Act funds were critical to assisting the Cooperative Alliance for Seacoast Transportation (COAST), the regional transit agency in the Portsmouth, New Hampshire area – to address preventative maintenance needs by funding COAST’s three-person maintenance team over the past year.  Based on the new methodology for calculating job retention and creation, COAST has sustained at least four full time equivalent positions through the expenditure of its Recovery Act funds – critical for a small community.

         Improving our infrastructure is only one focus.  Improving transit safety also continues to be one of our top transportation priorities.  Rail transit has the potential for catastrophic accidents resulting in multiple injuries, considerable property damage, and heightened public concern.   Following the recent tragic accidents in Washington D.C., Boston, and San Francisco it is clear we need to strengthen the safety oversight of transit rail operations.  The Administration’s transit safety bill will implement a comprehensive safety oversight strategy to establish common safety standards nationwide and to ensure the safety of our Nation’s transit riders and I am pleased that the Chairman has introduced a transit safety bill.    

Improving Airports

         The Recovery Act provided the Federal Aviation Administration (FAA) with a total of $1.3 billion in additional resources to address needed improvements at the Nation’s airports.  The majority of these funds – $1.1 billion – were provided for airport improvement grants; the remainder can be used to upgrade FAA-owned infrastructure.    Over the past year, FAA has awarded 100% of the airport grant funds on a total of 360 projects at 334 airport locations.  More than 80% of these funds were used for 288 runway, taxiway and apron construction projects totaling $889 million and supporting jobs at 265 airport locations nationwide.   Other projects include an additional $85 million directed towards improvements at 23 small commercial service airports, replacing decades-old infrastructure and improving facility efficiency for travelers at airports in smaller communities.  FAA estimates that all together these efforts resulted in approximately 6 thousand jobs Nationwide so far.  Perhaps even more impressive FAA reports that because the Recovery Act provided resources through FAA’s existing programs, some of the workers had paychecks in their hands within the first 90 days following passage of the Act.

One of the major airport projects is the Washington Dulles International Airport (IAD), in Chantilly, Virginia.  This $15 million project rehabilitated a portion of Runway 1C/19C from the south end to approximately the mid-point of the runway. The project removed and replaced the existing concrete that was almost 50 years old. The project also completed three connecting taxiways between the passenger terminal apron and the new west runway. These taxiways are critical for easy access to the new runway, and will reduce aircraft taxi time and fuel consumption.  Work started in mid-July, 2009 and the runway reopened in early December, 2009.  In addition to the employment impacts, and reduction in aircraft taxi time and fuel consumption, the project will reduce airport maintenance costs and enable more efficient movement of aircraft, thereby reducing delays.

$13.1 million in Recovery Act funds were used to rehabilitate the runway at the Omaha-Epply Airfield (OMA) in Omaha, Nebraska.  The project removes and replaces the existing concrete pavement, originally constructed in 1950, on a portion of runway 14R/32L and is part of a larger effort to completely rehabilitate the longest commercial runway and several associated taxiways.  Several phases of the runway rehabilitation project started in March, 2009.  The ARRA portion is substantially complete.

Recovery Act funds have also been used to fund a terminal apron rehabilitation at the Reno/Tahoe International Airport (RNO) in Reno, Nevada.  The $6.3 million project will complete a critical portion of the terminal apron serving aircraft terminal gates.  The project started in July 2009 and is 60 percent physically complete.  This phase of construction was originally planned to begin in late 2010, but the availability of Recovery Act funding allowed the project to proceed last summer.  

Tower and Radar Control facilities have also been replaced with Recovery Act funds.  $14 million was used to replace the tower and Terminal Radar Approach Control Facility at Wilkes-Barre, Pennsylvania.  To date, $14 million has been obligated toward the construction project and work on the project began in December 2009.  Roughly 140 jobs over two years are anticipated, yielding considerable benefit to the community’s depressed economy.  Once completed, the new facility will enhance safety by improving the line-of-sight for air traffic controllers.  It will be a more cost-efficient facility, thanks to new energy-efficient materials that cut down on heating and ventilation costs. Administrative costs will be lower than before, generating additional savings for the Federal Government every year.

            The Recovery Act included an exemption to the Alternative Minimum Tax that has enabled airports to leverage Recovery Act investments for even more benefit.  Over the past year, 75 transactions representing about $8.9 billion in airport bonds have been sold at 38 different airports.  This has resulted in reduced financing costs to these airports that can now be used toward airport development to reduce long-term debt.  The savings to airports from this provision is estimated at $635M.

Expanding Rail Opportunities

         Of all the contributions in the Recovery Act, the continuation of efforts to establish our Nation’s high speed rail capability ranks among the most exciting.  The $8 billion provided to the Federal Railroad Administration (FRA) represents a substantial down payment on developing or laying the groundwork for 13 new, large scale high-speed rail corridors in 31 states across the country. 

The majority of the dollars will go toward developing new, large-scale high-speed rail programs.  This includes projects in Florida, which are receiving up to $1.25 billion to develop a new high-speed rail corridor between Tampa and Orlando with trains running up to 186 miles per hour and at an average speed of 100 mph, and in California, which is receiving up to $2.25 billion for its planned project to connect Los Angeles to San Francisco and points in between with trains running up to 220 miles per hour.

FRA received almost $57 billion in project proposals for the initial $8 billion in funds awarded – demonstrating strong interest in the development of high-speed rail throughout the county.  

         The Recovery Act also addressed the needs of Amtrak providing $1.3 billion that doubled the size of Amtrak’s capital investment program.  Amtrak is using these funds to achieve a state of good repair for its critical infrastructure and assets that will benefit Amtrak passengers with increased capacity, improved operational reliability and increased passenger comfort and accessibility at stations. 

Assisting Small Shipyards

The Recovery Act included $100 million to assist small shipyards with infrastructure improvements to be administered by the Maritime Administration (MARAD).  To date, MARAD has approved 70 grants including a grant to Pacific Shipyards International in Honolulu that has allowed them to provide employment to 30 people on the ARRA funded dry-dock project.  The Aker Philadelphia Shipyard is using Recovery funds for a first-year skilled apprentice program.  The Guam Shipyard purchased a plasma cutting machine and a plate roller with the help of Recovery Act funds.  The plasma cutter will allow Guam Shipyard to cut steel that was previously cut by hand or cut on the mainland requiring a longer lead time.  Guam Shipyard provides service to the military where a quick turn-around is essential.  The plasma cutter and plate roller will advance the yard’s ability to respond quickly.   The erection of a new Recovery Act funded 400 ton Travelift will soon begin at Steiner Shipyard in Bayou La Batre, Alabama.  As offshore supply boats and fishing vessels grow larger, the new travelift will enable Steiner Shipyard to compete in the larger vessel market.  Finally, Recovery Act funds provided to Eastern Shipbuilding in Panama City, Florida will allow the yard to purchase an Ogden Panel Line.  The panel line will enable Eastern to assemble and weld steel more efficiently, with a quality of welds far superior to welds done by hand.  The overhead cranes will provide a safer method to handle large steel plates.  The yard estimates that this investment could save up to $1,000,000 in the construction of a 300-foot vessel because of increased efficiencies.  These are just a few examples of improvements to small shipyards made possible through the Recovery Act.

Discretionary “TIGER” Grants

                  Last week Secretary LaHood announced the 51 award recipients of the $1.5 billion TIGER Discretionary Grant Program that was provided in the Recovery Act for surface transportation projects of significance nationally, regionally, or within a major metropolitan area.  We received over 1,400 TIGER Grant applications totaling nearly $60 billion.   We have been very impressed with the high quality of the applications and their innovative approaches.  Many of the TIGER awards fund integrated multi-modal projects, and other projects that cannot be funded through existing transportation formula programs.  With applications requesting a total of over $60 billion in applications, fewer than 3% of the projects could be funded.  I hope Congress will continue the TIGER program in the context of any jobs legislation and work to enact the President’s new National Infrastructure Innovation and Finance Fund proposal which builds upon TIGER and will encourage future innovative thinking.   

Enhancing the Dialogue with the Public and Reporting Jobs Data  

         In addition to jobs creation and other economic benefits, the Recovery Act included provisions that have changed the way the Federal government communicates information about its programs to the American people.  The Act calls for unprecedented transparency so the public can fully understand what is being accomplished with Recovery Act funds.  In addition, Section 1512 calls upon Recovery Act fund recipients to report on the number of jobs created on individual projects.  We have now completed two rounds of recipient jobs reporting.  Based on the numbers reported during each round, we are averaging about 41,000 direct full time equivalent jobs reported for transportation programs nationwide based on the recent October – December 2009 reporting period.   I want to emphasize that the jobs estimates included in this report are only those directly associated with the individual transportation projects and do not include the many other jobs created as due to increased demand on supply chains and other supporting services.  When these indirect jobs are also taken into account, it is clear that the Recovery Act resources have made a significant impact on jobs and we expect these numbers to hold steady as some of the larger transportation projects continue to come on-line. 

Future Bill

As President Obama made clear in his State of the Union address, his number one priority in 2010 is accelerating the pace of job creation.  Transportation is an important part of his plan to put Americans back to work.  The President has called for new investments in a wide range of infrastructure, such as highways, transit, rail, aviation, and water, designed to get out the door as quickly as possible.   We think the efforts achieved in transportation during this first year demonstrate that transportation is an area where continued successes can be achieved and I urge the Congress to consider supporting future jobs creation legislation.

Again, thank you for the opportunity to share the Department’s accomplishments in meeting the goals of the Recovery Act.  I will be happy to answer your questions.

Statement of

The Honorable John D. Porcari
Deputy Secretary of Transportation

Before The

Committee on Commerce, Science and Transportation
United States Senate

The Federal Role in National Transportation Policy

September 15, 2010

Chairman Rockefeller, Ranking Member Hutchison and members of the Committee:   I am honored to appear before you today on behalf of President Obama and Secretary of Transportation Ray LaHood to discuss the rail industry as it continues to evolve to meet this Nation’s transportation needs.

The Administration’s Transportation Strategic Goals

Throughout the history of this nation, transportation has played a key foundational role in economic development, providing for the common defense, and in defining a quality of life that is the envy of the world.   Today the U.S. has the best transportation system in the world.   But this system must continue to evolve if we are to remain the global leader in coming decades.  As we develop policies that impact transportation, we must look at transportation from a system perspective.  It is in this context that the Department has identified five strategic goals that will guide the Department in meeting the challenges of transportation in the 21^st Century.   These are:

• Safety:  Improve public health and safety by reducing transportation-related fatalities and injuries.
• State of Good Repair:  Ensure the U.S. proactively maintains its critical transportation infrastructure in a state of good repair to preserve transportation safety, reliability, capacity and efficiency.
• Economic Competitiveness:  Promote transportation policies and investments that bring lasting and equitable benefits to the Nation and its citizens, including the encouragement of expanded transportation-oriented domestic manufacturing much like that spurred by the growth of the railroads in the 19^th Century and the automobile industry in the 20^th Century.
• Livable Communities:  Foster livable communities through place-based policies and investments that increase transportation choices and access to transportation services.
• Environmental Sustainability: Advance environmentally sustainable policies and investments that reduce carbon and other harmful emissions from transportation sources and lessen transportation’s dependence on fossil fuels.

In developing our policy, legislative and funding initiatives, we at the Department are moving beyond traditional modal programmatic stereotypes.    We are looking at transportation policy and investment from a bottom-line perspective.    We are asking where does our policy emphasis and transportation investment yield the greatest benefit when viewed against these goals?  

A challenge in taking such an approach is that it forces us to look beyond existing policy and programmatic structures.  The traditional Federal approach to rail transportation, certainly for the last several generations, has been markedly different than the approach to other forms of transportation.   While we have made significant public investments in highway, aviation, transit and waterway infrastructure over the past 30 years, the same cannot be said for rail.  

The Administration believes that we need to take a new look at rail transportation – both freight and passenger.  Indeed, freight rail has often been off our radar screens except when there was an accident.  Yet 40 percent of U.S. freight, when measured on a ton-mile basis, moves by rail.  Intercity passenger rail also plays a significant role in meeting mobility needs in several intercity corridors; and commuter rail service has experienced a sustained period of growth.    

Rail Aigns Well the Department’s Strategic Goals: 

Rail is safe.  According to the Bureau of Transportation Statistics’ National Transportation Statistics, 2010  the fatality rate related to movement of intermodal containers by rail is nine times better than moving similar containers by highway.    Passenger rail is also safer than travel by auto.

Rail is an efficient user of infrastructure and right-of-way thus having a positive effect on our efforts to maintain assets in a state of good repair and to offset the demand for investments in other forms of transportation.  Some estimate that to compensate for shutting down Amtrak’s Northeast Corridor would require the addition of seven new lanes to I-95.  Given the cost of highway construction, particularly in urban areas, rail construction is a sound investment.  On the freight side, a single intermodal train moves the equivalent of 300 truck movements. And, as I will discuss later, for the last 30 years, freight rail service has consistently attracted private capital into building and maintaining needed infrastructure.

 Rail contributes to our economic competitiveness.   Rail’s efficient access to ports facilitates the global trade for key areas of our economy such as agriculture.  Rail investment also offers a significant opportunity to develop and expand domestic manufacturing in the atrophied rail supply industries.  Rail is integral to the development and growth of our nation’s regional economies.

Rail transportation can be a key element of our strategies for enhancing the livability of our communities.   Rail transportation played a key role in the development of the U.S. in the 19^th and first half of the 20^th Century.     Many communities grew up around their rail connection.  Now those urban rail corridors offer significant opportunities to increase public transportation and reduce dependence upon single passenger automobile travel.  But this must be done without impacting critical freight mobility.

Approximately 57 percent of petroleum used in the U.S. is imported, and approximately 71 percent of U.S. consumption of petroleum is by the transportation sector (of which rail’s share is 2.13%).  Studies by the Federal Railroad Administration have concluded that transporting freight by rail, when measured on a gallons per ton-mile basis, is 3 to 4 times more energy efficient than moving that same freight over a highway.   Passenger rail is 21 percent more energy efficient when measured on a BTUs per passenger mile basis.  (the FRA fuel use study can be found at http://www.fra.dot.gov/Downloads/Comparative_Evaluation_Rail_Truck_Fuel_Efficiency.pdf)  Not only does rail offer the opportunity to reduce our dependence on petroleum products but also the greenhouse emissions that result.

The Department’s experience with the Transportation Investment Generating Economic Recovery (TIGER) Grants offers testament to the strength of rail as part of a truly modal neutral transportation system where decisions are based on efficiency and performance.   Authorized by the American Recovery and Reinvestment Act (ARRA), the TIGER grants were the first discretionary modal neutral program where investments decisions would be based upon objective results-based criteria and not upon allocation of resources into specified modal stovepipes.   In this competitive decision-making environment, rail projects received the greatest allocation of funds.  This allocation is even more significant when one realizes that freight rail projects do not traditionally compete for public funds.

Passenger Rail initiative and Freight Railroads

The President’s High-Speed Intercity Passenger Rail (HISPR) Program is one of the Administration’s most high-profile transportation initiatives.   Through this program we seek to bring the benefits of high performing intercity passenger rail service to regions across the country.    Our vision is of a multi-tiered passenger rail network, with services that are designed to meet the mobility demand of the regions they serve, and that are integrated in the local public and highway systems.   Thus, at one end of the spectrum we envision services at sustained peak speeds of 150 to 220 mph, on dedicated infrastructure, serving large urban areas (what we are calling High-speed Rail Express), particularly those experiencing highway and airline congestion.   As part of the network, we also envision a Regional network linking the Express service to mid-sized urban areas with convenient, frequent service at sustained peak speeds of 90 to 125 mph.  We see Emerging high-speed rail and Feeder routes that will connect regional urban areas to the intercity passenger rail network.  

We envision that Regional, Emerging and Feeder elements of the passenger rail network will be built upon a mixture of dedicated rail infrastructure and infrastructure and/or rights-of-way shared with freight operations.   It is the shared track and rights of way that have caused some concerns within the freight rail industry, which I wish to address here. 

The Interstate Highway program is now over 50 years old – 50 years in which to develop procedures, regulations, guidance and precedent that define the relationships of the various participants.   By contrast, the President’s new program investing in high-speed and improved intercity passenger rail is still in its formative stages.   In the absence of such a well defined program such as exists for highways, it is understandable that there would be some degree of concern on the part of the private sector freight railroads, over the specifics of investments in improved passenger rail on rights of way, including infrastructure they own and operate for the financial benefit of their shareholders.  We in the Department are attempting to provide clarity to the basic relationships between private freight railroads and the States that will need to exist to make the program successful.

Our top priority is and always will be safety.  Beyond that, we have identified the key elements that must be in the agreement between the State and its key stakeholder, the private freight railroad.  These elements are:

• America’s world-class freight rail system must be preserved and improved.
• HSIPR grants are for the benefit of existing or future intercity passenger rail service and will fund infrastructure improvements necessary to ensure a high level of performance.
• Agreements must achieve the necessary balance to protect both the private and public interests.
• Agreements must achieve and maintain quantifiable performance outcomes based upon objective, mutually agreed-upon analysis/modeling including:
  • operating slots/frequencies
  • trip times
  • reliability (to the extent it is under a party’s control.)

In its most basic terms, the States and the Federal Government are seeking to purchase, through capital investments, specific performance for passenger rail service improved or expanded under this program.   We are not looking for the freight railroads to participate in the new HSIPR program beyond their current obligations under the Railroad Passenger Service Act of 1970 and the Passenger Rail Investment and Improvement Act of 2008 without compensation.   On the other hand, it is not the purpose of HSIPR funds to add freight capacity, except where the freight railroad is a financial participant in the specific improvements.

This summer, we experienced a pause in all State negotiations of stakeholder agreements as the freight railroads absorbed the meaning of their obligations where public funds improved their infrastructure or other assets.   I am happy to report that in recent weeks we have seen stakeholder agreements that meet our bottom line principles reached between the Northern New England Passenger Rail Authority and Pan Am Railways for improvements between Portland and Brunswick, ME; between Vermont and the New England Central Railroad (NECR) subsidiary of Rail America for improvements to the rail line between Brattleboro and St. Albans, VT; and between Washington State and the Burlington Northern Santa Fe Railway (BNSF) for improvements between Seattle, WA and Portland, OR.  

The agreements reflect real progress.  The Department understands that other stakeholder agreements based upon the principles articulated above are in advanced stages of discussion.  Unfortunately, we understand that in other corridors, progress has not been as promising.   Some States have suggested that they be given the right of access to freight railroad infrastructure in a manner analogous to Amtrak, for the purpose of implementing the Administration’s new passenger rail program.   The Department remains hopeful that the freight railroads will see an alignment between their interests and those of the public in the success of this new program, just as have BNSF, NECR, and Pan Am.  Thus at this time we are not proposing inclusion of the legislation requested by the States into any bills pending before this Committee.

Rail As A Means To Meet Freight Mobility Needs

As we move from the recession to economic expansion, the freight rail movements needed to support our economy will grow.    Based upon past experience as documented by the U.S. Census Bureau’s Commodity Flow Survey, it is not unreasonable to expect that the freight tonnage hauled in 25 years will be nearly 25 percent greater than what is hauled today.   Our present transportation system cannot handle such growth without changes in how we do things. Success for our economy in the future will take policies and investments that improve our capacity and efficiency beginning today.  

Rail today carries 40 percent of the total domestic freight movements.  The Department believes that increasing that percentage could be a cost-effective approach to meeting our stated strategic goals.   Increasing the percentage of certain intermodal movements could be particularly telling on the investment needs in other forms of transportation.   To be clear, this does not imply disinvesting in highways or waterways.  Indeed, transportation of freight will grow on all modes of transportation in the future.  It means developing policies and investments that place all the modes on a level playing field where objective, merit-based measures define how the Department’s limited resources will be used in the future to ensure that each mode operates as efficiency as possible.   This will be one of the guiding principles as the Department considers options for reauthorization of surface transportation legislation.  

One attribute of the freight railroad segment of the rail industry has been its ability over the last 30 years to attract private capital for infrastructure investment.   Not so long ago, certainly within the professional careers of several in this room, this was not the case.   Large segments of the rail industry were in bankruptcy protection or Federal ownership. We certainly do not want to go back that era.   We learned then and know now that Federal funding cannot alone sustain a healthy freight rail industry. 

Affordable Federal investment options for the future will most likely be focused on addressing bottlenecks, much as the Alameda Corridor does in Los Angeles and the CREATE Project is designed to do in Chicago.   This will mean that freight railroads will need to be profitable to attract the level of private capital investment necessary to assure that the rest of their systems as a whole are built and maintained to meet our freight mobility needs of the future.  This is particularly true given a number of new initiatives underway including implementing positive train control, new air quality standards for locomotives, and new security initiatives.  

At the same time, public policy needs to be sensitive to shippers who have limited transport options.  Freight railroads must be able to earn enough to assure we avoid another era of the downward spiral of declining service quality, declining investment, and declining revenue.  On the other hand, freight railroad profitability should not be tied solely to revenues from shippers with limited transportation options.   Finding the correct balance will be difficult and we need to recognize that history would indicate that we will be very fortunate indeed if we find this balance the first time.  (The Staggers Rail Act of 1980 was the fourth piece of legislation enacted within a decade to address the rail financial crisis.) So any policy changes need to include provisions for quick correction if they are found to be detrimental to transportation investment.

In closing, America’s economy depends upon an efficient, safe and reliable transportation system. The Obama Administration believes that rail can play an increasingly important role in meeting our freight and passenger mobility needs.  But this cannot be just a responsibility of the Administration and the Congress.   It requires commitments from our States and local partners.  They too need to put into place the appropriate policies, program structures and investments, both public and private to achieve this enhanced opportunity for rail.  It also requires that our the private sector partners’ policies’ recognize that the larger public interest in rail transportation, in particular passenger rail transportation,  is foundational to achieving that part of the larger vision that they are most interested in.

The next several months will be exciting as we address these issues.   Secretary LaHood and I look forward to working with the Committee in realizing this once in a lifetime opportunity for American rail transportation.

I appreciate this opportunity to appear before you today and look forward to answering any questions you might have.

#

WRITTEN STATEMENT OF

CYNTHIA L. QUARTERMAN
ADMINISTRATOR
PIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION

BEFORE THE

COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE
UNITED STATES HOUSE OF REPRESENTATIVES

The Department of Transportation's Oversight and Management of Hazardous Materials Special Permits and Approvals

April 22, 2010

Introduction

Chairman Oberstar, Ranking Member Mica, and distinguished Members of the Committee, on behalf of Secretary of Transportation Ray LaHood, I appreciate the opportunity to discuss the progress the Pipeline and Hazardous Materials Safety Administration (PHMSA) has made in addressing concerns identified by your Committee and the Department’s Office of the Inspector General (OIG) relating to its Special Permits and Approvals Program.

Mr. Chairman, as you know, we inherited a program that suffered from almost a decade of neglect and was seriously adrift.  We have set a new course.  Our progress will be steady and the actions we are taking will improve the DOT’s hazardous materials program, and more specifically, the Special Permits and Approvals Program, as well as ensure that they both meet the highest safety standards.

PHMSA Has Completed Implementation Of All The Deliverables With Specific Target Dates In Its Special Permits Program Action Plan.

The Hazardous Materials Regulations (49 CFR Parts 171-180) generally are performance oriented regulations, and provide the regulated community with standards to meet safety requirements.  Even so, not every transportation situation can be anticipated and incorporated into the regulations. Special permits are a necessary part of our regulatory framework.  New products or packagings become available everyday and, often, the regulations do not adequately address these items.  The hazardous materials statute recognizes this reality by authorizing PHMSA to issue a “special permit” allowing for transportation of such items so long as the terms of the permit provide a level of safety equivalent to the regulations or, if a required safety level does not exist, so long as a finding is made that the permit is consistent with the public interest and Federal hazardous materials law. 

The regulations controlling special permits call for a thorough and documented application review prior to issuance of a special permit.  The process for obtaining a special permit requires: (1) technical review and documentation; (2) evaluation of the safety fitness of the applicant; (3) establishment of written requirements to assure an equivalent level of safety; (4) public notice and comment; (5) final review; and  (6) issuance of a special permit.  Historically, this has taken an average of 90 days from application to issuance, sometimes longer or shorter, depending on the hazardous material/package and the circumstances.  Special permits are also available on an emergency basis to facilitate emergency transportation of hazardous materials, such as the transportation of supplies to areas affected by natural or man-made disasters to support clean-up and rebuilding operations.   

In recent years, on average DOT annually issued 150 new special permit applications, 100 modifications to existing special permits, and issued approximately 1,650 renewals and related actions.  New special permits may be authorized for up to two years, at which time they may be renewed for  up to four years.  We currently have approximately 350 special permit applications pending.

In late July 2009, the OIG issued a Management Advisory relating to PHMSA’s oversight of the Special Permits Program and recommended immediate action to prevent unsafe operations involving the transportation of explosives under four special permits.  DOT responded immediately by developing an aggressive action plan that included the following 21 deliverables: 

• Developing and publishing a policy on special permits issued to associations;
• Completing  a top-to-bottom program review;
• Reassessing “equivalent level of safety” evaluation process  and policies;
• Reviewing and enhancing inter-agency coordination process;
• Developing enhanced enforcement for special permits;
• Reviewing applicant “fitness” policies and procedures;
• Reviewing and revising renewal procedures;
• Reviewing and updating standard operating procedures;
• Developing stakeholder special permit brochure;
• Developing an action plan for enhancing data collection and analysis;
• Contracting to modernize the information technology system;
• Identifying special permits for further assessment;
• Developing a plan to incorporate special permits into regulation;
• Updating our website on special permits policies;
• Notifying special use truck special permit holders of intent to evaluate fitness and modify permits;
• Scheduling fitness reviews of those permits holders;
• Reviewing documentation supporting those permits;
• Assessing risk of those permits;
• Modifying or rescinding those Special permits as appropriate;
• Working long-term on a pilot project on stability control; and
• Working long-term to develop best practices for emergency response to rollovers of special use trucks.    

All the deliverables in that action plan with specific deadlines were completed by February 5, 2010.  Certain commitments are longer term, but we have developed plans for staffing and resources that will enable PHMSA to progressively improve the program. 

 PHMSA Is On Course To Implement Fully Its Approvals Action Program.

The hazardous materials statute also requires PHMSA to provide written authorization or “approval” for a person to perform a function that requires prior consent under the regulations.  For example, PHMSA issues approvals covering the classification and transportation of explosives, certain lithium batteries, fuel cells, chemical oxygen generators, and radioactive materials.  In addition, PHMSA issues approvals authorizing companies to manufacture certain types of packagings, such as cylinders, and to perform the tests and inspections required to ensure that the packaging may continue to be used for transporting hazardous materials.  PHMSA also issues competent authority approvals for the transportation of hazardous materials in accordance with international transportation standards and regulations.  

Although the OIG’s July 2009 Management Advisory primarily focused on the Special Permit Program, PHMSA also addressed the policies and processes for issuing approvals and finalized an action plan to improve management and oversight of the approvals program on December 4, 2009.  The Approvals Action Plan identified the following 17 deliverables:

• Conducting a top-to bottom review of the approvals program;
• Developing and publishing a policy on approvals issued to associations;
• Reassessing “equivalent level of safety” process and policies;
• Reviewing and enhancing inter-agency coordination process;
• Developing enhanced enforcement for approvals;
• Reviewing applicant “fitness” policies & procedures;
• Reviewing and updating standard operating procedures;
• Developing policies for publishing approvals in the Federal Register;
• Developing and implementing a plan to reduce the approval and special permit back log;
• Developing a plan for incorporating expiration date when appropriate into approvals;
• Developing an action plan for enhancing data collection and analysis;
• Developing a plan to address the inspection, management and oversight of third party certification agencies;
• Establishing a Safety Review Board;
• Contracting to modernize the information technology system;
• Identifying approvals for further assessment;
• Developing a plan to incorporate approvals into regulations; and
• Updating our Websites on approvals policies.

Again, PHMSA has met all the deliverables to date and is on target to meet all planned deliverables in the approvals action plan with the exception of eliminating the approvals backlog by April 15.  In spite of our inability to clear the backlog of approvals by April 15, we have made steady progress towards significantly reducing that number and have worked with industry to prioritize approvals in need of action.  PHMSA has worked diligently to address all concerns related to special permits and approvals.  We began addressing these issues with our 2010 budget.   We have added staff to the program and detailed staff from other areas of the department (with training) to assist us. Our FY 2010 appropriation has enabled us to hire 16 new positions to include permit review and approval staff, enforcement inspectors, and data analysis staff.  In addition, we were able to acquire contractor support services for review of existing special permits and approval of new special permit requests using revised criteria, policies, and procedures. Because we are now conducting more in depth reviews of permits and approvals and of holders of permits, the processing of applications takes longer.  Backlogs developed in both special permits and approvals.  We have eliminated the backlog in special permits except for those applicants whose permit has been flagged for further safety fitness review.  The approvals backlog remains but we have dedicated every possible resource to resolve that backlog. 

The 2011 Budget request includes funding to continue evaluating special permits and approvals, conducting thorough fitness reviews, improving hazardous materials data preservation and research methods, and supporting the implementation of two action plans that will improve operational efficiency within PHMSA’s Office of Special Permits and Approvals.

PHMSA Has Successfully Addressed Half of The Recommendations Identified By The Inspector General In Its Report On Special Permits And Approvals.

On March 4, 2010, the OIG issued its Final Report on PHMSA’s Special Permits and Approvals Program and made ten recommendations for improving the program.  PHMSA’s response to the OIG’s recommendations is included in the OIG Report and summarized below.  As a result of PHMSA’s efforts to date, the OIG closed half of those recommendations.  The remaining five recommendations relate to items whose implementation is ongoing.

Following is a brief description of the OIG’s ten Recommendations and the current status of PHMSA’s actions organized as presented in the Final Report on Special Permits and Approvals.

1.PHMSA has finalized and is in the process of fully implementing the action plans to improve the effectiveness of processing special permits and approvals.

            PHMSA has finalized its August 6, 2009, Special Permits Action Plan, its November 4, 2009 Data Collection and Analysis Action Plan and its December 4, 2009, Approvals Action Plan.  We are fully and timely implementing all of these Actions Plans.  As PHMSA works to continuously improve the special permits and approvals programs it may identify additional measures that require changes to these plans.

2.   PHMSA has finalized and fully implemented formal standard operating procedures (SOPs) and policies for special permit and approval processes (i.e., application, evaluation, authorization; agency coordination; and oversight).

PHMSA completed its review and implemented SOPs for the special permits program on October 5, 2009.  The SOPs incorporate a number of program enhancements, including standardized documentation and retention requirements for applications, safety assessments, fitness evaluations, internal and intermodal coordination records, and all relevant background, data and analysis.  Further, the SOPs incorporate a rigorous process for determining if a special permit will achieve an equivalent level of safety as provided by the regulations and a comprehensive review and inspection procedure for making determinations as to the fitness of special permit applicants, including specific processes and metrics for defining and evaluating fitness.  

Between December, 2009, and March 2010, we completed and implemented numerous action items for the approval program, including enhanced procedures for safety assessment, fitness evaluations, and internal and intermodal coordination which resulted in a similarly rigorous process for that program.  As a result of these actions, the OIG considers this recommendation closed.

3.  PHMSA has established priorities for implementing each of the initiatives in the action plans as well as a process to measure the effectiveness of each initiative and revise or update initiatives as necessary.

We agree that it is important to prioritize our efforts to ensure that the concerns identified by the OIG are fully addressed.  The initiatives in the action plans are prioritized according to a combination of criteria based on due dates, timeframes for completion, logical order for progression and their anticipated safety impact, overall urgency, staffing and budget resources.  

A major component of the solution to the problems identified in OIG Final Report on Special Permits and Approvals Program involves enhancing PHMSA’s utilization of data and information to facilitate determinations as to whether the operations meet an established safety standard and the applicants are capable of conducting those operations safely.  Enhanced safety data and information will also improve monitoring the performance of companies who utilize special permits and approvals and increase identification of potential safety problems that need to be addressed.  The system must be upgraded to enable the agency to more effectively process applications and synthesize safety information about companies applying for special permits and approvals, as well as the safety performance of special permit and approval holders.  Addressing data issues associated with the special permits program must be accomplished as part of a broader effort to identify and use data to make better informed all safety decisions.

PHMSA’s multi-year Data Management and IT Modernization Roadmap identifies resource, process, and technology initiatives that will enhance our ability to manage data and IT in support of our safety mission.  Immediate benefits will be realized in 120–180 day increments, allowing us to constantly re-evaluate strategies based on current and future business needs.  As a result of these actions, the OIG considers this recommendation closed.

4.  PHMSA is in the process of resolving the issue of company fitness and level of safety for existing special permits issued to trade associations representing over 5,000 companies by requiring these companies to reapply under the new policy guidelines that require evaluating a company’s fitness and level of safety.

On August 17, 2009, PHMSA issued a written policy to clarify that special permits are only granted to members of associations, not to associations.  Authority to perform a transportation activity under the terms of a special permit must be exercised by the individual business entity that bears responsibility for compliance under the terms of the special permit.  Further, as an interim measure, on September 4, 2009, PHMSA re-issued all special permits granted to associations to specifically indicate that it is the members of the association who are individually responsible for compliance with the terms of the special permit. 

PHMSA plans to re-issue individual special permits to all companies that were previously granted special permits as members of trade associations as quickly as resources permit.  We estimate that at least 20,000-30,000 entities will be affected.  When re-issuing special permits to the individual entities, PHMSA will evaluate each company’s safety fitness before re-issuing the special permits.  The timeframe for completing this process will depend on the number of entities that elect to reapply and the available resources.  After a new application system for Special Permits becomes available online in May 2010, PHMSA will develop a specific plan to address the monumental task of re-issuing these special permits to individual entities.  

Concurrently, and as a part of the broader plan discussed later, to respond PHMSA is reviewing the active special permits issued to members of associations to identify those that should be incorporated into the regulations.  Where appropriate, conversion of such special permits to regulations of general applicability is a major priority.  PHMSA has already initiated two rulemakings to address association membership special permits related to cargo tank and rail tank car operations.  The cargo tank rulemaking applies to a significant number of special permit holders.  PHMSA expects to issue notices of proposed rulemakings for these two categories this spring and final rules as quickly thereafter as possible, while fully considering public comments.  Rules currently in progress will eliminate approximately 50% of the special permits formerly held by Associations. Additional rulemakings to incorporate other special permits issued to members of associations into the Hazardous Materials Regulations (HMR)  will be completed by January 2012.

  5. PHMSA is in the process of developing a more precise definition of what constitutes an applicant’s “fitness” to conduct the activity authorized by the special permit or approval. This definition should include reviewing an applicant’s safety history—incidents and enforcement actions—prior to granting a special permit or approval.

Working with our safety partners in the Federal Motor Carrier Safety Administration (FMCSA), Federal Railroad Administration (FRA), Federal Aviation Administration (FAA), and the United States Coast Guard (USCG), PHMSA completed a comprehensive review of existing fitness determination processes and developed a refined process for evaluating fitness, based on identified metrics related to a company’s safety history. Utilizing safety data from several existing sources, the agencies can now use performance-based measures to evaluate an applicant’s past safety history and ability to operate under the terms of the special permit as indicated in its application. 

PHMSA now conducts fitness reviews of all entities applying for a special permit or approval using historical records of incidents and violations.  Where the record appears to be questionable, the company will be asked to explain its record and the actions it has taken to resolve any safety problems, such as additional training or revisions to operating practices, as a condition of receiving the special permit or approval.  If we determine that the company is unable to operate safely, we will deny the application. 

Additionally, we plan to more clearly define the process and criteria used to determine the fitness of applicants for special permits or approvals.  It is important to note that the determination of fitness in a complex and variable transportation operating environment requires the expert application of specific criteria concerning a company’s safety performance together with an overall assessment of the risks inherent in the operations under consideration, including such factors as hazardous material type, quantity, and form; the transport mode and routes of operation; and the frequency and location of the operation.  Therefore, “fitness” may never be subject to one precise definition.

6.  PHMSA is requiring the Office of Hazardous Materials Technology to conduct and prepare complete evaluations that document the level of safety the company or individual is proposing is as safe as or safer than requirements from which the company is seeking relief.

  PHMSA developed a new safety evaluation form to document pertinent information regarding whether a special permit will provide a level of safety that is at least equivalent to that provided under the regulations and a similar process for consistent and uniform documentation of activities authorized under an approval.  The safety evaluation considers the risks of the materials to be transported, the type of packaging to be utilized, the mode of transport to be utilized, the conditions likely to be encountered during transportation, and pertinent special handling measures or operational requirements. These factors are all documented on the form and include accompanying applicant documents, data, or information.  To ensure that the Agency has sufficient information to complete the safety evaluation, we are amending our procedural regulations to require applicants to provide additional data and information concerning the risks of the proposed operations and the measures to be utilized to address the risks. We expect to finalize the new procedures, which must be approved by the Office of Management and Budget, by the end of this year.

7.  PHMSA has established a partner safety interagency working group to develop a uniform process for coordinating special permits, including new, renewal, “party-to,” and emergency permits as well as new and renewed approvals.

PHMSA established a working group with our partner safety agencies in DOT, specifically FAA, FMCA, and FRA, as well as the USCG on September 4, 2009.  The working group established specific interagency coordination and concurrence guidelines for special permit applications.  FAA, FMCSA and FRA now share PHMSA’s electronic docket management system to ensure more effective and efficient coordination.  The guidelines specify that PHMSA will approve or deny applications only after coordination with the operating administrations and the USCG, and provide for each to notify PHMSA of any violations of a special permit by the grantee that would call its fitness into question.  The special permits SOPs, implemented October 5, 2009, incorporate detailed procedures for coordinating special permit applications with the operating administrations.  On February 2, 2010, PHMSA finalized and implemented a similar process for interagency coordination of approval applications.  As a result of these actions, the OIG considers this recommendation closed.

8.  PHMSA now includes “holders of special permits and approvals” as a priority factor in its risk-based oversight approach in targeting companies for compliance reviews.

PHMSA’s Office of Hazardous Materials Enforcement has implemented a national business strategy to prioritize its activities.  Activities authorized under special permits and approvals are targeted as high priorities for inspection and oversight by the Office.  In addition, on September 4, 2009, PHMSA in concert with its partner operating administrations issued a plan for enhanced enforcement of the terms of special permits and approvals, utilizing the resources of all the operating administrations with enforcement responsibility and available data to identify potential safety problems and target resources.  The plan includes inspection procedures specific to special permit and approval grantees and inspection target goals.  As a result of these actions, the OIG considers this recommendation closed.

9.  PHMSA established timeframes for resolving and implementing long-standing safety concerns and periodically measures performance against the timeframes.

The OIG identified two long-standing safety issues involving special-use bulk explosive vehicles and lithium batteries.  We included a plan for addressing safety issues associated with special-use bulk explosive vehicles as part of the special permits action plan PHMSA implemented August 6, 2009.  Adhering to very aggressive timelines for completion, PHMSA completed safety performance and fitness reviews of the current special permit holders; performed a risk analysis to ensure the special permits address all possible safety issues, including the potential for a high-consequence (catastrophic) accident; and developed additional safety measures to address identified risks.  PHMSA completed its review of these special permits on September 4, 2009, and issued revised special permits incorporating a number of enhanced safety requirements on October 5, 2009, resolving this issue.

            We are also taking action to address lithium battery safety.  On January 11, 2010, PHMSA published a notice of proposed rulemaking (NPRM), attempting to address comprehensively the safe transport of lithium cells and batteries.  The NPRM represents another step in the Department’s continuing process to ensure the transport of lithium batteries remains safe.  The rulemaking proposals are intended to strengthen the current regulatory framework by imposing more effective safeguards, including design testing, packaging, and hazard communication measures for various types and sizes of lithium batteries in specific transportation contexts.  Several of the proposals are based on recommendations issued by the National Transportation Safety Board.  PHMSA is in the process of reviewing public comments on the proposed rule and hopes to publish a final rule by December 2010. 

More broadly, our improved oversight of the special permits and approvals programs, along with an enhanced working relationship with our partner agencies, will enable us to quickly identify potential safety issues and resolve them within reasonable time frames.

10. PHMSA established a method to develop standard procedures for facilitating the adoption of special permits and approvals into the Hazardous Materials Regulations in order to keep the current regulatory framework in sync with advanced technologies and business practices.

On February 5, 2010, we finalized a plan to establish a systematic process for reviewing outstanding special permits and incorporating them, where appropriate, into the regulations.  As part of this plan, we have created a team to review all currently active special permits – about 1,250 – and identify those that should be incorporated into the regulations.  As already discussed, this process was prioritized for special permits issued to associations.  Once the review of all currently active special permits is completed, expected by mid 2013, we will routinely review recently granted special permits each year and will initiate a rulemaking to propose incorporating them into the regulations as warranted.  We are developing a similar plan for incorporating the terms of certain approvals into the HMR.  As a result of these actions, the OIG considers this recommendation closed.            

PHMSA Has Given Immediate Attention To The OIG Management Advisory Related To The Classification of Explosives Approvals.   

On April 7, 2010, the OIG issued a Management Advisory relating to PHMSA’s oversight of the Explosives Classification Approvals Program.  The report focused on:   (1) the process for reviewing and authorizing explosives classification approvals; and (2) the oversight of explosives testing agencies.  PHMSA’s December 2009 Approval Action Plan addressed both of these issues. The plan contemplated PHMSA issuing standard operating procedures for each category of approvals by February 2010.  Standard operating procedures were issued for the Evaluation and Issuance of Explosive Classification Approvals in early January 2010.  Those procedures address the process for reviewing and authorizing explosives classification approvals. The Approval Action Plan also required PHMSA to issue specific requirements for inspection, management, and oversight of approved explosives testing agencies.  Those specific requirements were established March 2010.  In addition, PHMSA established a strike force of inspectors and scientists who created a detailed protocol to visit and review each explosives testing agency.  Those reviews have been completed and PHMSA is using the information gathered to determine whether a testing agency is in compliance with its requirements and may continue to serve as a PHMSA-authorized testing agency.  PHMSA is also reviewing any other third-party agencies it may have relationships with to ensure that our oversight of those relationships is adequate.

 Conclusion

In summary, PHMSA has taken swift and aggressive action to address each of the concerns identified by the OIG.  Actions have been completed, or are underway to address the issues raised by the OIG with respect to both the special permits program and the approvals program.  We have worked closely with the Department’s leadership and appreciate your Committee’s leadership and the Appropriations Committees support in securing additional staff and budget to continue addressing these commitments over the long term and to further improve an already strong safety record.

We welcome any and all recommendations for making our safety programs more effective and further ensuring the public’s safety.   I look forward to working with the Committee as we continue to implement measures to enhance our safety oversight of the hazardous materials special permits and approvals programs.  Let me conclude by saying that it took many years for the program to arrive where it is today and the changes we have proposed to make will not happen overnight, but successful implementation of the special permits and approvals actions plans as well as ensuring that our hazardous materials regulation are met, are my highest priorities.  

UNITED STATES DEPARTMENT OF TRANSPORTATION
Pipeline and Hazardous Materials Safety Administration

Hearing on

Implementation of the Pipeline Inspection, Protection, Enforcement and Safety Act
of 2006 and Reauthorization of the Pipeline Safety Program

Before the

Committee on Transportation and Infrastructure 
Subcommittee on Railroads, Pipelines, and Hazardous Materials  
United States House of Representatives

Written Statement of

Cynthia L. Quarterman
Administrator
Pipeline and Hazardous Materials Safety Administration
U.S. Department Of Transportation

Expected Delivery 10:00 a.m.
May 20, 2010

Chairwoman Brown, Ranking Member Shuster, members of the subcommittee, thank you for the opportunity to appear today.  Safety is Secretary LaHood’s top priority and it is my top priority as well.  Our employees are also committed to reducing risks in pipeline transportation as their highest priority.  We want our employees to bring up new and creative ideas and to challenge each other and supervisors so that the best safety solutions are put forward.  As our nation’s reliance on the safe and environmentally sound transportation of energy fuels and hazardous materials is increasing, the Pipeline and Hazardous Materials Safety Administration’s (PHMSA) safety oversight of the nation’s pipelines provides critical protection for the American people. 

We continue our work with many governmental partners to promote safety.  The National Transportation Safety Board (NTSB), the Department’s Office of Inspector General (OIG) and the Government Accountability Office (GAO) all have a vested interest in the safe and reliable operation of the nation’s pipeline infrastructure.  For years we have worked aggressively to be responsive to all of their recommendations.  We have taken seriously each and every recommendation that they have made to PHMSA.  Indeed, we implemented a deliberate approach to responding to their recommendations.  Accomplishments include closing the three OIG recommendations; significant progress on GAO recommendations on incident reporting with the last action due out this summer; and making progress on all of the NTSB recommendations.  When the Pipeline Inspection Protection Enforcement and Safety (PIPES) Act of 2006 passed, NTSB had thirteen open recommendations to PHMSA.  Over the last several years, NTSB has closed nine of these recommendations and we are currently working to address the remaining and additional recommendations.  We do not have any open unacceptable recommendations.

I am pleased to discuss the PHMSA Pipeline Safety Program and to brief you on the significant progress made since the passage of the PIPES Act in December, 2006.  We also look forward to working with you to build on this solid foundation.

I.              IMPLEMENTATION OF THE PIPES ACT.

PHMSA has made significant progress in fulfilling the statutory requirements of the PIPES Act that has resulted in safer communities today.  The pipeline safety record is good.  Over the past 20 years, all the traditional measures of risk exposure have been rising – population, energy consumption, pipeline ton-miles.  At the same time, the number of serious pipeline incidents – those involving death or injury – has declined by 50% over the last twenty years.  As indicated in the chart below we aim to continue this long-term trend.

The following is a brief description of PHMSA’s successful use of the tools provided by Congress in the PIPES Act to improve the safety record of the nation.

A.            PHMSA Has Increased the Strength of Integrity Management Programs and Enforcement Activities. 

The PIPES Act broadened the scope of the systems-based approach to assessing and managing safety related risks.  The additional initiatives included: (1) increasing enforcement activity, transparency, and data quality; (2) implementing an integrity management program for distribution pipelines and; (3) requiring a human factors management plan to reduce risks associated with human factors, including operator fatigue in pipeline control centers, and implementing NTSB recommendations on the Supervisory Control and Data Acquisitions (SCADA) systems in pipelines.  We are pleased with increasing results from our effective systems risk management approach, which this Subcommittee helped devise.

1.              PHMSA Has Increased Enforcement, Increased Transparency, and Improved Data Quality.

PHMSA has used its full enforcement authority to give teeth to its systems-based approach to risk management and increase pipeline company management accountability for safety.  The PIPES Act, and the appropriations that followed, authorized PHMSA to increase the number of federal inspectors, as well as state inspectors.  In 2006, PHMSA had 141 pipeline staff.  That increased to 173 by the end of 2009, including a significant increase in inspection and enforcement staff, and we expect to have 206 pipeline staff by the end of 2010. 

Also, PHMSA has embraced enforcement transparency by leveraging its website and databases to provide on-the-spot information to stakeholders.  Within months after the Act was signed into law, we launched our enforcement transparency website.  As we reported in our 2008 testimony before this Subcommittee, PHMSA has made tremendous strides in improving the transparency of its enforcement process.  The enforcement transparency web site provides public access to a variety of reports and enforcement program information that goes beyond what is required by the PIPES Act.  This site provides year-by-year reports on cases initiated and closed, the status of different types of enforcement cases, and reports on civil penalty cases showing the amounts proposed, assessed, and collected.  Information and documents on individual cases are also provided.  These documents include the initial notices that allege operator violations or inadequacies; operator responses to these allegations; and the orders documenting PHMSA’s final determinations.  In addition, PHMSA provides monthly updated enforcement summaries to the public.  Use of the enforcement transparency web site has climbed steadily since its inception in May 2007 and averaged more than 1,500 hits per day in 2009.  In 2010, we expanded and improved the information on civil penalty cases and began displaying enforcement data from state pipeline safety agencies. 

In addition to economic resources, the PIPES Act also gave PHMSA a much needed enforcement tool – the Safety Order.  On January 16, 2009, PHMSA published a final rule establishing the process by which PHMSA will conduct Safety Order proceedings to address pipeline integrity risks to public safety, property, or the environment. 

Finally, the PIPES Act now requires that senior executive officers of pipeline companies certify their pipeline integrity management program performance on an annual and semi-annual basis.  As we had hoped, the certification requirement has placed an increased emphasis on management’s accountability and the importance and accuracy in performance reporting. 

PHMSA also undertook a significant effort to improve data consistency and quality culminating in a new generation of data reporting that will begin in the summer of 2010.  First, PHMSA published a final rule in August 2009 to align cause categories across natural gas transmission and distribution incident reports.  Second, PHMSA sought and received Office of Management and Budget approval for new forms and additional data collections.  Third, PHMSA updated its guidance and forms regarding incident reporting.  Fourth, PHMSA proposed revisions to the reporting requirements in Part 191 and expects to issue a final rule.  While all seemingly small changes, the process allowed for coordination and input from state pipeline safety agencies and other Federal agencies that ultimately resulted in raising industry awareness.  This effort specifically addressed Congress’ mandates to modify reporting requirements to ensure that incident data accurately reflects incident trends over time and collects data on controller fatigue.  PHMSA took that direction and acted comprehensively.

2.              PHMSA Has Established a Gas Distribution Integrity Management Program (DIMP).

Pursuant to the authority granted in the PIPES Act, PHMSA issued a final rule on December 4, 2009, requiring operators of gas distribution pipelines to develop and implement integrity management programs to manage and reduce risks in gas distribution pipeline systems.  These programs are intended to enhance safety by identifying and reducing pipeline integrity risks.  The requirements for the integrity management programs are similar to those required for gas transmission pipelines, but tailored to reflect the differences in and among distribution pipelines.  The regulation requires operators to develop and implement plans for monitoring and improving the condition of their systems, in addition to complying with current code requirements.  The rule also requires distribution operators to install excess flow valves in new and replaced service lines for single family residences where conditions are suitable for their use.  The rule applies to the entire extent of distribution pipelines and the thousands of small and large companies that deliver natural gas over the 2 million miles of pipelines serving American communities, not just high consequence areas.  That said, the rule establishes simpler requirements for master meter and small liquefied petroleum gas operators, reflecting the relative risk of these smaller pipeline systems. 

PHMSA made tremendous efforts getting ready for the establishment of DIMP.  We have consensus standards, guidance, training, IT systems, and data to increase our understanding of risk and provide effective oversight.  We are especially mindful of the increased oversight requirements associated with the program.  Getting 50 states to implement a performance standard takes a lot more preparation than preparing a single federal entity.  Accordingly, we have worked with our state partners to prepare them for assuring thorough training, education, and effective enforcement compliance.

3.              PHMSA Has Established Control Room Management Requirements

Pursuant to the authority granted in the PIPES Act, PHMSA issued a final rule on December 4, 2009, to address human factors and other aspects of control room management for pipelines remotely operated and controlled by personnel using SCADA systems.  Operators must define the roles and responsibilities of controllers and provide controllers with the necessary information, training, and processes to fulfill these responsibilities.  Controllers must manage SCADA alarms; assure control room considerations are taken into account when changing pipeline equipment or configurations, and review reportable incidents or accidents to determine whether control room actions contributed to the event.  Operators must also implement methods to prevent controller fatigue.  These regulations will enhance pipeline safety by coupling strengthened control room management with improved controller training and fatigue prevention measures.

The regulations apply to all hazardous liquid pipelines, and gas transmission and distribution pipelines that meet certain risk criteria.  This rule not only responds to the PIPES Act mandate but also addresses a NTSB safety recommendation regarding controller fatigue that was on the NTSB’s Most Wanted list.  A public workshop is planned for November 2010 to present preliminary guidance materials.  Programmatic inspections will be conducted between September 2011 and February 2013.

B.             PHMSA is Enhancing Pipeline Safety with Increased Assistance to States, Damage Prevention Education, Technical Assistance Grants, and Public Access to Information.

1.              PHMSA Has Strengthened Its Assistance to States.

State pipeline safety agencies oversee the bulk of the 2.5 million miles of pipeline infrastructure.  Specifically, states are responsible for oversight of virtually all gas distribution pipelines, gas gathering pipelines and intrastate gas transmission, as well as 88% of intrastate hazardous materials liquid pipelines and 20% of the interstate gas pipelines.  PHMSA maintains primary responsibility for the remaining pipelines, including all interstate hazardous liquid pipelines and 80% of the interstate gas pipelines.  States employ approximately 63% of the inspector workforce.  The expansion of the Federal pipeline safety initiatives has increased the cost of and resource demands on both federal and state pipeline safety agencies. 

In recognition, Congress increased PHMSA’s ability to provide grants to state pipeline safety agencies to offset the costs associated with the statutory requirements for their inspection and enforcement programs.  In addition, Congress gave PHMSA considerable resources to expand its relationship with state pipeline safety agencies, increasing policy collaboration, training, information sharing, and data quality and collection.  In FY 2010, PHMSA’s $40.5 million appropriation to support state programs will fund 54% of state pipeline safety programs.  Additionally, the President’s FY 2011 request includes an increase in funds to support state programs totaling approximately $44.5 million, which would reflect a 65% funding of the state pipeline safety programs.  These partnerships have proven to be one of PHMSA’s strongest assets in helping to strengthen the safety of pipelines in American communities. 

2.              PHMSA Has Strengthened Damage Prevention Efforts.

The vast majority of America’s pipeline network is underground making pipelines vulnerable to accidental breaches and failures by third-party excavators.  While excavation damage is 100% preventable, it remains a leading cause of pipeline incidents involving fatalities and injuries.  Three-quarters of all serious consequences from pipeline failures relate to distribution systems and more than one-third of these failures are caused by excavation damage.  PHMSA’s goal is to significantly reduce excavation damage with strong outreach and public awareness programs.  As evident in the chart below, PHMSA is making progress. 

  The PIPES Act authorizes PHMSA to award State Damage Prevention (SDP) grants to fund improvements in damage prevention programs.  Each state has established laws, regulations, and procedures shaping its state damage prevention program.  Since 2008, PHMSA provided over $4 million dollars in SDP grants to 30 distinct state organizations.  Eligible grantees include state one call centers, state pipeline safety agencies, or any organization created by state law and designated by the Governor as the authorized recipient of the funding.

SDP grants reinforce nine specific elements that make up the components of an effective damage prevention program, under the PIPES Act:

1. Enhances communications between operators and excavators;
2. Fosters support and partnership of all stakeholders;
3. Encourages operator’s use of performance measures for locators;
4. Encourages partnership in employee training;
5. Encourages partnership in public education;
6. Defines roles of enforcement agencies in resolving issues;
7. Encourages fair and consistent enforcement of the law;
8. Encourages use of technology to improve the locating process; and
9. Encourages use of data analysis to continually improve program effectiveness.

PHMSA’s Technological Development Grants program makes grants to an organization or entity (not including for-profit entities) to develop technologies that will facilitate the prevention of pipeline damage caused by demolition, excavation, tunneling, or construction activities.  A total of $500,000 was appropriated for the program in 2009.  Two awards have been made to date. 

PHMSA has also used the authority in the PIPES Act to promote public education awareness with national programs such as, “811- Call Before You Dig Program” through the Common Ground Alliance (CGA).  PHMSA provided over $1.5 million funding assistance for CGA’s 811 advertising campaign.

PHMSA is proud of its continued and steady leadership in supporting national and state damage prevention programs.  In March 2010, we participated in the CGA’s annual meeting highlighting the importance of the National “811-- Call Before You Dig Program.”  In April 2010, Transportation Secretary LaHood acknowledged the importance of calling before you dig by establishing April as “National Safe Digging Month.”  The U.S. Senate and the House of Representatives both introduced resolutions designating April 2010 as “National Safe Digging Month.”  Forty states, including those represented by the members of this committee, also followed suit.  The efforts driven and supported by PHMSA, involved the CGA, many states, and damage prevention stakeholders from around the country, who are advocates for safe excavation practices. 

3.              PHMSA Has Launched the Technical Assistance Grant Program.

 The PIPES Act empowers PHMSA to encourage communities to take part in efforts to develop technical solutions for environmental and emergency planning, zoning, and land use management near pipelines, and to prevent damage to pipelines.  Under this authorization, PHMSA created the Technical Assistance Grant (TAG) program to provide grants to local communities and organizations for technical assistance related to pipeline safety issues.  Technical assistance is defined as engineering or other scientific analysis of pipeline safety issues.  The funding can also be used to help promote public participation in official proceedings. 

In 2009, PHMSA selected 21 communities and organizations to receive funding through the agency’s TAG program.  Grants, totaling $1 million, were used to foster open communication between the public and pipeline operators on pipeline safety and environmental issues, and perform other important tasks.  Examples of such projects include the use of geographic information systems for enhanced pipeline monitoring and public awareness campaigns to promote the sharing of information between pipeline operators and landowners. 

Each technical assistance grant recipient must provide a report to PHMSA within one year of its award demonstrating completion of the work as outlined in its grant agreement.  PHMSA is thoroughly overseeing this process and will evaluate the expected outcomes of each grant recipient.  PHMSA’s Community Assistance and Technical Services Managers will offer their technical support to communities and organizations as well to address pipeline safety questions that may arise during the course of the grant agreement period.

4.              PHMSA’s Pipelines and Informed Planning Alliance Advances Smart Growth along Pipelines in Our Communities.

In addition to the grants, PHMSA has conducted other activities to inform the public and engage public interest and participation in all of its initiatives.  We funded publicly accessible, internet broadcast viewing of two pipeline events sponsored by the Pipeline Safety Trust, including a focus on safer land use planning.  We have made one grant and may make others to professional associations of county and city government officials to represent the public in the Pipelines and Informed Planning Alliance (PIPA).  PIPA is an initiative organized by PHMSA to encourage the development and use of risk-informed land use guidelines to protect pipelines and communities.

A companion effort is helping communities understand where pipelines are located, who owns and operates them, and what other information is available for community planning.  Following the passage of the PIPES Act, PHMSA worked with the Department of Homeland Security (DHS)/Transportation Security Administration (TSA) to resolve concerns about sensitive security sensitive information.  Vital information that communities need for land use, environmental, and emergency planning around pipelines is now publicly available through PHMSA’s National Pipeline Mapping System (NPMS).  We continue to work with states, industry, and other stakeholders to make the NPMS information more accurate and useful. 

C.            PHMSA Has Addressed the Additional Regulatory Enhancements and Undertook Congressional Required Studies. 

In addition to the programmatic authorizations already discussed, Congress provided PHMSA with the authority to address narrow, but significant, gaps in its safety regulations.  The gaps related to regulating low stress pipelines, effective response to emergency disruption of pipeline operations, regulation of direct sale natural gas pipelines, and the coordination of pipeline security responsibility.  PHMSA has addressed all of these additional regulatory initiatives in the PIPES Act.

Low Stress Pipelines.  Under the direction of the PIPES Act, PHMSA took action to regulate rural low-stress hazardous liquid pipelines to the same standards as other hazardous liquid pipelines.  Low stress pipelines operate at or below 20% specified minimum yield strength.  PHMSA had already regulated low stress hazardous liquid pipelines that were in populated areas or that crossed commercially navigable waterways.  The PIPES Act stressed that PHMSA needed to regulate all low stress line including those rural low stress lines that could pose a threat to unusually sensitive environmental areas.  On June 3, 2008, we published a Final Rule, Low Stress I, as phase one of a two phase process to complete the regulatory mandate in the PIPES Act.  Low Stress I brought under safety regulation those rural low-stress pipelines that pose the greatest risk to environmentally sensitive areas, particularly low stress lines that are 8 5/8 inches or greater in diameter and located in or within a ½-mile of an unusually sensitive area.  With Phase I accomplished, PHMSA is now working on issuing a notice of proposed rulemaking for Low Stress II.  Low Stress II will bring the remainder of the unregulated low stress pipelines under our safety regulation. 

Emergency Waiver of Pipeline Safety Requirements.  The PIPES Act provided authority allowing PHMSA to waive compliance with certain federal pipeline safety requirements without notice and opportunity for a hearing if needed to address an emergency involving pipeline transportation.  In the wake of hurricane Katrina, Congress recognized that in an emergency, it would not be feasible to provide for notice and opportunity for a hearing, as provided for other waivers.  PHMSA issued a final rule on January 16, 2009, to process emergency special permits when necessary to address an actual or impending emergency caused by a natural or manmade disaster.

Clarify Regulation of Direct Sale Natural Gas Pipelines.  PHMSA issued an advisory bulletin on May 13, 2008, advising operators that the PIPES Act eliminated the exception of direct sale natural gas pipelines from the definition of an interstate gas pipeline facility and that PHMSA is now responsible for regulatory oversight and enforcement of these lines.

OIG Recommendations Regarding Pipeline Security Annex.  After the OIG completed its statutorily required report to Congress on DOT actions to implement the pipeline security annex between DOT and the DHS, PHMSA addressed all three recommendations in the report.  We finalized the action plan for implementing the annex.  We formalized each agency’s security roles and responsibilities and helped develop a Pipeline Security Incident Response Protocols plan for responding to potential terrorist actions.  We coordinate efforts to minimize duplicative security inspections and we have almost daily communication with DHS concerning pipeline safety events and security incidents. 

In the PIPES Act, Congress also requested that PHMSA undertake certain studies to attend to specific concerns brought to light by certain natural disasters and the aging infrastructure of the pipeline system.  We appreciate the opportunity to show Congress that we are working diligently with our stakeholders and other governmental departments to address petroleum capacity, leak detection, and internal corrosion concerns, as well as to determine appropriate risk assessment intervals.  PHMSA has conducted and reported to Congress on all the required studies. 

Petroleum Capacity Market Study.  On June 1, 2008, PHMSA submitted to Congress a final report on the domestic transport capacity of petroleum products by pipeline and to reduce the likelihood of shortages of petroleum products or price disruptions due to shortages of pipeline capacity. 

Leak Detection Systems Study.  On June 23, 2009, PHMSA submitted to Congress a final report describing the capabilities and limitations of leak detection systems used by hazardous liquid pipeline operators.  The report also discusses ongoing investment by PHMSA and research to improve the sensitivity of leak detection technology, particularly for hazardous liquid operators.  As we stated in the report, PHMSA has adequate oversight to evaluate the leak detection capability of individual operators and has exercised authority as needed to compel systems upgrades where warranted.

Internal Corrosion Control Regulations Study.  On June 23, 2009, PHMSA submitted to Congress a final report of its thorough review of the federal pipeline safety internal corrosion control regulations, accident history, research findings, and consensus standards to determine if such regulations are adequate.  In our report to Congress, we found that existing regulations are generally sufficient to achieve safety and environmental protection goals but that we were also considering other near and long-term actions to further reduce the risk of internal corrosion.

Seven-Year Risk Assessment Study.  In November 2007, PHMSA reported to Congress on its review of the GAO report on the seven-year assessment interval and sent Congress legislative recommendations necessary to implement the conclusions of that report.  PHMSA reviewed its experience with gas transmission operators’ implementation of integrity management and the GAO report on this subject.  We recommended that Congress amend the law to provide us the authority to promulgate risk based standards for determining pipeline reassessment intervals.  As a risk-based, data-driven organization, we continue to believe that a scientific basis is the best way to determine safety decisions and the allocation of resources.  We have demonstrated that PHMSA and its state agency partners have the ability, experience, and training to review the adequacy of engineering justification that would be presented to us by operators seeking to vary the reassessment interval.  In January 2008, we held a public meeting on the technical basis for making decisions on assessment intervals.  The bottom line is that we believe these decisions should be made on a case-by-case basis, one operator at a time, and segment by segment, so that relevant operating characteristics can be considered along with individual operator performance.

II.            BUILDING ON A SOLID FOUNDATION

As we continue to advance pipeline safety, we believe we have a solid foundation to build on.  We have accomplished a great deal, but much remains to be done to implement the promise of the PIPES Act.  We are committed to completing the two remaining initiatives authorized by PIPES Act – completing the notice of proposed rulemaking to regulate low stress pipelines this year, and taking the next step to implement federal enforcement of third party excavation damage to pipelines.

We have accomplished many goals with our state partners; however, we need to make sure that our state partners continue to receive the resources they need to implement not only damage prevention initiatives but the distribution integrity management program.  We hope that the grant programs to states and communities supported and funded in the PIPES Act receive continued support.

PHMSA also intends to update its enforcement strategy and penalties to deter future non-compliance and incentivize better performance.  We continue to make full use of the increased civil penalty authority granted in the Pipeline Safety Improvement Act of 2002.  It is evident from the comparable periods before and after the PIPES Act, PHMSA has doubled its proposed pipeline safety civil penalties, and the average per case has more than tripled.  Specifically, between 2004 and 2006, we proposed $10 million in civil penalties, with an average proposed civil penalty of $57,000; and, between 2007 and 2009, we proposed $19 million in civil penalties and an average proposed civil penalty of $183,000.  Furthermore, the average penalty proposed per individual violation[1] has increased from approximately $16,000 in 2002 to an average of approximately $100,000 today.  As a result, in major cases we are now limited by the cap of $100,000 per violation/$1,000,000 series in our penalty provisions.  As integrity management programs take hold, we intend to ensure operator accountability through strong, effective enforcement.

We look forward to seeing our integrity management programs continue to mature and yield results.  With this in mind we will continue to look at performance measures and ways we can improve the data that we collect.  Having more, and better, data will help us make risk based informed decisions along the way as we look to see what other regulatory gaps need to be strengthened or closed.  We will also continue to monitor the effectiveness of integrity management programs and the need for additional regulatory enhancements. 

With the anticipated increase in transportation of new products with properties like ethanol, hydrogen, carbon dioxide, and potentially other bio-fuels, we are working to ensure a solid regulatory framework to prevent accidents and ensure safety.  We currently regulate pipelines transporting ethanol blends and to the extent new biofuels are developed in the future that will involve pipeline transportation, PHMSA is committed to taking whatever steps are necessary to ensure that such transportation will be conducted safely.  We coordinate with other federal agencies to forecast the transportation implications from the inception of marketing new fuels, as part of a systemic oversight process.  We coordinate with other countries to benefit from their experience.  We continue to work with individual operators, identifying safety concerns that must be satisfied, both with the infrastructure and with the surrounding community.  For example, ethanol poses very unique emergency response challenges, and PHMSA is responsible for helping communities prepare.  We collaborate with the pipeline industry, the renewable fuels organizations, and others like emergency responder organizations and the National Commission on Energy Policy, to investigate and solve technical challenges.   

In closing we look forward to working with Congress to address these issues and to reauthorize the pipeline safety program.  PHMSA very much appreciates the opportunity to report on the status of our progress with PIPES Act implementation and I am committed to full compliance.  Thank you.  I would be pleased to answer any questions you may have.

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