Testimony

In This Section

The Reauthorization of the Federal Railroad Administration’s (FRA) Rail Safety Program

Written Statement of

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

before the

Subcommittee on Surface Transportation and Merchant Marine
Infrastructure, Safety, and Security,
Committee on Commerce, Science, and Transportation,
U.S. Senate

July 26, 2007

Chairman Lautenberg, Ranking Member Smith, and other Members of the Subcommittee, I am very pleased to be here today, on behalf of Secretary of Transportation Peters, to discuss the reauthorization of the Federal Railroad Administration’s (FRA) rail safety program. At your May 22 hearing, also on this subject, FRA’s witness Associate Administrator for Safety Jo Strang included in her testimony an overview of FRA’s day-to-day work to reduce the number and the severity of railroad accidents, a status report on the agency’s implementation of our National Rail Safety Action Plan, a summary of our passenger safety rulemakings and other key safety initiatives, and an analysis of rail safety statistics. Today, for the sake of brevity, I will provide an update of these safety statistics (at Appendix A) and, otherwise, focus on rail safety legislation alone.

In February of this year, the Administration submitted its rail safety reauthorization bill, the Federal Railroad Safety Accountability and Improvement Act, to the Congress. The bill has been introduced, by request, in both the House and the Senate. I want to thank you again, Chairman Lautenberg, for introducing the Administration bill, by request, for yourself and Senator Smith. The Administration bill has been designated as H.R. 1516 and S. 918, respectively. In addition to proposing to reauthorize FRA’s vital safety mission, this bill calls for important—and in some cases historic—substantive changes in the rail safety laws that we expect will materially improve safety. I look forward to working with you to help secure their enactment.

The U.S. Department of Transportation (DOT) has also provided a views letter on H.R. 2095 as introduced by Chairman Oberstar and Chairwoman Brown. DOT also plans to provide its comments on major rail safety reauthorization legislation introduced in the Senate.

THE ADMINISTRATION’S RAIL SAFETY BILL (H.R. 1516, S. 918)

The Administration’s rail safety reauthorization bill would reauthorize appropriations for FRA to carry out its rail safety mission for four years. FRA has made a full copy of the proposal available on our Web site at http:// www. fra.dot.gov/us/

content/48, including the supporting analysis for each section. Let me take this opportunity to discuss the major provisions of the Administration bill and how we believe they will further FRA’s safety efforts.

A. Authorizes Safety Risk Reduction Program and Protects Confidentiality of Risk Analyses Produced

In order to enhance the accountability of railroads in assuming full responsibility for the safety of their employees and operations, the bill would authorize appropriations for the addition of a safety risk reduction program to supplement FRA’s current safety activities. The bill requests Congressional endorsement of this pilot program, which FRA has already begun on a voluntary basis. Since rail-related accidents, injuries, and deaths are already at historically low levels, FRA seeks to augment the agency’s traditional behavior-based and design-specification-based regulations with a robust risk reduction program to further drive down those key indicators and measures of risk at a reasonable cost and in a practical manner before accidents and injuries occur.

In the rail safety context, such a risk reduction program is intended to ensure that the systems by which railroads operate and maintain their properties are adequate to meet or exceed safety objectives. Our current risk reduction program is intended to encourage an open collaboration with industry’s labor and management so that they will try, and eventually adopt, voluntary risk reduction approaches. FRA is placing much greater emphasis on developing models of how railroads can systematically evaluate safety risks and implement plans to eliminate or reduce the chance for workers to make mistakes that can lead to accidents or close calls. A safety risk reduction program could integrate previous voluntary efforts in the human factors area (such as behavior-based safety methods and close call reporting), while extending similar risk management techniques to track safety and other areas.

To encourage railroads to produce thorough, as opposed to superficial, risk assessments, a companion provision in the bill would bar public disclosure by DOT of records required under the safety risk reduction program, except for Federal law enforcement purposes. Also in order to promote the preparation of substantive risk analyses by railroads, the provision would forbid discovery by private litigants in civil litigation for damages of any information compiled or collected under the program, and would forbid admission into evidence of the same information in civil litigation by private parties for damages. Here is an example of how this provision would work if enacted. A commuter railroad undertakes, develops, and writes a collision hazard analysis required by an FRA order issued under the risk reduction program and implements the results of the analysis. In this process, the railroad identifies a bridge abutment near a crossover as a collision hazard. It is unlikely that the railroad would be able to remove this collision hazard (a derailment could send the cars into the fixed structure), but the railroad could mitigate the risk by reducing operating speeds and by further training its employees on safely transiting the location. DOT would not be allowed to release the railroad’s written hazard analysis except to enforce Federal law, and the hazard analysis (as well as information compiled or collected under the program) would also be protected from discovery in a civil action by private parties for damages.

FRA is mindful that any restriction of public access to information may be controversial and requires careful scrutiny. However, to prevent misuse of the data developed under the risk reduction program, we are convinced that assuring confidentiality is essential to promote full, accurate, and timely disclosure by both the railroads and their employees, making certain that such programs are meaningful and more likely to bring about tangible improvements in safety.

B. Grants Rulemaking Authority over Hours of Service to the Secretary of Transportation

Human factors are a primary or contributing factor in more than a third of all train accidents, constituting the leading cause of train accidents. Fatigue is at least a contributing factor in one of every four serious human factor train accidents. We believe that crewmember fatigue has played an increasing role in railroad accidents over the past decade through poor judgment, miscommunication, inattentiveness, and failure to follow standard operating procedures. The challenge before us is to ensure that crewmembers consistently have adequate opportunity to rest, do not suffer from medical disorders that can disrupt sleep, and are fully engaged in, and committed to, maintaining alertness.

However, the statutory provisions that govern the hours of service of railroad train crews, dispatchers, and signal maintainers are antiquated—essentially a century old—and woefully inadequate to address present realities. For example, under those laws, train crews may work on a schedule of eight hours on duty, eight hours off duty, perpetually. Engineers and conductors often work 60 to 70 hours a week, and may be called to work during the day or night, which may disrupt sleep patterns and reduce their ability to function. Please see Appendix B, “Scientific Learning Demonstrating the Inadequacy of the Hours of Service Laws.”

Moreover, the hours of service laws contain no substantive rulemaking authority. The lack of regulatory authority over duty hours—authority that other DOT agencies have with respect to their modes of transportation—has precluded FRA from making use of scientific learning on this issue of sleep-wake cycles and fatigue-induced performance failures. Behavioral science has progressed to the point that computer models can accurately predict the likely effect of specific sleep and rest patterns on employee performance. The models provide useful guidance to aid employee scheduling practices, and as discussed in FRA’s May testimony, the agency published a validation report of one such model in 2006. Yet, only the Union Pacific Railroad Company and the Canadian Pacific Railway are making use of a sleep model to evaluate their own crew scheduling practices. Most railroads have yet to integrate use of such models into their operations and have refrained from making public commitments to use this capability in the future. Further, over the past 15 years, the history of attempts by rail labor and management to cooperatively improve fatigue management has not experienced steady progress.

We recognize that specific amendments to the hours of service laws might mitigate some sources of fatigue. Yet, we believe that sincere and well-intentioned attempts at providing short-term relief will almost certainly result in unintended consequences that may limit FRA’s and the industry’s ability to consider or provide better solutions downstream. Even if exceptions are provided for in statute, treating limbo time as on-duty time, for instance, may force carriers to reduce the length of many assignments to avoid the possibility of “violations” under circumstances where safety could not be seriously compromised, and may significantly increase the cost of any further reforms. Hours of service issues are inherently complex, and they need to be properly considered within the overall context of fatigue prevention and management. FRA is committed to achieving significant progress in this area, but we require the regulatory authority to do so.

We strongly recommend that the existing hours of service laws be replaced with flexible regulations based on a modern, scientific understanding of fatigue. Today, I am again asking for your support for legislation that will permit us to put into action what has been learned. In order to apply this scientific knowledge to the problem of fatigue, the Administration bill first proposes to sunset the hours of service laws, but retain their protections as interim regulations embodying their substantive provisions. Next, the proposal calls for FRA, as the Secretary’s delegate, to make use of the extensive research findings in reviewing the issue of fatigue through FRA’s Railroad Safety Advisory Committee, and to develop as necessary new, science-based requirements that can help us reduce the number and severity of human factor-caused train accidents and casualties. We believe revised “benchmark” limits are needed on work hours, and requirements for rest periods, to provide simple guidance for fixed schedules, where that will suffice.

The bill would also authorize FRA under certain circumstances to permit railroads to comply with an approved fatigue management plan as an alternative to complying with the “benchmark” limits” set forth in any prospective regulations. With the tools now available, we will be able to evaluate proposed fatigue management approaches to ensure that they include an objective evaluation of a wide variety of more flexible work schedules by validated techniques. In fact, under such conditions, we believe that most safety-critical railroad employees would be protected by performance-based fatigue management programs that will enhance safety while holding down costs.

For the sake of public and employee safety, it is time to make a long-overdue change by granting the Secretary rulemaking authority over hours of service so that FRA as the Secretary’s delegate is authorized to directly address the major cause of far too many train accidents.

C. Promotes Crossing Safety

Accidents at highway-rail crossings and dedicated pedestrian crossings over railroad tracks account for more than a third of all fatalities arising from railroad operations. In 2006 alone, according to FRA’s preliminary figures, 368 people were killed at crossings. The bill seeks to prevent accidents, injuries, and deaths at crossings and to make crossings safer through two main provisions.

1. Requires Reports by Railroads and States to DOT on the Characteristics of Crossings

Currently, reporting to the DOT National Crossing Inventory is strictly voluntary. FRA is the custodian of the inventory, and the quality of the data is only as good as what States and railroads have historically reported. Some information is missing from the Inventory altogether. Too much information that is in the Inventory has become outdated, rendering its use at least problematic. The bill would remedy these information deficits by requiring that railroads and States provide the Secretary with current information regarding the country’s approximately 277,000 at-grade and grade-separated highway-rail crossings and dedicated pedestrian crossings over railroad tracks. Mandatory reporting would make this unique national database more current and complete, which would help (i) States better rank their crossings by risk and channel resources to the most dangerous crossings first, and (ii) DOT and transportation researchers identify the most promising ways to reduce crossing casualties. The bill would, therefore, require initial reports on all previously unreported crossings and then periodic updates on all crossings.

2. Fosters Introduction of New Technology to Improve Safety at Public Highway-Rail Grade Crossings

Only about 40 percent of the Nation’s 144,000 public highway-rail grade crossings are equipped with an active device to give warning to motorists and pedestrians at the crossing. Many crossings have only crossbucks. Active warning devices are expensive to install and maintain, and, perversely, safety engineering improvements at one crossing are often cited in tort actions to prove or insinuate the relative inadequacy of warning signs or devices at another crossing. Under the Administration bill, if the Secretary has approved a new technology to provide advance warning to highway users at a grade crossing, the Secretary’s determination preempts any State law concerning the adequacy of the technology in providing the warning. FRA believes that this proposal would help encourage the creation and deployment of new, cost-effective technology at the Nation’s approximately 80,000 public grade crossings that still lack active warning devices. Let me provide an example of innovative crossing safety technology. Under an FRA waiver the Twin Cities and Western Railroad Company and a supplier successfully demonstrated a warning system designed for lower-volume roadways and rail lines using dedicated locomotives. The system uses the Global Positioning System and a data radio link between the locomotive and each crossing. This product is now being commercialized by a major signal supplier.

D. Expands the Secretary’s Authority to Disqualify Individuals Unfit for Safety-Sensitive Service

Another provision of the bill would expand the Secretary’s existing disqualification authority to cover individuals who, after opportunity for a hearing, are deemed to be unfit for safety-sensitive service in the railroad industry because of a violation of the Hazardous Materials Regulations related to transporting hazardous material by rail. Currently, FRA, as the Secretary’s delegate, may disqualify an individual only for a violation of the rail safety laws or regulations, not the Hazardous Materials Regulations, even though violation of the Hazardous Materials Regulations may involve a greater potential accident risk or consequence (in the event of an accident). This proposal would logically extend our disqualification authority over railroad employees and complement current initiatives to strengthen FRA’s safety compliance program.

E. Protects Rail Safety Regulations from Legal Attack on the Ground that They Affect Security and Repeals the Statutory Requirement for the Secretary of Homeland Security to Consult with the Secretary of Transportation when Issuing Security Rules that Affect Rail Safety

The bill would also bar legal challenges to DOT safety regulations on the basis that they affect rail security. In many cases, rail safety and security are intertwined, if not linked inextricably, and part of the justification for certain DOT regulations is that they enhance rail security. The bill would clarify the scope of the Secretary’s safety jurisdiction and help deter or quickly rebuff any legal challenge that asserts that DOT has exceeded its statutory authority in issuing such regulations.

Of course, the U.S. Department of Homeland Security (DHS) would continue to exercise primary responsibility for the promulgation of rail security regulations. In this regard, the bill would repeal the statutory provision that, when issuing security rules that affect rail safety, DHS must consult with DOT. We believe the provision is unnecessary and confusing in light of other statutes, executive orders, and existing inter-Departmental cooperation formalized under the DOT-DHS Memorandum of Understanding and its related annexes on rail security.

F. Clarifies the Secretary’s Authority to Issue Temporary Waivers of Rail Safety Regulations Related to Emergencies

The bill would clarify that FRA, as the Secretary’s delegate, may grant a temporary waiver without prior notice and an opportunity for public comment and hearing, if the waiver is directly related to an emergency event or needed to aid in recovery efforts and the waiver is also in the public interest and consistent with railroad safety. Although FRA’s normal practice is to set aside time for public comment and hearing on waiver petitions, this process appreciably slows down issuance of waivers necessary for emergency response and recovery efforts. Yet granting a waiver without such procedures risks legal challenge. The provision would free FRA from this dilemma and allow the agency to support emergency response and recovery efforts by dispensing with prior notice and an opportunity for comment and hearing, and by otherwise expediting the process for granting waivers. Further, the relief granted would be temporary (a maximum of nine months), and the normal waiver procedures would have to be followed to extend the temporary relief granted should doing so be necessary.

G. Authorizes the Monitoring of Railroad Radio Communications

Currently, FRA is permitted to monitor railroad radio communications only in the presence of an authorized sender or receiver, such as a railroad employee. Yet, when railroad employees know that FRA is present, they tend to be on their best safety behavior. Therefore, FRA cannot be sure whether the level of compliance observed is normal, and we are less able to identify what are, under ordinary circumstances, the most frequent and serious instances of noncompliance. Access to candid communications off site would yield a truer picture of compliance levels.

As FRA’s objective of accident prevention is ordinarily fulfilled daily by conducting safety inspections of railroad operations and enforcing the rail safety laws, monitoring of radio communications would not only help achieve that objective, but would greatly improve the efficiency of those inspections, the accuracy of the results, and the effective deployment of FRA’s limited inspection resources based on those more accurate results.

H. Clarifies and Relaxes the Existing Statutory Provision on Moving Certain Defective Equipment for Repair

Finally, I would like to mention that the bill would amend a complicated statutory provision that states the conditions for hauling a railroad car or locomotive with a safety appliance or power brake defect for repair without civil penalty liability, including the requirement that equipment be back-hauled to the nearest available repair point. Back hauls required by statute can be both unsafe (because of the hazards related to switching a car out of one train and into another train), and inefficient (because the car is stopped from moving toward its destination and forced to go to a different place that is physically closer than the next forward point for repair). The proposal would allow the equipment to be moved to the next forward point of repair under clear regulatory safeguards for moving defective equipment that are more consistent with the movement-for-repair provisions applicable to vehicles with other types of defects, such as Freight Car Safety Standards defects.

Further, the bill would also define some key statutory terms and then provide FRA, as the Secretary’s delegate, with rulemaking authority to define others. Currently, FRA may provide only guidance on the meaning of these terms, and this has contributed to an atmosphere of uncertainty about the requirements of the statute in day-to-day application. For example, FRA has received many complaints over the years that cars have been hauled past a repair point that FRA does not consider to be a repair point. This proposal would, therefore, help dispel such uncertainty and promote understanding and compliance with the provisions governing the safe movement of equipment with a safety appliance or power brake defect.

I would like to emphasize that, while all of the provisions I have discussed are among the major provisions of the bill, there are other significant provisions I have not mentioned today that will also enhance rail safety. These include providing FRA rail security officers with greater access to Federal, State, and local law enforcement databases, officer-protection warning systems, and communications for the purpose of performing the Administrator’s civil and administrative duties to promote safety, including security, and for other purposes authorized by law. All of these provisions are set forth in the bill the Secretary presented in February, and I would be glad to discuss each of them in detail with you.

LEGISLATION PROPOSING AMENDMENTS TO THE RAIL SAFETY AND SECURITY PREEMPTION PROVISION AT 49 U.S.C. 20106

The Administration’s bill does not include a provision that would revise the preemption provision at 49 U.S.C. § 20106 (Section 20106). Section 3 of H.R. 1401, as passed by the House provides that causes of action for damages under State law are not preempted under Section 20106 unless compliance with the State standard makes compliance with the Federal standard impossible. It further provides that the Secretaries of Transportation and Homeland Security may preempt positive State law and regulations only by covering the subject matter. Common law tort claims related to the same subject matter would not be preempted. The effect of this proposal would be that an ever-changing myriad of State and local standards would be established through tort litigation, based on the findings of individual judges and juries, who will undoubtedly have limited exposure to and understanding of the Federal standards at issue, and even less understanding of the consequences of their decisions beyond the implications for the immediate plaintiffs. The result of this amendment would be to eviscerate national uniformity, as the existence of Federal requirements and the railroad’s compliance with them would have no bearing on the potential for liability in the event of an accident or terrorist incident. The effective standard would be the latest tort judgment in each State, without any assurance whatsoever that compliance with that standard would save a railroad from future liability. Faced with limitless tort liability and the need to meet these changing standards all around the country, nationally uniform standards would lose their meaning and effectiveness, and safety and security would be compromised. For this reason, the Administration’s views letter on H.R. 1401 threatens a Presidential veto if section 3 remains in the bill.

Another proposed amendment to Section 20106, the provision at Section 616 of H.R. 2095 as passed by the House Transportation and Infrastructure Committee, provides a State cause of action for damages for personal injury, death, or property damage resulting from a violation of Federal railroad safety and security standards. However, the amendment goes too far by providing that a State cause of action is also created for a railroad’s failure to “adequately comply” with any Federal regulation or order and “adequately comply” with its plan or standard created pursuant to a Federal regulation or order; this provision will generate needless litigation and undercut the national uniformity that section 20106 aims to achieve. If the Committee needs further information to address this important issue, FRA staff would be glad to provide assistance.

Conclusion

The Administration’s rail safety reauthorization bill would enable FRA to continue its existing rail safety initiatives and to enhance rail safety systematically in many ways. I look forward to working with the Subcommittee to bring about the enactment of the Administration’s bill, and to help make our Nation’s railroad system even safer. Thank you.

Appendix A

The Railroad Industry’s Safety Record

The railroad industry’s overall safety record is very positive, and most safety trends are moving in the right direction. While not even a single death or injury is acceptable, progress is continually being made in the effort to improve railroad safety. This improvement is demonstrated by an analysis of FRA’s database of railroad reports of accidents and incidents that have occurred over the nearly three decades from 1978 through 2006. See 49 CFR part 225. (The period 1978 through 2006 is chosen for analysis because the worst year for rail safety in recent decades was 1978, and 2006 is the last complete year for which preliminary data are available.) Between 1978 and 2006, the total number of rail-related accidents and incidents has fallen from 90,653 to 13,139, an all-time low since FRA’s existing database was first established in 1975, representing a decline of 86 percent. Between 1978 and 2006, total rail-related fatalities have declined from 1,646 to 912, a reduction of 45 percent. From 1978 to 2006, total employee cases (fatal and nonfatal) have dropped from 65,193 to 5,165, the record low; this represents a decline of 92 percent. In the same period, total employee deaths have fallen from 122 in 1978 to 16 in 2006, a decrease of 87 percent.

Contributing to this generally improving safety record has been a 74-percent decline in train accidents since 1978 (a total of 2,891 train accidents in 2006, compared to 10,991 in 1978), even though rail traffic has increased. (Total train-miles were up by 7.8 percent from 1978 to 2006.) In addition, the year 2006 saw only 28 train accidents, out of the 2,891 reported, in which a hazardous material was released, with a total of only 69 hazardous material cars releasing some amount of product, despite about 1.7 million movements of hazardous materials by rail.

In other words, over the last almost three decades, the number and rate of train accidents, total deaths arising from rail operations, employee fatalities and injuries, and hazardous materials releases all have fallen dramatically. In most categories, these improvements have been most rapid in the 1980s, and tapered off in the late 1990s. Causes of the improvements have included a much more profitable economic climate for freight railroads following deregulation in 1980 under the Staggers Act (which led to substantially greater investment in plant and equipment), enhanced safety awareness and safety program implementation on the part of railroads and their employees, and FRA’s safety monitoring and standard setting. (Most of FRA’s safety rules were issued during this period.) In addition, rail remains an extremely safe mode of transportation for passengers. Since 1978, more than 11.2 billion passengers have traveled by rail, based on reports filed with FRA each month. The number of rail passengers has steadily increased over the years, and since 2000 has averaged more than 500 million per year. Although 12 rail passengers died in train collisions and derailments in 2005, none did in 2006. On a passenger-mile basis, with an average about 15.5 billion passenger-miles per year since the year 2000, rail travel is about as safe as scheduled airlines and intercity bus transportation and is far safer than private motor vehicle travel. Rail passenger accidents–while always to be avoided–have a very high passenger survival rate.

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

Appendix B

Scientific Learning Demonstrating the Inadequacy of the Hours of Service Laws

The following four examples illustrate some of the ways in which the existing hours of service statutory regime fails to reflect the latest scholarship on the subject of fatigue.

First, current scientific information indicates that to feel well rested most people need approximately eight hours of sleep per night. The current hours of service laws require a minimum off-duty period of only 10 hours if an employee in train and engine service has worked 12 consecutive hours in the previous 24-hour period. If an employee works 11 hours and 59 minutes or less, the laws require a minimum rest period of only eight hours. Very few employees work 12 consecutive hours; therefore, most may legally be called back to duty with only eight hours off duty. During that off-duty time, the employee must travel to and from work and attend to personal needs such as bathing and eating. Crew-calling practices allow the employee to be called as little as two hours prior to the beginning of the next duty period. Given these circumstances, it is certain that the current law permits employees to work with less than eight hours of sleep per night.

An FRA study of locomotive engineers’ sleep and work patterns found that the average locomotive engineer obtained 7.13 hours of sleep per night.[1] Another FRA study of train handling performance conducted on a highly realistic locomotive simulator by locomotive engineers working under schedules that conformed with the hours of service laws[2] found that engineers who worked ten hours and had 12 hours off duty, slept an average of only 6.1 hours. A similar group of engineers who also worked ten hours, but had only 9.3 hours off duty, slept an average of only 4.6 hours. Again, most people need about eight hours of sleep per night; therefore, for most people, the amount of sleep these engineers received was insufficient even though their schedules fully conformed with the hours of service laws.

Second, scientific information also shows that the quantity and quality of sleep vary with the time of day. Most people sleep best at night; however, the current hours of service laws do not take the time of day when sleep can occur into account. Under those laws, engineers who quit work at dawn and have to sleep during the daytime, when it is harder to sleep, get the same minimum eight or ten hours off as engineers who quit work in the evening and have the relative luxury of sleeping at night. The study by Pollard referenced earlier found that engineers, in fact, obtain the least sleep if their on-duty period ends between 5:00 a.m. and noon.

Third, most mammals, including human beings, have an approximately 24-hour sleep-wake cycle known as a “circadian rhythm.” Rapid changes in the circadian pattern of sleep and wakefulness disrupt many physiological functions such as hormone releases, digestion, and temperature regulation. Human function can be affected, performance may be impaired, and a general feeling of debility may occur until realignment is achieved. The maximum work periods and minimum off-duty periods specified in the current hours of service laws force sleep-wake cycles into a less-than-24-hour pattern that is highly unnatural and very difficult to adapt to. Jet lag when flying east is the most commonly experienced syndrome similar to the experience of consistently working on a less-than-24-hour cycle.

Fourth, recent studies “suggest that sleep loss (less than 7 hours per night) may have wide-ranging effects on the cardiovascular, endocrine, immune, and nervous systems, including the following:

Obesity in adults . . .
Diabetes and impaired glucose tolerance
Cardiovascular disease and hypertension
Anxiety symptoms
Depressed mood
Alcohol use[.]” [3]

In other words, sleep loss, which the current hours of service regime permits railroad operating employees to suffer, contributes not only to the safety risk of fatigue, but also to a gamut of health risks, including the risk of serious health problems such as diabetes, cardiovascular disease, and hypertension.

^[1] Pollard, J. K. 1996. Locomotive engineer’s activity diary. Report Number DOT/FRA/RRP-96/02.

^[2] Thomas, G. R., Raslear, T. G., and Kuehn, G. I. 1997. The effects of work schedule on train handling performance and sleep of locomotive engineers: A simulator study. Report Number DOT/FRA/ORD-97-09.

[3] Institute of Medicine of the National Academies. Sleep Disorders and Sleep Deprivation: an Unmet Public Health Problem (2006), p. 59.

Proposed Rail Safety Legislation

Written Statement of

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

before the

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

May 8, 2007

Chairwoman Brown, Ranking Member Shuster, and other Members of the Subcommittee, I am very pleased to be here today, on behalf of the Secretary of Transportation, to discuss proposed rail safety legislation.

In February, the Administration presented its rail safety reauthorization bill, the Federal Railroad Safety Accountability and Improvement Act. In March, House Committee Chairman Oberstar introduced the Administration bill, by request, for himself and Ranking Member Mica and the leaders of this Subcommittee. I would like to express the Federal Railroad Administration’s (FRA) sincere appreciation to you and your colleagues for this assistance. Also in March, Senator Lautenberg, Chairman of the Senate Subcommittee on Surface Transportation and Merchant Marine Infrastructure, Safety, and Security, introduced the Administration bill, by request, for himself and Senator Smith, Ranking Member of the Subcommittee, for which we are very grateful. The Administration bill has been designated as H.R. 1516 and S. 918, respectively.

In addition to proposing to reauthorize FRA’s important safety mission, this bill calls for important—and in some cases historic—substantive changes in the rail safety laws that we expect will materially improve safety. These changes would significantly enhance FRA’s wide-ranging efforts to implement the National Rail Safety Action Plan, which I will discuss below, and I look forward to working with you to help secure their enactment.

FRA also appreciates the efforts of the Committee in developing its rail safety reauthorization proposals in H.R. 2095, The Federal Railroad Safety Improvement Act of 2007. I look forward to working with you on these proposals as the legislative process moves forward.

THE NATIONAL RAIL SAFETY ACTION PLAN

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

As a result of these concerns, in May 2005, the U.S. Department of Transportation (DOT) and FRA, as the agency charged with carrying out the Federal railroad safety laws, initiated the National Rail Safety Action Plan (Action Plan), a comprehensive and methodical approach to address critical safety issues facing the railroad industry. The Action Plan’s goals broadly stated are:

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

As I have previously testified, the causes of train accidents are generally grouped into five categories: human factors; track and structures; equipment; signal and train control; and miscellaneous. From 2002 through 2006, the vast majority of train accidents resulted from human factor causes or track causes. Accordingly, human factors and track have been our primary focus to bring about further improvements in the train accident rate. Overall, the Action Plan includes initiatives intended to:

Reduce train accidents caused by human factors;
Address fatigue;
Improve track safety;
Enhance hazardous materials safety and emergency preparedness;
Strengthen FRA’s safety compliance program; and
Improve highway-rail grade crossing safety.

In testimony before this Subcommittee in January, February, and March, FRA has detailed the substantial progress made in fulfilling Action Plan objectives, and the improvements that have been made. I will be glad to provide further updates to the Subcommittee concerning our ongoing safety initiatives. Given the topic of this hearing, however, I will focus my testimony on the Administration’s safety bill and how we believe it will advance the Action Plan and FRA’s overall safety program.

THE ADMINISTRATION’S RAIL SAFETY BILL

The Administration’s rail safety reauthorization bill, the Federal Railroad Safety Accountability and Improvement Act, would reauthorize appropriations for FRA to carry out its rail safety mission for four years. FRA has made a full copy of the proposal available on our web site at http://www.fra.dot.gov/us/content/48, including the supporting analysis for each section. Let me take this opportunity to discuss the major provisions of the Administration bill and how they will further FRA’s safety efforts.

A. Authorizes Safety Risk Reduction Program and Protects Confidentiality of Risk Analyses Produced

In order to enhance the accountability of railroads in assuming full responsibility for their own safety, the bill would authorize appropriations for the addition of a safety risk reduction program to supplement FRA’s current safety activities and seeks Congressional endorsement of this pilot program. Since rail-related accidents, injuries, and deaths are already at low levels, FRA needs to augment our traditional behavior-based and design-specification-based regulations with a robust safety risk reduction program to drive down those key measures of risk at a reasonable cost and in a practical manner.

In the safety context, a risk reduction program is intended to make sure that the systems by which railroads operate and maintain their properties are adequate to meet or exceed safety objectives. FRA continues to place greater emphasis on developing models of how railroads can systematically evaluate safety risks, in order to hold railroads more accountable for improving the safety of their operations, including implementing plans to eliminate or reduce the chance for workers to make mistakes that can lead to accidents or close calls. A safety risk reduction program could unify previous voluntary efforts in the human factors arena while extending similar techniques to management of risk in other arenas such as track safety.

To encourage railroads to produce thorough, as opposed to superficial, risk analyses, a companion provision in the bill would bar public disclosure by FRA of records required under the safety risk reduction program, except for Federal law enforcement purposes. Also in order to promote the preparation of serious risk analyses by railroads, the provision would forbid discovery by private litigants in civil litigation for damages of any information compiled or collected under the program, and would forbid admission into evidence of the same information in civil litigation by private parties for damages.

FRA is mindful that any restriction of public access to information may be controversial and requires careful scrutiny. However, we are convinced that assuring confidentiality is essential to promote full disclosure by the railroads and their employees to make such programs meaningful and bring about tangible improvements in safety.

B. Grants Rulemaking Authority over Hours of Service

Human factors cause more than a third of all train accidents, constituting the largest category of train accident causes. Fatigue is at least a contributing factor in one of every four serious human factor train accidents. We believe that fatigued crewmembers have played an increasing role in railroad accidents over the past decade through poor judgment, miscommunication, inattentiveness, and failure to follow procedures. Our challenge is to ensure that crewmembers have adequate opportunity to rest, are free of disorders that can disrupt sleep, and are fully engaged in maintaining alertness.

The Subcommittee has recognized the deleterious effect that fatigue has on the safety of railroad operations, convening a hearing in February focused solely on this widespread problem. However, as I testified at that hearing, the statutory provisions that govern the hours of service of railroad train crews, dispatchers, and signal maintainers are antiquated—essentially a century old—and inadequate to address present realities. For example, under those laws, train crews may work eight hours on duty and eight hours off duty perpetually. Engineers and conductors often work 60 to 70 hours a week, and may be called to work during the day or night, which disrupts sleep patterns and reduces their ability to function.

Moreover, those laws contain no substantive rulemaking authority. The lack of regulatory authority over duty hours—authority that other DOT agencies have with respect to their modes of transportation—has precluded FRA from making use of scientific learning on this issue of sleep-wake cycles and fatigue-induced performance failures. Behavioral science has progressed to the point that computer models can accurately predict the likely effect of given sleep and rest patterns on employee performance. The models provide useful guidance to aid employee scheduling, and FRA published a validation report of one such model in 2006, as I testified in February. However, only the Union Pacific Railroad Company is making use of a sleep model to evaluate its own crew scheduling practices. Most railroads have yet to integrate use of such models in their operations and have refrained from making public commitments to use this capability in the future.

Further, over the past 15 years, the history of attempts by rail labor and management to improve fatigue management has not been marked by sustained progress, in part because rail labor organizations have a duty of fair representation that many of their members construe to include as maximizing earnings. Less hours worked is understood as less pay. There is, therefore, a market failure in connection with maximizing income that does not adequately protect the public or the safety interests of the employees themselves. Government needs to set an appropriate standard that ensures employees an adequate opportunity for rest, and labor and management should be free to work out the details regarding how that standard will be met through collective bargaining.

Madam Chairwoman, we recognize that the Committee will consider specific amendments to the law that might mitigate fatigue. Although FRA understands the frustrations that this issue has produced and the temptation to provide early relief, we believe that sincere attempts at short-term relief can also create constraints that may limit the ability to provide optimal solutions downstream. Treating limbo time as on-duty time, for instance, would shift the law from a safety frame of reference to a “fair labor standards” frame of reference, force carriers to reduce the length of many assignments to avoid the possibility of “violations” under circumstances where safety could not be seriously compromised, and ensure that any further reforms would be very costly indeed. Hours of service issues are surprisingly complicated, and they need to be considered within the overall context of fatigue prevention and management. FRA is committed to progress in this area, but we need the regulatory authority to do it.

So we will continue to urge that the hours of service laws be replaced with flexible regulations based on a modern, scientific understanding of fatigue. Today, I am here asking for your support for legislation that will permit us to put into action what we have learned. The Administration bill first proposes to sunset the hours of service laws, but retain their protections as interim regulations embodying their substantive provisions. Next, the proposal calls for FRA, as the Secretary’s delegate, to review the problem of fatigue with the assistance of the Railroad Safety Advisory Committee, and to develop as necessary new, science-based requirements that can help us reduce human factor-caused accidents and casualties. We believe revised “benchmark” limits are needed on work hours, and requirements for rest periods, to provide simple guidance for fixed schedules, where that will suffice.

The bill would also authorize FRA to permit railroads to comply with an approved fatigue management plan as an alternative to complying with the “benchmark” limits” in the regulations. With the tools now available, we will be able to recognize fatigue management approaches that include careful evaluation of a wide variety of more flexible work schedules by validated techniques. In fact, we believe most safety-critical railroad employees would be protected by performance-based fatigue management programs that will enhance safety while holding down costs.

For public and employee safety, it is time to make a long-overdue change and provide us the rulemaking authority necessary to reform the hours of service laws and more effectively address the major cause of far too many train accidents.

C. Promotes Highway-Rail Grade Crossing Safety

Deaths in highway-rail grade crossing accidents are the second-leading category of fatalities associated with railroading, causing more than a third of all rail-related fatalities. (Trespasser fatalities are the leading category.) The number of grade crossing deaths has declined substantially and steadily in recent years. However, the growth in rail and motor vehicle traffic continues to present challenges. The bill seeks to prevent highway-rail grade crossing collisions and make crossings safer through two main provisions.

1. Requires Reports by Railroads and States to DOT on the Characteristics of Highway-Rail Grade Crossings

Currently, reporting to the DOT National Crossing Inventory is strictly voluntary. The bill would require that railroads and States provide the Secretary with current information regarding the country’s approximately 280,000 highway-rail grade crossings. Mandatory reporting would make this unique national database more up to date and complete, which would help (i) States rank their crossings by risk and channel resources to the most dangerous crossings first, and (ii) DOT and transportation researchers identify the most promising ways to reduce crossing casualties. The bill would therefore require initial reports on all previously unreported crossings and periodic updates on all crossings. We appreciate action by the leadership of the Committee to include a very similar provision in H.R. 2095.

2. Fosters Introduction of New Technology to Improve Safety at Public Highway-Rail Grade Crossings

Fewer than half of the 140,000 public highway-rail grade crossings have active warning devices, which are expensive to install and maintain. Perversely, improvements at one crossing are often cited in tort actions to prove the inadequacy of protections at another crossing. Under the Administration bill, if the Secretary has approved a new technology to provide advance warning to highway users at a grade crossing, the Secretary’s determination preempts any State law concerning the adequacy of the technology in providing the warning. FRA believes that this proposal would help encourage the creation and deployment of new, cost-effective technology at the Nation’s approximately 80,000 public grade crossings that still lack active warning devices.

D. Expands FRA’s Authority to Disqualify Individuals Unfit for Safety-Sensitive Service

Another provision of the bill would expand FRA’s existing disqualification authority to cover individuals who are unfit for safety-sensitive service in the railroad industry because of a violation of the Hazardous Materials Regulations related to transporting hazardous material by rail. Currently, FRA may disqualify an individual only for a violation of the rail safety laws or regulations, not the Hazardous Materials Regulations, even though violation of the Hazardous Materials Regulations may involve a greater potential accident risk or consequence (in the event of an accident). This proposal would logically extend our disqualification authority over railroad employees and complement current initiatives to strengthen FRA’s safety compliance program.

E. Protects Rail Safety Regulations from Legal Attack on the Ground that They Affect Security and Repeals Statutory Requirement for DHS to Consult with DOT when Issuing Security Rules that Affect Rail Safety

The bill would also bar legal challenges to DOT safety regulations on the basis that they affect rail security. Rail safety and security are intertwined, and part of the justification for certain DOT regulations is that they enhance rail security. The bill would clarify the scope of the Secretary’s safety jurisdiction and help deter or quickly rebuff any challenge that DOT has exceeded its statutory authority in issuing such regulations.

Of course, the U.S. Department of Homeland Security (DHS) would continue to exercise primary responsibility for the promulgation of rail security regulations. In this regard, the bill would repeal the statutory provision that, when issuing security rules that affect rail safety, DHS must consult with DOT. We believe the provision is unnecessary and confusing in light of other statutes, executive orders, and existing inter-Departmental cooperation under the DOT-DHS Memorandum of Understanding and its related annexes on rail security.

F. Clarifies the Secretary’s Authority to Issue Temporary Waivers of Rail Safety Regulations Related to Emergencies

The bill would clarify that FRA, as the Secretary’s delegate, may grant a temporary waiver without prior notice and an opportunity for public comment and hearing, if the waiver is directly related to an emergency event or needed to aid in recovery efforts and it is in the public interest and consistent with railroad safety. While FRA’s normal practice is to set aside time for public comment and hearing on waiver petitions, this appreciably slows down issuance of waivers necessary for emergency response and recovery efforts. Yet granting a waiver without such procedures risks legal challenge. The provision would free FRA from this dilemma and allow the agency to support emergency response and recovery efforts by dispensing with prior notice and an opportunity for comment and hearing, and by otherwise expediting the process for granting waivers. Further, the relief granted would be temporary (a maximum of nine months), and the normal waiver procedures would have to be followed to extend the temporary relief granted should doing so be necessary.

G. Authorizes the Monitoring of Railroad Radio Communications

The bill would address this concern by letting FRA safety inspectors monitor and record railroads’ radio communications over their dedicated frequencies outside of the presence of railroad personnel for the purpose of accident prevention (including accident investigation) and, with certain exceptions, to use the information received. The exceptions would be that the information (1) may generally not be used as direct evidence in any administrative or judicial proceeding, and (2) may not be released under the Freedom of Information Act. The information may, however, be used as background material for further investigation. Nor should there be concern that the information communicated is personal information. Railroad operating rules and procedures already require that all radio communications relate to railroad operations and prohibit railroad employees from using the radio for personal use.

We appreciate inclusion of a similar provision on radio monitoring in H.R. 2095, and look forward to working with the Committee on this matter.

H. Clarifies and Relaxes the Existing Statutory Provision on Moving Certain Defective Equipment for Repair

III. Conclusion

FRA’s approach to enhancing the safety of rail transportation is multifaceted. FRA personnel strive daily to implement the comprehensive initiatives for safety assurance and hazard mitigation under the National Rail Safety Action Plan to make rail operations safer for the public and the rail transportation industry.

The Administration’s Federal Railroad Safety Accountability and Improvement Act would enable FRA not only to continue these efforts but to enhance safety in many other ways: such as by allowing FRA (1) to launch a safety risk reduction program that will make railroads more accountable for their safety performance; (2) to issue scientifically sound rules on hours of service that will reduce the fatigue of safety-critical employees; (3) to get vital, up-to-date data on all highway-rail crossings; (4) to foster the development of new crossing-safety technology; (5) to disqualify railroad personnel from safety-sensitive service based on their violation of the Hazardous Materials Regulations; (6) to protect rail safety regulations from legal challenge on the ground that they affect security and eliminate unnecessarily confusing statutory language; (7) to issue temporary waivers of rail safety regulations related to emergencies and emergency response efforts, without legal challenge on notice and comment grounds; (8) to monitor railroad radio communication to enhance FRA’s compliance and accident prevention efforts; and (9) to make provisions for moving equipment with a safety appliance or power brake defect clearer and more consistent with similar FRA provisions.

I look forward to working with the Subcommittee and the Committee as a whole to bring about the enactment of these and the other provisions of the Administration’s bill, and to help make our Nation’s railroad system ever safer. Thank you.

APPENDIX

The Railroad Industry’s Safety Record

The railroad industry’s overall safety record is very positive, and most safety trends are moving in the right direction. While not even a single death or injury is acceptable, progress is continually being made in the effort to improve railroad safety. This improvement is demonstrated by an analysis of the Federal Railroad Administration’s (FRA) database of railroad reports of accidents and incidents that have occurred over the nearly three decades from 1978 through 2006. See 49 CFR part 225. (The worst year for rail safety in recent decades was 1978, and 2006 is the last complete year for which preliminary data are available.) Between 1978 and 2006, the total number of rail-related accidents and incidents has fallen from 90,653 to 12,940, an all-time low representing a decline of 86 percent. Between 1978 and 2006, total rail-related fatalities have declined from 1,646 to 913, a reduction of 44 percent. From 1978 to 2006, total employee cases (fatal and nonfatal) have dropped from 65,193 to 5,065, the record low; this represents a decline of 92 percent. In the same period, total employee deaths have fallen from 122 in 1978 to 16 in 2006, a decrease of 87 percent.

Contributing to this generally improving safety record has been a 74-percent decline in train accidents since 1978 (a total of 2,864 train accidents in 2006, compared to 10,991 in 1978), even though rail traffic has increased. (Total train-miles were up by 8.5 percent from 1978 to 2006.) In addition, the year 2006 saw only 28 train accidents out of the 2,834 reported in which a hazardous material was released, with a total of only 69 hazardous material cars releasing some amount of product, despite about 1.7 million movements of hazardous materials by rail.

In other words, over the last almost three decades, the number and rate of train accidents, total deaths arising from rail operations, employee fatalities and injuries, and hazardous materials releases all have fallen dramatically. In most categories, these improvements have been most rapid in the 1980s, and tapered off in the late 1990s. Causes of the improvements have included a much more profitable economic climate for freight railroads following deregulation in 1980 under the Staggers Act (which led to substantially greater investment in plant and equipment), enhanced safety awareness and safety program implementation on the part of railroads and their employees, and FRA’s safety monitoring and standard setting (most of FRA’s safety rules were issued during this period). In addition, rail remains an extremely safe mode of transportation for passengers. Since 1978, more than 11.2 billion passengers have traveled by rail, based on reports filed with FRA each month. The number of rail passengers has steadily increased over the years, and since 2000 has averaged more than 500 million per year. Although 12 passengers died in train collisions and derailments in 2005, none did in 2006. On a passenger-mile basis, with an average about 15.5 billion passenger-miles per year since the year 2000, rail travel is about as safe as scheduled airlines and intercity bus transportation and is far safer than private motor vehicle travel. Rail passenger accidents–while always to be avoided–have a very high passenger survival rate.

The Reauthorization of Amtrak and the Future of Intercity Passenger Rail Service in the United States

Statement of

The Honorable Joseph H. Boardman
Federal Railroad Administrator

Before The

Subcommittee on Surface Transportation and Merchant Marine
Committee on Commerce, Science and Transportation
United States Senate

February 27, 2007

Mr. Chairman, Ranking Member Smith, I appreciate the opportunity to appear before you today on behalf of Secretary of Transportation Mary Peters and the Bush Administration to discuss the reauthorization of Amtrak and the future of intercity passenger rail service in the United States.

This hearing is particularly timely. If the Congress and the Administration cannot agree on legislation authorizing Amtrak and the Federal role in intercity passenger rail service, October 1 will mark the beginning of the sixth year since the end of the authorization of appropriations contained in the Amtrak Reform and Accountability Act of 1997. Unfortunately, operating without authorization, other than that conferred by annual appropriations acts, is not the exception for Amtrak but is increasingly becoming the rule. Over the last 25 years, Amtrak has had to rely on appropriators rather than authorizers for intercity passenger rail service authorization about 40 % of the time. Thus, Secretary Peters and I both hope that the Congress and the Administration can reach a consensus on intercity passenger rail policy, if not in this session, then certainly during the 110^th Congress.

However, our overall assessment of S. 294 is that it does not include enough meaningful reforms. Amtrak is an outdated monopoly that is based on a flawed business model. It does not provide an acceptable level of service, nor has it been able to control its finances. Our goal is improve the nation’s intercity passenger system to make it responsive to the needs of the traveling public, state and local governments, and ultimately to the taxpayers. To accomplish this, we urge the Congress to pass legislation that reflects the core reform principles originally presented by Secretary Mineta. Passing an authorization that does not fundamentally reform Amtrak -- but provides a higher level of Federal subsidy for it -- is not an acceptable outcome.

The Administration’s View On Intercity Passenger Rail Reform

It’s been nearly five years since then-Secretary of Transportation Norman Y. Mineta presented the Bush Administration’s five principles for intercity passenger rail service reform. These principles are:

Create a system driven by sound economics.
Require that Amtrak transition to a pure operating company.
Introduce carefully managed competition to provide higher quality service at reasonable prices.
Establish a long-term partnership between states and the federal government to support intercity passenger rail service.
Create an effective partnership, after a reasonable transition, to manage the capital assets of the Northeast corridor.
1. The Administration proposed legislation in 2003 and 2005, the Passenger Rail Investment Reform Act (PRIRA), to implement these principles.    While PRIRA is one way to implement the principles, Secretary Mineta maintained that PRIRA was not the only way to achieve these goals. He consistently expressed his willingness to work with the Congress to develop meaningful intercity passenger rail reform legislation acceptable to both the Congress and the Administration.   Secretary Peters shares this view.   However, she believes, as do I, that the principles articulated by Secretary Mineta in 2002 must still be addressed by any Amtrak reauthorization legislation that we could recommend that the President sign. It is from that perspective that I offer some general comments on S. 294, the Rail Investment and Improvement Act.
  Observations on S. 294
  To provide structure, these comments are organized by the Administration’s five principles of reform.
  Create a system driven by sound economics.
  The Administration believes that intercity passenger rail must be a cost-effective provider of transportation services for it to achieve its potential of playing an increasingly more important role in our national transportation system.   Regular reports by the Government Accountability Office, the Department of Transportation’s Inspector General and Amtrak’s own Inspector General have identified how Amtrak has lost the focus of its statutory mandate to “… be operated and managed as a for-profit corporation…”(49 U.S.C. 24301(a)(2)).   Instead, we have been faced with circumstances where 10 percent or more of the federal subsidy for Amtrak has gone to underwrite its food and beverage service while much needed long-term capital improvements to nationally-important infrastructure have been deferred.
  It is for this reason, the Administration believes that intercity passenger rail service must be operated like a business, with priority placed upon the financial bottom line. Nothing in this testimony should be taken as criticism of Amtrak’s current Board of Directors and management who are addressing the Corporation’s financial performance on both the revenue and expense sides of the ledger. There has been progress but this can only be viewed as a beginning effort that must be sustained. It is thus as both a goal and an incentive that the Administration continues to believe that Federal operating subsidies should be eliminated within the next few years.
  S. 294 does not align with the Administration’s vision on this issue. Overall, the bill authorizes approximately $2 billion annually for Amtrak, which represents a significant increase over its current subsidy. The bill offers no programmatic justification for why this amount is needed or how Amtrak should or could spend these sums. Beyond the fact that the bill authorizes funding in excess of even Amtrak’s own estimate of needs (by several hundred million dollars), authorizing such levels undermines the incentive for the railroad to become more efficient and business like.   Amtrak needs to be held accountable for its well-documented inability to control costs and manage its operations. If the goal is to make Amtrak more fiscally responsible and self sufficient, ramping up its Federal subsidy would send the wrong message.
  A key need of any private successful business is to make decisions on when to enter or leave markets based upon economics and not government policy. The reestablishment of a “National Rail Passenger System” in section 201, would work against this end. Specifically, the Administration finds it unacceptable to continue to subsidize poor performing, under-utilized long-distance routes that lose hundreds of millions of dollars annually. The maintenance of a static nationwide network has been routinely cited as a major flaw of Amtrak’s business model. As the GAO recently reported, long-distance trains “show limited public benefits for dollars expended,” and that “these routes account for 15 percent of riders but 80 percent of financial losses.” Rationalizing the route structure must be a key element of any reauthorization legislation.
  Furthermore, the chances of creating a system driven by sound economics will be undermined by altering the structure of Amtrak’s board of directors. The bill proposes comprising the board with equal numbers of members from each political party, all of whom must be vetted through the Congress. Introducing overt partisanship into the selection process would increase the chances the board would become deadlocked on issues and unable to provide decisive leadership for the company. A strong unified board is critical for making changes at Amtrak.
  On the other hand, the establishment of an improved financial accounting system (section 203), recognizes that all businesses need to have accurate accounting of revenue and expenses, not just for the benefit of the independent auditors and shareholders, but for management to make critical business decisions. Work is underway in developing such systems at Amtrak and FRA and this section is welcomed reinforcement.
  Perhaps the greatest opportunity to align S. 294 with the Administration’s vision of intercity passenger rail can be found in section 208 where FRA and Amtrak, in consultation with the Surface Transportation Board and others, would be directed to develop metrics and minimum standards for measuring performance and service quality. Elsewhere (section 210) S. 294 would provide that FRA could withhold funds from routes based upon substandard performance against these standards. The issue that needs to be addressed to make section 208 meaningful is for the Act to spell out the goals to be achieved. The Administration believes that such goals should include elimination of Federal operating subsidy and in the interim, maximizing transportation benefit per dollar of Federal subsidy. Performance measures alone will not address these issues, however. Legislation must ensure that the railroad’s purpose and design allow it to make decisions based on sound economics.
  Require that Amtrak transition to a pure operating company.
  The management of Amtrak has three significant challenges – operating trains in a safe and cost effective manner; maintaining infrastructure essential for intercity, commuter, and freight rail transportation; and developing both internal and external resources to get this done. History has shown that these are three difficult challenges to juggle regardless of the skill and good intentions of those in Amtrak’s management. The most frequent results are priorities and tradeoffs that push both service and infrastructure in the direction of marginally “good enough”.
  The Administration believes that the infrastructure owned by Amtrak, particularly the Northeast Corridor and Chicago Union Station, is too important to be subjected to such tradeoffs.   It appears that S. 294 recognizes this concern. The improved accounting system required in section 203 is intended to be able to “…aggregate expenses and revenues to infrastructure and distinguish them from expenses and revenues related to rail operations.”   In describing the grant process in section 205, the bill provides that funds cannot be moved among accounts – effectively preventing the use of capital funds for operating expenses – without the approval of the Secretary.
  The Administration believes that to improve operating performance, Amtrak needs to shed its responsibilities for maintaining capital infrastructure. This way Amtrak could focus on its core functions with dedicated funds. We have previously presented a plan for accomplishing this goal, though as you know we would be open to other approaches that achieve the same ends.
  Introduce carefully managed competition to provide higher quality service at reasonable prices.
  A fundamental underpinning of the Administration’s vision for the future of intercity passenger rail service is to create opportunities for competition by allowing new operating companies to compete for service contracts with States, groups of States, and regional authorities to operate the trains they believe important. Competition will help control costs and improve service quality. I recognize that some have said that such competition would not work in the passenger rail industry. This is belied, however, by the relatively robust competitive environment that has developed for the operation of commuter trains in recent years. Having States, groups of States, or regional authorities award contracts for passenger service would bring decisions about how much of which services to buy much closer to the customers for those services. That, too, should result in better service.
  S. 294 provides some opportunities for competition. For example, section 211 would permit FRA to select rail carriers that own infrastructure over which Amtrak operates to be considered as a passenger rail service provider, excluding many other potentially qualified operators including states themselves.   Section 218 would establish a mechanism for States to acquire access to Amtrak-controlled equipment if the State selects an entity other than Amtrak to provide intercity passenger rail service. In section 301 (which proposes a new section 24402(b) (3) in Title 49), an applicant for a Federal/State passenger rail capital grant would have to provide a written justification to the Secretary if a proposed operator of the service was not selected competitively. While these sections move in the right direction, overall, the competitive balance is still in Amtrak’s favor. Except for the infrastructure owner, State selected competitors would not have the same right of access to the rail infrastructure as Amtrak and would not have access to the Federal subsidies made available for intercity passenger rail service except that limited amount available through the proposed State grant program. S. 294 needs to establish a more comprehensive and level competitive environment. The Administration envisions a system where states can contract with a company, potentially including Amtrak itself, based on cost and performance criteria. Having a range of available competitors available is key to making managed competition produce improved system performance.
  Establish a long-term partnership between States and the Federal government to support intercity passenger rail service.
  Most publicly supported transportation in the U.S. is undertaken through a partnership between the Federal Government and the States. This model, which has worked well for generations for highways and transit and airports, places the States, and in certain cases their subdivisions, at the forefront of planning and decision-making. States are uniquely qualified to understand their mobility needs and connectivity requirements through statewide and metropolitan area intermodal and multimodal transportation planning funded, in part, by the U.S. Department of Transportation.
  While intercity passenger rail has historically been an exception to the application of this successful model, in recent years some States have taken an active role in their rail transportation services. Several States have chosen to invest in intercity passenger rail service provided by Amtrak as part of strategies to meet their passenger mobility needs. Over the past 10 years, ridership on intercity passenger rail routes that benefit from State support has grown by 73 percent. Over that same time period, ridership on Amtrak routes not supported by States has increased by only 7 percent. In discussions with interested States, the U.S. Department of Transportation has found that the greatest single impediment to implementing this initiative is the lack of a Federal/State partnership, similar to that which exists for highways and transit, for investing in the capital needs of intercity passenger rail.
  S. 294 recognizes an important role for the States in section 302 by requiring development of State rail plans and in section 301 by establishing a program matching Federal/State grants for intercity passenger rail capital investment. While a start in the right direction, the Administration believes that a larger and stronger role needs to be established for the States. Like the Federal Transit grants, we strongly urge that the State matching requirement be increased to 50 percent. This would ensure a State’s full commitment to a project and would make States more accountable for selecting a well-justified project. The State planning provision in section 203 is established as a stand alone rail planning effort.   Planning for rail transportation needs to be fully integrated in the multimodal State-wide planning that States already undertake under 23 U.S.C. 135. It is essential, in my opinion, that States consider all modes when undertaking mobility planning and select the investments that best meet their mobility needs regardless of the mode.
  Decisions on where intercity passenger rail service should be operated, and the schedules and attributes of this service should flow from this State planning and informed decision-making and not the corporate offices of Amtrak. While establishing a Federal/State capital program, section101(c) relegates this program to a secondary importance by continuing to provide the lion’s share of available Federal capital to Amtrak directly instead of to the States. The Administration believes that most if not all of the capital designed for intercity passenger rail improvements should flow through the States who are in the best position to know about mobility needs.
  We fully support creating a Federal-State partnership for investing in capital infrastructure. However, the framework presented in this bill gives too little responsibility to the States, while continuing to funnel most capital funding through Amtrak. Instead, States should be empowered to decide how best to invest in intercity passenger rail facilities.
  Create an effective partnership, after a reasonable transition, to manage the capital assets of the Northeast corridor.
  As discussed earlier, the Northeast Corridor infrastructure places significant burdens on Amtrak’s management. Moreover, this is an essential transportation asset needed by commuters and freight carriers as well as Amtrak. It should be managed for the benefit of the region’s transportation needs and not corporate priorities and the short-term financial fortunes of one should not affect the operations of all. Decisions on essential infrastructure replacements and improvements should not have to compete, as they do today, with decisions on what will be served on Amtrak’s dining cars.
  S. 294 makes some modest movement in this direction. Section 213 requires Amtrak, in consultation with the USDOT and the States, to develop a capital spending plan to return the Northeast Corridor to a state of good repair. This is similar to a condition I required in Amtrak’s FY 2006 grant agreement and I appreciate the reinforcement that comes from inclusion of this provision in the bill. Section 214 would establish advisory committees to promote cooperation in the planning and investment on the NEC and reinforces the STB’s authority over new usage agreements between Amtrak and the commuter rail operators. I believe, however, based upon my past career in State transportation, that more is needed to keep the States from being reluctant partners in making the investments needed to preserve and improve the Corridor. I recognize that creating a decision-making body to control the Northeast Corridor with representatives of the Federal Government, eight States and the District of Columbia will be a daunting task, but this is what is needed.
  Amtrak Debt
  The Administration believes that Amtrak’s debt is a private corporate matter and should remain so. A quarter of a century ago, Congress relieved Amtrak of more than a billion dollars of debt without improving matters noticeably. Amtrak simply incurred even more debt. The Administration strongly opposes any attempts to transfer Amtrak’s debt onto the U.S. Treasury. Amtrak, which incurred its debt independently and beyond the oversight of the government, must be responsible for retiring any debt using all the resources it has available. Amtrak has over $3 billion in revenue annually and therefore has the wherewithal to address its debt without special assistance from the U.S. government. Amtrak’s debt should not be misunderstood to be a de facto obligation of the Federal government. Furthermore, the Administration does not believe that the bill should include a mechanism that would allow Amtrak to incur new government-backed debt.
  Other Provisions
  At two locations, section 101(d) and in section 301 (where it would create a new section 24403 in Title 49), S. 294 recognizes that the Department and FRA require fiscal resources to oversee implementation of intercity passenger rail capital projects and gives FRA the authority to retain a portion of the funds authorized to help fund such oversight. This authority is much needed and is in accord with the Administration’s views.
  Title IV would include in this legislation the “Surface Transportation and Rail Security Act of 2007.” On February 2, 2007, the Acting General Counsel of the Department of Transportation provided the Department’s views on this legislation to Chairman and Ranking Member of the full committee. I wish to incorporate her letter into this testimony by reference.
  The foregoing comments reflect a high level view of major provisions of S. 294. By all means these comments should not be considered comprehensive or the absence of a comment on a particular section be interpreted as Administration support. Staff from the Department and FRA will be available to provide more detailed comments to the staff of this Committee at their convenience.
  S. 294 is a complex bill that reflects much work and thoughtful consideration by the bill’s authors. However, it falls short of making necessary reforms identified by the Administration and other independent experts. Without the changes we have identified, we have serious reservations with the bill.
  Secretary Peters and I look forward to a continuing dialogue with this Committee to develop a much needed consensus that can be embraced by the Congress and the Administration.
  I appreciate your attention and would be happy to answer questions that you might have.
  
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The Issue of Fatigue and its Relationship to the Safety of Railroad Operations

Written Statement of

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

before the

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

February 13, 2007

Federal Railroad Administration
1120 Vermont Avenue, N.W.
Washington, DC 20590
(202) 493-6014

Written Statement of

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

before the

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

February 13, 2007

Chairwoman Brown, Ranking Member Shuster, and other members of the Subcommittee, I am very pleased to be here today, on behalf of the Secretary of Transportation, to testify regarding the issue of fatigue and its relationship to the safety of railroad operations. In my testimony last July 25^thregarding the broader topic of railroad safety human factors, I outlined eight requirements that must be addressed in order to maximize safety and minimize risks:

The worker’s task needs to be well defined, and the rules and procedures for its accomplishment must be effective, clear, and unambiguous.
Rules and procedures must be well understood, and skills must be practiced.
Everyone must be accountable.
The organization must nourish a positive safety culture.
All personnel must learn how to work constructively together.
Individual employees must be fit for duty—rested, free of alcohol and drugs that could impair their faculties, and free of other disabling medical conditions.
Technology must be part of the solution, not part of the problem.
Impediments to working safely must be identified and removed.

Clearly, these elements are not mutually exclusive, and none can be satisfied with full assurance at any given point in time. Our institutions and our people, including ourselves, are imperfect, and given to occasional error. But each of us can do better if we are provided an appropriate work environment, and we can put in place supporting structures that will catch us when we fall. Since I testified on human factors last July, the Federal Railroad Administration (FRA) has been busy with a variety of human-factor initiatives, among them publication of a proposed rule addressing key railroad operating rules and the management of programs of operational tests. Indeed, one of the pillars of FRA’s National Rail Safety Action Plan is the reduction of accidents caused by human factors, and that involves addressing the serious problem of fatigue among railroad employees.

It is particularly timely that the Subcommittee should call for testimony on the subject of fatigue. We have progress to report, and we intend to submit to Congress a rail safety reauthorization bill that will include an important new provision on hours of service reform.

Background

For each of us to be fully effective in our work, we need to be well rested and alert. The issue of fatigue is particularly critical to the safe discharge of duties in railroad operations. This was first recognized by the Congress 100 years ago, with passage of the Hours of Service Act.

What is “fatigue”? In order to be scientifically sound, we will use the definition found in the Department of Transportation’s (DOT) March 1999 policy statement on fatigue: “a complex state characterized by a lack of alertness and reduced mental and physical performance, often accompanied by drowsiness.” Fatigue certainly includes lack of alertness (i.e., sleepiness), but also involves compromised attention to detail and diminished ability to reason rapidly and clearly in order to respond to changing circumstances. The DOT policy statement goes on to summarize the sources of fatigue.

Fatigue may be caused or exacerbated by any or all of the following: lack of sleep, disruptive work/rest cycles, neurological conditions, excess mental or physical workload, exposure to extreme physical conditions, emotional stress, the use of drugs or alcohol, illness, and/or monotony.

FRA has sought to promote railroad employees’ fitness for duty through enforcement of the hours of service laws (which, since 1994, have been codified as positive law at 49 U.S.C. 21101 et seq.), as well as through joint efforts with railroads and employee organizations, research, analysis, and participation in the North American Rail Alertness Partnership (NARAP). In addition, both FRA and the National Transportation Safety Board (NTSB) have sought to understand the role of fatigue in significant rail accidents.

When I appeared before the Subcommittee last July, I reviewed some of the programs in which we were participating that were directed at risk reduction with respect to fatigue. Today, I’d like to review with you the culmination of rapid developments that have occurred over the past several years that have improved our understanding of the origins and dimensions of fatigue and that have provided better tools for fatigue prevention and mitigation. Then I’d like to describe some of the new efforts underway to address fatigue, and finally I’d like to ask for your consideration of the hours of service reform provision that FRA intends to submit.

Growing Knowledge of Fatigue, Better Tools to Prevent and Mitigate It

Both railroads and employee organizations are heavily invested in their work practices and collective bargaining agreements. Railroads owe their shareholders a duty to make a reasonable profit, and they owe their customers reliable service. Labor organizations must consider the interest of some members in maximizing earnings. Neither labor nor management is inclined to undertake or sustain initiatives that, however well intentioned, do not contribute to the overall well-being of the industry in a way that can be clearly established. Railroads operate 24 hours each day, and the demands of the market are constantly shifting. Take these factors together, and they describe a situation that is hostile to fatigue management. Let me be clear that it is not the railroad executives, or the rail labor executives, or their colleagues who are hostile. Quite the contrary; rather, it is the institutional situation.

Accordingly, it has been critically important that we clearly understand the true dimensions of the fatigue problem and that we formulate approaches that can effectively address the problem while avoiding unnecessary disruptions of stakeholder expectations and transportation service.

Over the past two decades, significant progress has been made in sleep science and in our understanding of the role of fatigue in our daily lives. The NTSB has played a salutary role in calling out fatigue as a factor in at least 18 rail accidents since 1984. FRA-funded research has used an integrated strategic planning and evaluation strategy of field data collection, laboratory simulations, and analysis and evaluation of Fatigue Management Systems to enrich our knowledge of fatigue as it affects employees in a wide range of railroad occupations. This multi-faceted research has resulted in a strategic fatigue roadmap for FRA that identifies work scheduling as one of the top policy issues, and a key starting point for addressing the fatigue problem in the rail industry today.

FRA’s analysis of data gathered by our Switching Operations Fatality Analysis (SOFA) Working Group indicates that fatigue (largely related to biological rhythms or time of day) was likely responsible for more than 22 percent of the risk of SOFA severe incidents from 1997 through 2003. Last July, FRA released the Collision Analysis Report, which identified compromised alertness as a likely significant factor in 29 percent of the collisions reviewed in detail by a panel of railroad subject matter experts representing labor, management, and the Federal government.

On November 29, 2006, we announced the release of an important new study entitled Validation and Calibration of a Fatigue Assessment Tool for Railroad Work Schedules (the Validation Study), which confirmed the applicability of a Department of Defense fatigue model to railroad operations. The Summary Report from that study described the relationship between fatigue and human-factor train accidents. The study is the largest and most rigorous of its kind, based on review of 30-day work histories of locomotive crews involved in 400 human-factor and 1,000 other train accidents. The data from the model validation study showed that there is a reliable relationship between the time of day of human-factor accidents and the expected, normal circadian rhythm. This circadian pattern was not reliably present for accidents not caused by human factors. The risk of a human-factor accident was increased by 20 percent by working during the hours from midnight to 3 a.m.

The results of this accident analysis study indicated that a fatigue model could predict an increased risk of human-factor accidents under certain conditions that cause fatigue. A bio-mathematical fatigue model, known as SAFTE (Sleep, Activity, Fatigue, and Task Effectiveness), was used to estimate crew cognitive effectiveness based entirely on work schedule information and opportunities to obtain sleep. Effectiveness is a metric that tracks speed of performance on a simple reaction-time test and is strongly related to overall cognitive speed, vigilance, and the probability of lapses. The model rates effectiveness on a scale from 0 to 100. There was a reliable linear relationship between crew effectiveness (fatigue) and the risk of a human-factor accident: as crew effectiveness declined, human-factor accident risk went up. No such relationship was found for accidents not caused by human factors. This result satisfied the criteria for model validation. The risk of human-factor accidents was elevated at any effectiveness score below 90 and increased progressively with reduced effectiveness. There was a reliable time-of-day variation in human-factor accidents, but not in accidents not caused by human factors. Human-factor accident risk increased reliably when effectiveness was below 70, a value that is the rough equivalent of a 0.08 blood alcohol level or being awake for 21 hours following an eight-hour sleep period the previous night. Below an effectiveness score of 70, accident cause codes (codes defined by FRA that indicate the factors that caused the accident, such as passing a stop signal or exceeding authorized speed) were of the sort expected in situations involving fatigue, confirming that the relationship between accident risk and effectiveness was meaningful. If an individual had an effectiveness score of less than or equal to 50, his or her chance of having a human-factor accident was increased 65 percent.

Although the Validation Study was designed to test a fatigue model rather than determine the role of fatigue in specific accidents, the data from the study necessarily imply two conclusions:

From the data available, the majority of human-factor train accidents do not involve fatigue.
However, a significant number of the most serious accidents (e.g., violation of a mandatory directive or failure to comply with a stop signal) do appear to include fatigue as a significant factor.

FRA has explored the dimensions of the fatigue issue in the working lives of not only train crew members but also other categories of railroad employees. In a final report dated October 2006, entitled Work Schedules and Sleep Patterns of Railroad Signalmen. FRA posits that signal maintainers could be adversely affected by unscheduled trouble calls on top of their normal eight-hour workdays. This survey-based study was facilitated by the Brotherhood of Railroad Signalmen. In a final report published in December 2006, entitled Work Schedules and Sleep Patterns of Railroad Maintenance of Way Workers, FRA researchers described the challenges that track workers face in remaining well rested. This report was facilitated by the Brotherhood of Maintenance of Way Employes Division. It is important to note that neither of these studies described any situation of egregiously overscheduled employees. Rather, the studies provide an enhanced foundation for fatigue management in those occupations.

The Collision Avoidance Working Group (CAWG), which produced the Collision Analysis Report referred to above, examined 65 main-track train collisions in which human-factor causes contributed to trains exceeding their authority by passing a stop signal, failing to comply with a restricted speed signal, or entering territory without authority. CAWG found that 19 of the 65 accidents (29 percent) involved “impaired alertness” (defined as failing to take appropriate actions to avoid the accident). In the accident sample for the model validation study, 38 percent of similar accidents had effectiveness scores of 70 or below. Nearly all of the 19 CAWG collisions occurred between midnight and eight in the morning, which indicates a strong circadian effect.

Industry, FRA, and Joint Fatigue Management Efforts

In the railroad safety effort, our common perception of the problem of fatigue is perhaps best exemplified by the service crisis of 2004. In that year, a major Western railroad found itself with too few employees and more traffic than it could efficiently handle. The result was clogged main lines, hundreds of “recrews” daily (as legal limits on hours of service stopped trains en route), confusion and delays in getting crews off trains, and some serious accidents that may have arisen from fatigue. Other carriers faced challenges as well. Some local labor agreements that might have acted as a check on the problem had been abandoned, either by the railroad or the labor organizations. FRA tried to help through the Safety Assurance and Compliance Program, but solutions did not take effect for some time. All concerned will freely concede that it was not their finest hour.

We are past that period of time, but we know that over-scheduling can and does occur, and the future will have its own challenges. The national rail system is very robust and capable, but it is subject to disruptions from natural disasters, unexpected service demands, and infrastructure needs that are not promptly addressed. These circumstances, and everyday difficulties, present the risk that work schedules may not be effectively managed.

Even given the best work-scheduling practices, fatigue remains a concern in any transportation mode because opportunities for rest must be effectively utilized, and individual employees may be prevented from taking advantage of these opportunities by sleep disorders, poor sleep hygiene, the demands of normal family life, or other factors. It is critically important that employees know how to get effective rest and that they appreciate the importance of doing so. As will be discussed below, FRA has provided tools and funding to assist the railroad industry in evaluating work schedules, and these efforts are sure to continue.

Over the past decade, labor and management, supported by FRA, have made significant efforts to address these needs. At the national level, NARAP serves as an ongoing forum for dialogue regarding present challenges, results of research, and products of voluntary efforts. Railroads and rail labor organizations have made significant efforts to deliver fatigue training programs and ensure ongoing awareness. Major railroads have adopted policies to permit individual crew members to take restorative short naps on board trains while stopped.

Railroads, sometimes in concert with labor organizations, have tried a remarkable variety of scheduling options to prevent fatigue. Among the options implemented by the carriers are assigned workdays (e.g., either seven days on and one day off, or eight days on and two days off); minimum undisturbed rest hours (normally 10 hours); automatic markups (employees returning from extended absences not assigned duty until the next day);[1] and use of “call windows,” in which employees are assigned a specific time period for reporting for duty.[2]

While the industry has taken significant steps toward addressing fatigue issues, the various mitigation measures implemented have resulted in only limited success at either the industry-wide or carrier-system-wide level. This variance is due to a number of factors ranging from operating idiosyncrasies (market demands), to staffing and retention issues, and provisions in collective bargaining agreements. While programs related to minimum undisturbed rest are common throughout the industry, implementation varies significantly between carriers and even among specific locations within one carrier’s organization. For example, a carrier’s policies related to minimum undisturbed rest hours at one location may be mandatory, while at another location the policies are optional. This dichotomy also exists for other fatigue mitigation measures.

As evidenced by analysis of data in the Validation Study, which included the worst of the service crisis, these efforts have had some success. The Validation Study clearly reflects the fact that, assuming that the railroad operating employees have taken advantage of sleep opportunities, most of these employees work at a high level of effectiveness most of the time. However, given the very uneven application of fatigue countermeasures in the industry, we cannot say that the threat of fatigue-caused accidents and injuries has abated. Clearly, then, more comprehensive responses are warranted.

Given the availability of the recently validated and calibrated SAFTE fatigue model, there are new opportunities to schedule the work of railroad operating employees more carefully. To hasten the implementation of corporate fatigue risk management strategies, FRA has initiated a complementary effort to develop a workforce fatigue risk management tool called the Schedule Fatigue Risk Management (SFRM) Tool. This tool uses the same methodology as the Validation Study but is able to process work schedule data from an entire workforce and provide standardized reports to assist a company in evaluating levels of work schedule-induced fatigue that exist at specific work sites or within certain work groups. By incorporating the features of SFRM and SAFTE under a single “umbrella,” the railroad industry will have the ability to assess the impact of fatigue from both a systemic and individual perspective.

With funding from FRA, Union Pacific has entered into a cooperative arrangement with the Institutes for Behavior Resources (IBR) and the developer of the SAFTE model to share work schedule information on employee work groups within the Union Pacific system. IBR will provide Union Pacific with detailed fatigue evaluations across work groups and geographic locations as part of a comprehensive system-wide fatigue analysis using SFRM. Following this initial evaluation, IBR will design a program that the Union Pacific crew management department can use to routinely evaluate fatigue using the SAFTE model. We believe other major railroads will take advantage of this developing analytical capability, but we will be certain only as we see the tools matured and applied.

FRA’s Office of Research and Development and Office of Safety are currently working to establish a state-of-the-art educational website that employees and small railroads can utilize to provide fatigue management information and tools. The website will include items such as sleep disorder screening that are tailored to the railroad workplace. The major freight railroads are working separately with the University of Denver on a website that will provide additional, and updated, fatigue training curricula for use by railroad training departments.

The NTSB has emphasized the role of sleep disorders in transportation accidents, and we recognize that providing fatigue management information alone may not be sufficient. In October 2004, FRA published a safety advisory in the Federal Register, urging railroads to address sleep disorders through progressive company policies. This past September, FRA’s Railroad Safety Advisory Committee adopted a task to develop recommendations on medical standards for safety-critical railroad employees. Management of sleep disorders is among the important elements of that effort, which is now well underway.

It is important to remind ourselves that fatigue affecting individuals occurs in a larger context. As we noted in reciting the discussion of fatigue in DOT’s policy statement, reduced effectiveness associated with fatigue may derive, in part, from more than simply unfavorable work schedules. For instance, depression can adversely affect sleep and contribute to fatigue. In 2006, FRA entered into two contracts with a Class I carrier to study the symptoms of sleep disorders and depression within the industry. Findings from these studies will be available in mid-2007. Another year-long contract will soon be awarded to study the role of stress in performance and safety. Objectives of these studies include identifying employees with medical ailments, establishing screening and diagnostic protocols, and implementing comprehensive programs of intervention. The target audiences for these studies are primarily employees in the operating crafts (e.g., engineers and conductors). Participation in the studies is voluntary, and the cooperation and support of labor officials are essential.

Finally, we know that not all risk associated with fatigue and other human performance challenges can be eliminated. For example, the Validation Study called attention to the fact that, even under the best of circumstances, those working in the early morning hours are not as effective as they would be working during other periods. Accordingly, it is important that we fashion strategies that guard against the consequences of reduced effectiveness. Crew Resource Management (CRM) techniques, which encourage employees to watch out for one another and to challenge one another to work safely, have been applied somewhat sparingly in the training of railroad employees. FRA has been working with the BNSF Railway Company (BNSF) to develop more effective CRM training. This year, we will also publish a study by the Texas Transportation Institute addressing the business case for CRM.

Innovative programs such as the Close Call Confidential Reporting System, which is proposed in the 2008 budget, promise new insights into the causes of human-factor accidents and incidents, and FRA looks forward to harvesting insights from the first pilot project, which is now underway, and from subsequent implementations.

With respect to train operations, Positive Train Control (PTC) systems offer significant promise of providing a safety net for occasional errors associated with fatigue. In December, FRA approved the first Product Safety Plan for a PTC system designed to serve the freight railroad industry—BNSF’s Electronic Train Management System. We are working aggressively to facilitate introduction of this technology.

Taken together with other literature, the Validation Study provides a scientific basis for managing the work schedules of railroad operating employees. As noted above, that study indicates that most train and engine crews have ample opportunity to gain rest and remain effective most of the time. Coupled with more refined tools to deal with those schedules that do present excessive risk, this realization provides a foundation for optimism that the railroads and labor organizations will deal with this issue in ways that do not interfere significantly with settled expectations regarding availability of crews and the opportunity to achieve earnings.

If the Subcommittee would like more detailed information regarding FRA’s fatigue research efforts and fatigue management initiatives, we would be happy to schedule a briefing.

Role for Legislation

The Secretary intends to submit to the Congress the Bush Administration’s rail safety reauthorization bill, the Federal Railroad Safety Accountability and Improvement Act. This bill would reauthorize appropriations for FRA to carry out its rail safety mission for four years and proposes a number of other measures that would significantly advance rail safety, primarily by fostering railroads’ accountability for their safety performance, by reducing the fatigue of safety-critical workers, and by preventing collisions at highway-rail crossings. Given the subject of this hearing, I will focus only on the fatigue provision of the bill.

To help improve the alertness of railroad operating personnel, the bill would permit FRA, as the Secretary’s delegate, to replace the hours of service laws with scientifically based regulations, after first seeking consensus recommendations from the agency’s Railroad Safety Advisory Committee. The hours of service laws, first enacted in 1907 and currently delegated to FRA to administer, contain no substantive rulemaking authority over duty hours. FRA’s lack of regulatory authority over duty hours, unique to FRA among all the safety regulatory agencies in the Department, precludes FRA from making use of almost a century of scientific learning on the issue of sleep-wake cycles and fatigue-induced performance failures. FRA’s general safety rulemaking power under chapter 201 of title 49 would provide ample authority to deal with the entire subject of maximum work periods and minimum rest periods in light of current research on those subjects; however, the hours of service laws effectively bar such a rational regulatory initiative because the chapter 201 authority may be used only to supplement the pre-1970 railroad safety statutes, not to supplant them. Where the hours of service laws set a rigid requirement, e.g., maximum on-duty and minimum off-duty periods for train crews, a regulation could not lawfully vary from them. FRA would refrain from adopting new requirements relating to fatigue if the agency determines that voluntary activities are adequately addressing topics of concern, and the agency would be authorized to allow a railroad to comply with an approved fatigue management plan as an alternative to compliance with the usual regulatory regimen. The regulations that would be issued under the provision would be subject to review under the Congressional Review Act (5 U.S.C. 801) as the sole and exclusive means of review.

Conclusion

Fatigue presents risk in any mode of transportation, as well as in other industrial workplaces. The railroad industry and its employees understand the factors that cause fatigue, and they have made significant strides in addressing them. Nevertheless, fatigue continues to contribute to railroad accidents and personal injuries. We must do better in preventing and managing it.

I think a reasonable person could look at the objective situation and find much basis for optimism. Consider these points:

Although, by all accounts, fatigue is still a problem, it is not at epidemic levels in the industry. This means that we should be able to address the fatigue that does remain, at an affordable cost to employers and employees.
Thanks to the growing body of knowledge regarding accident causation, we know that we have an issue that we cannot avoid. The time to hesitate, if there was such a time, is certainly over now.
The Validation Study and other work now confirm our ability to create models that can undergird future crew scheduling, and a major railroad is already working with FRA to make use of it. We have the potential to manage this issue using a performance-based approach.
Leaders of rail labor organizations are showing courage by taking on this issue, and this Congress has shown a bipartisan interest in addressing fatigue in the railroad industry.
The Department of Transportation intends to offer an important hours of service reform proposal that promises real change in this safety-critical area.

When you put all of this discussion together, it is good news for safer rail transportation and for the people who provide it. We can do better in helping to keep rail employees alert and effective through careful scheduling of work, and we can help those employees contribute through training, awareness efforts, and management of sleep disorders. We are eager to move forward with all of the efforts I have described. Thank you for the opportunity to address this important issue.

[1] Automatic markup procedures help to ensure that employees returning from extended leave have the opportunity to obtain adequate rest prior to a duty assignment. Prior to implementation of these procedures, employees returning to work could be assigned duties commencing at midnight regardless of their sleep patterns during leave. In the absence of these procedures, employees could experience symptoms of fatigue in the form of performance degradation and diminished cognitive abilities. The collision between Union Pacific Railroad Company (Union Pacific) trains near Delia, Kansas on July 2, 1997 (RAR-99/04) resulted, in part, from the absence of adequate markup procedures

[2] The use of call windows is intended to provide an employee a predictability indicator, within a specific period of time, of his or her next scheduled duty assignment. Call windows are normally four-hour periods, e.g., 8:00 a.m. to noon, and the selection of a specific call window is governed by collective bargaining agreements, including seniority rights.

The Reauthorization of the Federal Railroad Administration’s (FRA) Safety Program

Written Statement of

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

before the

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

January 30, 2007

Chairwoman Brown, Ranking Member Shuster, and other members of the Subcommittee, I am very pleased to be here today on behalf of the Secretary of Transportation to testify about the reauthorization of the Federal Railroad Administration’s (FRA) safety program. My testimony will begin with an overview of how FRA is working daily to reduce both the frequency and the severity of railroad accidents. My testimony will then highlight the real and substantial progress FRA has made in implementing our National Rail Safety Action Plan. Finally, I will touch on our passenger safety rulemakings and other key safety initiatives.

FRA’s Railroad Safety Program

FRA is the agency of the U.S. Department of Transportation (DOT) charged with carrying out the Federal railroad safety laws. These laws provide FRA, as the Secretary’s delegate, with very broad authority over every area of railroad safety. In exercising that authority, the agency has issued and enforces a wide range of safety regulations covering a railroad network that employs more than 232,000 workers, moves more than 42 percent of all intercity freight, and provides passenger rail service to more than 500 million persons each year.

FRA’s regulations address such topics as track, passenger equipment, locomotives, freight cars, power brakes, locomotive event recorders, signal and train control systems, maintenance of active warning devices at highway-rail grade crossings, accident reporting, alcohol and drug testing, protection of roadway workers, operating rules and practices, locomotive engineer certification, positive train control, and use of train horns at grade crossings. FRA currently has active rulemaking projects on a number of important safety topics, many of which will be described later in this testimony. FRA also enforces the Hazardous Materials Regulations, promulgated by DOT’s Pipeline and Hazardous Materials Safety Administration (PHMSA), as they pertain to rail transportation.

FRA has an authorized inspection staff of about 400 persons nationwide, distributed across its eight regions. In addition, about 160 inspectors employed by the approximately 30 States that participate in FRA’s State participation program also perform inspections for compliance with the Federal rail safety laws. Each inspector is an expert in one of five safety disciplines: Track; Signal and Train Control; Motive Power and Equipment; Operating Practices; or Hazardous Materials. FRA also has 18 full-time highway-rail grade crossing safety positions in the field. Every year FRA’s inspectors conduct thousands of inspections, investigate more than 100 railroad accidents, investigate hundreds of complaints, develop recommendations for thousands of enforcement actions, and engage in a range of educational outreach activities on railroad safety issues, including educating the public about highway-rail grade crossing safety and the dangers of trespassing on railroad property.

FRA closely monitors the railroad industry’s safety performance, and the agency uses the extensive data gathered to guide its accident prevention efforts. FRA strives to continually make better use of the wealth of available data to achieve the agency’s strategic goals. FRA also sponsors collaborative research with the railroad industry to introduce innovative technologies to improve railroad safety. Finally, under the leadership of the U.S. Department of Homeland Security (DHS), FRA actively plays a supportive role in the Federal effort to secure the Nation’s railroad transportation system.

The National Rail Safety Action Plan

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

In May 2005, DOT and FRA announced the National Rail Safety Action Plan, a blueprint to comprehensively address critical safety issues facing the railroad industry with the following strategy:

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

The Action Plan includes initiatives intended to:

Reduce train accidents caused by human factors;
Address fatigue;
Improve track safety;
Enhance hazardous materials safety and emergency preparedness;
Strengthen FRA’s safety compliance program; and
Improve highway-rail grade crossing safety.

The causes of train accidents are generally grouped into five categories: human factors; track and structures; equipment; signal and train control; and miscellaneous. In the 5 years from 2001 through 2005, the great majority of train accidents resulted from human factor causes or track causes. Accordingly, human factors and track are the major target areas for improving the train accident rate.

Reducing Train Accidents Caused by Human Factors

Development of Rulemaking to Address Leading Causes of Human Factor Accidents

Accidents caused by human factors constitute the largest category of train accidents, accounting for 37 percent of all train accidents in the 5 years from 2001 through 2005. Some human factors are addressed squarely by FRA regulations. For example, FRA’s regulations on alcohol and drug use by operating employees were the first such standards in American industry to incorporate chemical testing, and they have been very successful in reducing accidents resulting from the use of illicit substances. FRA also has regulations on locomotive engineer certification, and enforces the Federal hours of service restrictions, which are wholly governed by statute. However, FRA has been concerned that several of the leading causes of human factor accidents are not presently covered by any specific Federal rule, and these causes can have serious consequences.

In May 2005, FRA asked its Railroad Safety Advisory Committee (RSAC) to develop recommendations for a new human factors rule to address the leading causes of human factor accidents. This effort helped lead to FRA’s issuance of a Notice of Proposed Rulemaking (NPRM) in October 2006, to Federalize core railroad operating rules governing the handling of track switches, leaving cars in the clear, and shoving rail cars. See 71 FR 60371. Overall, the rule proposes to establish greater accountability on the part of railroad management for the administration of railroad programs of operational tests and inspections, and greater accountability on the part of railroad supervisors and employees for compliance with those operating rules that are responsible for approximately half of the train accidents related to human factors. FRA believes this will contribute positively to railroad safety, by emphasizing the importance of compliance with fundamental operating rules and providing FRA a more direct means of promoting compliance. The final rule is expected to be issued later this year.

The final rule is intended to supersede Emergency Order No. 24, which FRA issued in October 2005, in response to an increasing number of train accidents caused by hand-operated, main track switches in non-signaled territory being left in the wrong position and the potential for catastrophic accidents, such as the one in Graniteville, South Carolina, in January 2005, which resulted in nine deaths. The Emergency Order requires special handling, instruction and testing of railroad operating rules pertaining to hand-operated main track switches in non-signaled territory, and is expected to remain in place until the final rule addressing the major causes of human factor accidents is promulgated and becomes effective.

Launch of “Close Call” Pilot Research Project

“Close calls” are unsafe events that do not result in a reportable accident but could have done so. FRA is working to better understand these phenomena. In March 2005, FRA completed an overarching Memorandum of Understanding (MOU) with railroad labor organizations and management to develop pilot programs to document the occurrence of close calls. In other industries, such as aviation, adoption of close-call reporting systems that shield the reporting employee from discipline (and the employer from punitive regulatory sanctions) has contributed to major reductions in accidents. In August 2005, FRA and DOT’s Bureau of Transportation Statistics (BTS) entered into an MOU stipulating that BTS will act as a neutral party to receive the close-call reports and maintain the confidentiality of the person making the report. Four railroads have expressed interest in taking part in this project, and participating railroads will be expected to develop corrective actions to address the problems that may be revealed. Union Pacific Railroad Company (UP) has signed an Implementing MOU for its North Platte Service Unit to be the first site for this project. A kickoff meeting with UP is slated for early next month, and data collection is expected to begin immediately thereafter. Discussions are also underway with BNSF Railway Company (BNSF) and Canadian Pacific Railway for second and third sites for this project.

Development and Implementation of Promising Technologies to Improve Safety

Technology can be a tremendous aid to safety, providing a safety net when human beings err or become incapacitated.

Positive Train Control (PTC) System. PTC systems are capable of automatically

preventing train collisions (with positive stop protection), preventing overspeed derailments, and protecting roadway workers within their authorities. Recognizing the safety benefits of PTC systems, as well as their potential to improve rail efficiency by safely increasing the capacity of high-density rail lines, FRA issued a final rule in 2005 setting out Performance Standards for Processor-Based Signal and Train Control Systems. See 49 CFR Part 236. Earlier, FRA worked with Amtrak and other stakeholders to assist in the development of PTC systems in support of high-speed passenger rail. The results included the Advanced Civil Speed Enforcement System, which, combined with cab signals and automatic train control, safeguard operations up to 150 mph on the Northeast Corridor. In addition, the Incremental Train Control System was deployed on Amtrak’s Michigan line and currently supports operations up to 95 mph (planned for 110 mph when validation and verification work is complete on the final system).

This month, FRA approved operational use of the first PTC system intended for general use, BNSF’s Electronic Train Management System. The rail industry is actively advancing the implementation of PTC technology as other railroads—among them, UP, Norfolk Southern Railway Company, CSX Transportation, Inc. (CSX), and the Alaska Railroad—are all making significant strides to develop PTC systems. The Association of American Railroads (AAR) will play a critical role in finalizing interoperability requirements for these technologies.
Switch Point Monitoring System and Other Systems. There are steps that can be

taken short of PTC to reduce risk in non-signalized territory while PTC systems are deployed. In November 2005, FRA partnered with BNSF through a $1 million Switch Point Monitoring System pilot project. The main objective of the project is to develop a low-cost system that electronically monitors for and reports a misaligned switch on main line track located in dark (non-signaled) territory. The project involves the installation of wireless communication devices at 49 switches along a 174-mile section of non-signaled BNSF track between Tulsa and Avard, OK. Train dispatchers at an operations center in Fort Worth, TX, are monitoring the devices to detect when the hand-operated switches are set in the wrong position. If a switch is misaligned, the dispatcher directs a train to slow down or stop until railroad crews in the field confirm it is safe to proceed. Along with the human factors rulemaking, this new switch monitoring system may prevent future train accidents such as the one at Graniteville, which resulted from an improperly lined main track switch in non-signaled territory.

BNSF is also demonstrating rail integrity circuits, which can detect broken rails and alert the dispatcher much in the same way as the switch point monitoring technology. Both of these technologies are “forward-compatible” with PTC, meaning that they can be integrated into PTC as it is deployed on the subject territories.
Electronically Controlled Pneumatic (ECP) Brakes. In 2005, 14 percent of main

track, human factor-caused accidents involved improper train handling or misuse of the automatic braking system. A significant number of these events might have been avoided if locomotive engineers were given a more suitable air brake system to use as a tool. During the 1990s, the AAR led an industry effort to develop ECP brakes, which use an electronic train line to command brake applications and releases. ECP brakes apply uniformly and virtually instantaneously throughout the train, provide health status information on the condition of brakes on each car, respond to commands for graduated releases, and entirely avoid runaway accidents caused by depletion of train-line air pressure. ECP brakes shorten stopping distances on the order of 40 to 60 percent, depending on train length and route conditions. In turn, shortened stopping distances mean that some accidents that occur today might be avoided entirely, and some others might be reduced in severity. (I would hasten to add that our ongoing safety analysis confirms that most grade crossing accidents, in particular, could not be prevented by ECP brakes, because motorist actions become manifest only seconds before the collision.)

FRA commissioned a study released last year that identified and quantified significant business benefits that could be realized with this technology through greater operational efficiencies and suggested a migration plan that would start with unit train operations, logically focused initially on the Powder River Basin coal service. Since then, FRA has been working with the AAR, railroads, vendors and the coal sector to generate momentum toward implementation of this cost- and, potentially, life-saving technology. In this regard, ECP brakes are one of the key features of FRA’s Advanced Concept Train, a train specially designed and equipped with other improvements that is helping to demonstrate the potential of these new technologies across the Nation. FRA is also planning to develop a revised set of requirements for train air brakes that are more suitable for this new technology, by issuing a notice of proposed rulemaking some time in the near future. Until a final rule is issued amending the train air brake requirements, we remain ready to review and respond to requests for relief from railroads interested in proceeding with ECP technology, and are in the process of reviewing one now.

Addressing Fatigue

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

I appreciate the Subcommittee’s recognition of the importance fatigue has on railroad safety by devoting a separate hearing on this matter next month. As a result, I will not take up the Subcommittee’s time on this issue at this hearing and look forward to sharing with the Subcommittee in depth FRA’s current efforts and plans to address railroad fatigue.

Improving Track Safety

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

Demonstration of New Technology to Detect Cracks in Joint Bars

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

Requirements for Enhanced Capability and Procedures to Detect Track Defects

FRA is also addressing joint bar cracks on the regulatory front. As a direct result of a Congressional mandate in the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) and of National Transportation Safety Board (NTSB) recommendations arising out of various accidents involving cracked joint bars, FRA published an interim final rule (IFR) in November 2005 concerning the inspection of joints in continuous welded rail (CWR) track. Subsequently, after soliciting public comment and advice from RSAC’s Track Safety Standards Working Group, FRA issued a final rule in October 2006, which adopted portions of the IFR and made changes to other provisions. The final rule requires track owners to develop and implement a procedure for the detailed inspection—including on-foot inspection—of CWR rail joints, to identify joint bar cracks and joint conditions that can lead to the development of these cracks. Track owners must now also create and submit fracture reports to FRA whenever a cracked or broken joint bar is discovered in CWR track. Based on the data that FRA will collect from the fracture reports, FRA will establish a program to review the root causes of joint bar failure. In addition, the rule encourages railroads to develop and adopt automated methods to improve the inspection of rail joints in CWR track.

Deployment of Two Additional Automated Track Inspection Vehicles

Subtle track geometry defects, such as rails being uneven or too far apart, are difficult to identify during a typical walking or hi-rail inspection. That is why FRA has developed automated track inspection and research vehicles to enhance the capability to identify problems, and ensure that they are addressed, before a train accident occurs. In May 2005, FRA added the T-18 vehicle to its fleet. Two more inspection vehicles with similar technology are currently being readied (one that is self-propelled and one that is towed), and they are expected to be delivered within the next 2 months. Once fully operational, they will allow FRA to inspect nearly 100,000 track-miles each year, three times as much as FRA currently inspects. This additional capability will permit FRA to inspect more miles of major hazardous materials (hazmat) and passenger routes, while also having the ability to follow up more quickly on routes where safety performance is substandard.

Improving Hazardous Materials Safety and Emergency Response Capability

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

It is important to emphasize that these safety initiatives are in addition to and complement efforts by FRA, DHS and its Transportation Security Administration (TSA), and PHMSA to provide for the security of hazmat transported by rail. A major component of this effort has been PHMSA’s March 2003 regulation requiring each shipper and carrier of significant quantities (placardable amounts) of hazmat to adopt and comply with a security plan. See 49 CFR § 172.800 et seq. Last December, in consultation with FRA and TSA, PHMSA published an NPRM to revise current requirements for the security of hazmat transported by rail, with particular focus on toxic inhalation hazard materials, such as chlorine and anhydrous ammonia. See 71 FR 76833. This proposal would require consideration of both safety and security in evaluating routing of hazardous materials and the mitigation of hazards on the routes selected. PHMSA and FRA will hold two public meetings, one on February 1, in Washington, D.C., and the second on February 9, in Dallas, Texas, to obtain oral comments on the proposed requirements, with a view to issuing a final rule.

The safety and security of hazmat transported by rail are often intertwined, and I would be glad to provide the Subcommittee with additional information concerning the many security initiatives in this area.

Enhancements to Emergency Response Readiness

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

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

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

In addition, another pilot project is underway to evaluate the use of Railinc Corporation’s Freightscope, a program that provides equipment search capabilities for hazmat shipments. The system was installed at CHEMTREC in December 2006, and it has the potential to more rapidly provide information about hazmat shipments on shortline and regional railroads to CHEMTREC watchstanders to improve information availability and reduce delays in emergency response. The pilot project is scheduled to last a year, and includes various tests to determine the system’s effectiveness. Two tests have already been conducted with good results.

Improvements in Tank Car Integrity through Research and Development

Prior to the August 2005 enactment of SAFETEA-LU, FRA had initiated tank car structural integrity research stemming from the circumstances of the 2002 derailment in Minot, North Dakota, involving the release of anhydrous ammonia from a tank car punctured during the derailment. Current research involves a three-step process to assess the effects of various types of train accidents (e.g., a derailment or collision) on a tank car. The first phase is the development of a physics-based model to analyze the kinematics of rail cars in a derailment. The second phase is the development of a valid dynamic structural analysis model; and the third phase is an assessment of the damage created by a puncture and entails the application of fracture mechanics testing and analysis methods. DOT’s Volpe National Transportation Systems Center (Volpe Center), part of the Research and Innovative Technology Administration (RITA), is doing the modeling work now, and FRA will dovetail this ongoing research with the requirements of the statute. FRA, in conjunction with PHMSA, hopes to develop new hazardous material tank car safety standards in 2008.

In addition to focusing on strengthening the structural integrity of the tank car to reduce the probability that a collision will result in release of a hazardous commodity, the project is also evaluating technology such as pushback couplers, energy absorbers, and anti-climbing devices designed to prevent a train derailment in the first place. We are currently consulting with railroads, shippers, and car manufacturers and have solicited public comments in this initiative.

To further these efforts, FRA just signed a Memorandum of Cooperation with Dow Chemical Company, UP, and the Union Tank Car Company to participate in their Next Generation Rail Tank Car Project. The agreement provides for extensive information sharing and cooperation between ongoing FRA and industry research programs to improve the safety of rail shipments of hazardous commodities such as toxic inhalation hazards and high-risk gases and liquids.

Further, in September 2006, FRA awarded $200,000 to test sample tank car panels with various coatings to determine their ability to prevent penetration from small arms fire, as well as their ability to self-seal and, thereby, mitigate the severity of any incident. FRA developed the project in coordination with the AAR and DHS, which came up with the idea of applying to tank cars a protective coating like that used to enhance the armor protection of military vehicles in Iraq.

Strengthening FRA’s Safety Compliance Program

Implementation of National Inspection Plan

FRA continually seeks ways to direct its inspection and enforcement efforts toward the issues and locations most in need of attention. To this end, FRA instituted the National Inspection Plan (NIP), an inspection and allocation program that uses predictive indicators to assist FRA in allocating inspection and enforcement activities within a given region by railroad and by State. In essence, it makes use of existing inspection and accident data in a way that identifies potential safety “hot spots” so they can be corrected before a serious accident occurs.

In April 2005, Operating Practices, Track, and Motive Power and Equipment became the first FRA safety disciplines to use the NIP, since the corresponding accident causes (human factors, track, and motive power and equipment) together account for a total of about 84 percent of all train accidents. This was followed by the Signal and Train Control and Hazardous Materials disciplines in March 2006. A reduction in both the number and the rate of train accidents is expected once the NIP has had time to take its full effect and FRA refines its application in response to actual experience.

Revisions to Schedules of Civil Penalties for Safety Violations

In December 2006, FRA published proposed statements of agency policy that would amend the 25 schedules of civil penalties issued as appendixes to FRA’s safety regulations, to reflect more accurately the safety risks associated with violations of the rail safety laws and regulations, as well as to make sure that the civil penalty amounts are consistent across all safety regulations. See 71 FR 70589. While the minimum and maximum civil penalty amounts that may be assessed for all rail safety violations have been adjusted in recent years, the guideline penalty amounts for specific rail safety violations have not. FRA therefore decided to reevaluate the penalty amounts in the schedules using a severity scale with particular consideration to the likelihood that an accident or incident would result from, and/or be aggravated by, a failure to comply with a specific regulatory provision. Because the schedules are statements of agency policy, FRA has authority to issue the revisions without having to follow the notice and comment procedures of the Administrative Procedure Act. Nevertheless, FRA is providing members and representatives of the general public an opportunity to comment on the proposed revisions before amending them. This initiative will complement FRA and PHMSA’s evaluation of guideline penalty amounts for specific violations of the Hazardous Materials Regulations, and adjustments in guideline penalty amounts made, while revising the minimum and maximum civil penalty amounts for violations of the hazmat transportation laws pursuant to Title VII of SAFETEA-LU. See 71 FR 77293.

Fostering Further Improvements in Highway-Rail Grade Crossing Safety

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

Issuance of Safety Advisory 2005-03

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

Development of State-Specific Grade Crossing Safety Action Plans

In June 2004, DOT and FRA issued an Action Plan for “Highway-Rail Crossing Safety and Trespass Prevention” that sets forth a series of initiatives in the areas of engineering, education, and enforcement to reduce and prevent highway-rail grade crossing accidents. As one of these initiatives, FRA began working with the State of Louisiana in March 2005 to develop its own action plan for grade crossing safety, to address high numbers of grade crossing accidents and deaths at the State level. The action plan focuses on reducing collisions between trains and motor vehicles at grade crossings where multiple collisions have occurred. After a cooperative effort between the Louisiana Department of Transportation and Development, Federal Highway Administration, FRA, and other stakeholders, the State approved the action plan in April 2006. The State of Texas is currently working with FRA to develop a similar, State-specific action, and FRA is encouraging other States with high numbers of grade crossing accidents and deaths to do the same.

Focus on Pedestrian Safety

In addition, FRA will work with the grade crossing safety community to determine appropriate responses to pedestrian fatalities at grade crossings. Early in 2006, the Transportation Research Board devoted an entire session of its annual meeting to pedestrian grade crossing safety issues in order to capture information on how to improve safety in this area. By this spring, FRA will publish a compilation of information on existing pedestrian safety devices currently being used in the Nation so that those making decisions on methods to improve pedestrian safety may have resource material available.

Inquiry on Safety of Private Grade Crossings

In June 2006, FRA initiated an inquiry into the safety of private grade crossings. Approximately 10 percent of grade crossing collisions occur at privately-owned crossings. However, there is little governmental safety oversight of these crossings, at either the State or Federal level. As a result, in cooperation with appropriate State agencies, FRA has been soliciting oral statements at a series of public meetings throughout the Nation on issues related to the safety of private grade crossings, including current practices concerning responsibilities for safety at these crossings, the adequacy of warning devices at the crossings, and the relative merits of a more uniform approach to improving safety at private crossings. The next and final meeting is scheduled to be held in Syracuse, New York, on February 15. FRA has also opened a public docket on these issues, so that interested parties may submit written comments for public review and consideration. The statements made and comments received will help inform decisions on what action needs to be taken to address the safety of private grade crossings.

Passenger Rail Safety Initiatives

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

Passenger Safety Rulemakings

FRA is hard at work on several rulemakings specifically designed to improve rail passenger safety. First, as a result of consensus recommendations from RSAC, in August 2006 FRA proposed new passenger rail safety standards to improve evacuation of passengers from trains, provide additional ways for rescuers to access the passenger car in case of an emergency, and enhance onboard emergency communication systems. FRA is in the process of preparing the final rule, which is expected to be issued some time in the near future. Moreover, a separate regulatory proposal is also in development within the Emergency Preparedness Task Force, focusing on passenger car emergency signage, low-location exit path marking, and emergency lighting. The proposal under development is based on American Public Transportation Association (APTA) standards for passenger safety and is intended to augment current Federal requirements. FRA is also preparing a proposed rule to implement the RSAC’s recommendations to enhance structural strength requirements for the front of cab cars and multiple-unit locomotives. These enhancements would include the addition of “energy deformation” requirements specified in revised APTA standards for front-end collision posts and corner posts for this equipment.

Passenger Safety Research and Development

Crash Energy Management (CEM) Systems. Research has shown that passenger rail

equipment crashworthiness in train-to-train collisions can be significantly increased if the equipment structure is engineered to crush in a controlled manner. For several years, FRA has been advancing this engineering approach, termed CEM, with strong support from RITA’s Volpe Center. First use of this concept on the North American continent was in design of Amtrak’s Acela Express trainset. In March 2006, FRA successfully conducted the last of a series of full-scale passenger train crash tests at FRA’s Transportation Technology Center in Pueblo, Colorado, to evaluate new CEM technology that might be applied to conventional equipment. In this test, a passenger train that had been equipped with a CEM system that included sacrificial crush zones in unoccupied spaces, pushback couplers designed to retract and absorb energy, and specially designed anti-climbers to keep the train in line, better protected the spaces intended to be occupied by passengers and train crewmembers. Also tested were new passenger seats with special padding and new tables with crushable edges, to help prevent and mitigate passenger injuries. Use of this integrated CEM technology is expected to save lives by more than doubling the speed at which all passengers are expected to survive a train crash.

The Southern California Regional Rail Authority (Metrolink) is in the process of procuring a new fleet of cars utilizing CEM technology. Metrolink’s procurement is being facilitated by the completed work of an RSAC working group, the CEM Working Group, specially tasked in May 2005 to develop a detailed technical specification for implementing CEM technology in passenger rail cars. The South Florida Regional Transportation Authority (SFRTA) has joined Metrolink in procuring equipment using this specification, and FRA expects other passenger railroads to include the specification in future procurements of their own.
Rollover Rig. In May 2006, FRA unveiled a state-of-the-art Passenger Rail Vehicle

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

Collision Hazard Analysis

“Collision Hazard Analysis” is a specific type of safety review that seeks to identify collision hazards and to develop reasonable solutions to eliminate or mitigate these hazards. Collision hazards include conditions and activities that increase the risk of collisions between trains or other on-track equipment, between trains and motor vehicles/pedestrians, or between trains and fixed objects along the right of way. FRA strongly believes that the performance of a Collision Hazard Analysis will strengthen and support the passenger rail system safety process that grew out of the combined experience of the agency and the commuter railroads under Emergency Order No. 20. FRA and the Volpe Center have partnered with APTA to conduct important pilot projects regarding Collision Hazard Analysis. During the first pilot project, FRA, the Volpe Center, and APTA worked cooperatively to train and mentor a hazard analysis team at Tri-Rail, SFRTA’s commuter service, which volunteered to be the first commuter railroad to conduct this analysis. The Tri-Rail project proved very successful and served as the model for a Collision Hazard Analysis pilot project on the Virginia Railway Express, completed last fall. The effort was also very successful and provided further insight into the collision hazard analysis process. Based on positive experiences on both pilot projects, FRA strongly advocates that all commuter operators undertake a Collision Hazard Analysis. The analysis is especially useful for “New Start” rail projects where design and operational decisions can be readily influenced.

The Gap

Recent attention has been focused on passenger safety at stations with high-level platforms where there are gaps between passenger car doorways and the platform. On August 5, 2006, a young woman fell into a gap between the platform and the Long Island Rail Road (LIRR) commuter train she was exiting from, and was ultimately struck and killed by another train. FRA staff conducted an informal survey of standards used for determining gap distance, and found a great deal of variation in standards among commuter railroads. Visits to station platforms at six selected railroads found considerable variations in gap length. Setting and maintaining an acceptable gap is a complicated process affected by passenger equipment types, track maintenance, track curvature, and platform configuration. The gap is also affected when freight trains or specialized equipment must use the same track used for passenger boarding.

FRA has made this issue a priority. FRA has established an RSAC task force on General Passenger Safety to specifically address safety concerns associated with platform gaps and other matters directly affecting passenger safety on or around station platforms, and to make any necessary recommendations to FRA for regulatory action. The first meeting of the task force is scheduled for February 13 and 14.

Conclusion

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

APPENDIX

The Railroad Industry’s Safety Record

The railroad industry’s overall safety record is very positive, and most safety trends are moving in the right direction. While not even a single death or injury is acceptable, progress is continually being made in the effort to improve railroad safety. This improvement is demonstrated by an analysis of the Federal Railroad Administration’s (FRA) database of railroad reports of accidents and incidents that have occurred over the nearly three decades from 1978 through 2005. (The low point of rail safety in recent decades was 1978, and 2005 is the last complete year for which nearly final data are available.) Between 1978 and 2005, the total number of rail-related accidents and incidents has fallen from 90,653 to 13,969, an all-time low representing a decline of 85 percent. Between 1978 and 2005, total rail-related fatalities have declined from 1,646 to 888, the second-lowest number on record and a reduction of 46 percent. From 1978 to 2005, total employee cases (fatal and nonfatal) have dropped from 65,193 to 5,643, the record low; this represents a decline of 91 percent. In the same period, total employee deaths have fallen from 122 in 1978 to 25 in 2005, a decrease of 80 percent.

Contributing to this generally improving safety record has been a 71 percent decline in train accidents since 1978 (a total of 3,225 train accidents in 2005, compared to 10,991 in 1978), even though rail traffic has increased. (Total train-miles were up by 5 percent from 1978 to 2005.) In addition, the year 2005 saw only 37 train accidents out of the 3,225 reported in which a hazardous material was released, with a total of only 50 hazardous material cars releasing some amount of product, despite about 1.7 million movements of hazardous materials by rail.

In other words, over the last approximately three decades, the number and rate of train accidents, total deaths arising from rail operations, employee fatalities and injuries, and hazardous materials releases all have fallen dramatically. In most categories, these improvements have been most rapid in the 1980s, and tapered off in the late 1990s. Causes of the improvements have included a much more profitable economic climate for freight railroads following deregulation in 1980 under the Staggers Act (which led to substantially greater investment in plant and equipment), enhanced safety awareness and safety program implementation on the part of railroads and their employees, and FRA’s safety monitoring and standard setting (most of FRA’s safety rules were issued during this period). In addition, rail remains an extremely safe mode of transportation for passengers. Since 1978, more than 10.7 billion passengers have traveled by rail, based on reports filed with FRA each month. The number of rail passengers has steadily increased over the years, and since 2000 has averaged more than 500 million per year. Twelve rail passengers were killed in train collisions and derailments in 2005, including ten that died in the Glendale, California tragedy. On a passenger-mile basis, with an average about 15.5 billion passenger-miles per year since the year 2000, rail travel is about as safe as scheduled airlines and intercity bus transportation and is far safer than private motor vehicle travel. Rail passenger accidents–while always to be avoided–have a very high passenger survival rate.

As indicated previously, not all of the major safety indicators are positive. Grade crossing and rail trespasser incidents continue to cause a large proportion of the deaths associated with railroading. Grade crossing and rail trespassing deaths accounted for 93 percent of the 888 total rail-related deaths in 2005. In recent years, rail trespasser deaths have replaced grade crossing fatalities as the largest category of rail-related deaths. In 2005, 467 persons died while on railroad property without authorization, and 357 persons lost their lives in grade crossing accidents. Further, significant train accidents continue to occur, and the train accident rate per million train-miles has not declined at an acceptable pace in recent years. It actually rose slightly in 2003 and 2004 (to 4.05 and 4.38, respectively) compared to that in 2002 (3.76), although it dropped in 2005 (to 4.08). As stated in the main testimony, the causes of train accidents are generally grouped into five categories: human factors; track and structures; equipment; signal and train control; and miscellaneous. The great majority of train accidents are caused by human factors and track. In recent years, most of the serious events involving train collisions or derailments resulting in release of hazardous material, or harm to rail passengers, have resulted from human factor or track causes. Accordingly, the National Rail Safety Action Plan makes human factors and track the major target areas for improving the train accident rate.

Federal Efforts for Rail and Surface Transportation Security

WRITTEN STATEMENT OF

JOSEPH H. BOARDMAN
ADMINISTRATOR
FEDERAL RAILROAD ADMINISTRATION
U.S. DEPARTMENT OF TRANSPORTATION

BEFORE THE

UNITED STATES SENATE
COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

HEARING ON

FEDERAL EFFORTS FOR RAIL AND SURFACE TRANSPORTATION SECURITY

JANUARY 18, 2007

Testimony of

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

before the

Committee on Commerce, Science, and Transportation,
United States Senate

January 18, 2007

Chairman Inouye, Vice-Chairman Stevens, and other members of the Committee, I am pleased to be here today to testify, on behalf of the Secretary of Transportation, about the security of our Nation's passenger and freight railroad network and the efforts that the Department of Transportation (DOT) is making to enhance rail safety and security. The Federal Railroad Administration’s (FRA) primary mission is to promote the safety of the U.S. railroad industry and to reduce the number and severity of accidents and incidents arising from railroad operations. Our railroad safety mission necessarily includes our involvement in railroad security issues. The U.S. Department of Homeland Security (DHS) and its Transportation Security Administration (TSA) have primary responsibility for transportation security, with FRA providing support in the railroad sector. FRA works closely with TSA and the railroad industry on a daily basis in addressing railroad security and safety issues, participates in the Government Coordinating Council for Rail, and contributed its expertise to the National Strategy for Transportation Security and the National Infrastructure Protection Plan.

My testimony today will provide some background on FRA’s railroad safety program, describe the role that FRA plays in railroad security, and discuss railroad safety and security initiatives. We stand ready to work with the Committee in furthering the safety and security of our Nation’s railroad network.

Overview of the Railroad Industry

The U.S. railroad network is a vital link in the Nation’s transportation system and is critical to the economy, national defense, and public health. Passenger and freight railroads operate over 170,000 route miles of track and employ over 232,000 workers. The rail system is diverse and expansive. Security risks are inherent in its supporting infrastructure, as well as in the people and products moving through it. Most of the larger railroads have their own police force, and they are supplemented by State and local law enforcement.

Amtrak, the Alaska Railroad Corporation, and commuter railroads provide passenger rail service to more than 500 million passengers yearly. Passenger operators face many challenges in their efforts to provide a secure public transportation environment. By definition, the systems are open, providing numerous points of access and egress leading to high passenger turnover and making them difficult to monitor effectively. Amtrak, for example, operates as many as 300 trains per day serving over 500 stations in 46 States, and Amtrak trains use tracks owned by freight railroads except for operations in the Northeast Corridor and in Michigan.

Privately-owned freight railroads connect industries and businesses with each other across the country and with markets overseas, moving 42 percent of all intercity freight, measured in ton-miles, including 67 percent of the coal used by electric utilities to produce power, and chemicals used in manufacturing and water purification. Seven Class I railroads haul over 90 percent of the rail cargo in the U.S., with the remaining 10 percent being transported by 30 regional railroads and over 500 local railroads. Typically railroads move about 1.7 to 1.8 million carloads of hazardous materials (hazmat) yearly, with roughly 105,000 of these carloads being toxic inhalation hazard (TIH) materials, such as chlorine and anhydrous ammonia. Over 64 percent of TIH materials are currently transported by rail. The railroads have an outstanding record in moving all goods safely. The vast majority of hazardous materials shipped by rail every year arrive safely and without incident, and train accidents involving a release of hazardous materials that causes death are infrequent and rare, even while rail traffic volumes have increased steadily. As discussed below, DOT has an aggressive and comprehensive action plan to address the root causes of hazmat accidents, to examine and improve the integrity of rail tank cars used to transport hazmat, and to improve the railroads’ hazmat security plans. In addition, DOT’s Pipeline and Hazardous Materials Safety Administration (PHMSA) annually provides grant funds to States and Indian tribes to assist in the development, improvement, and implementation of hazmat emergency response plans, and to train emergency responders to respond to hazmat accidents and incidents; details on this program are contained in PHMSA’s Web site (hazmat.dot.gov).

Maintaining a safe and secure railroad transportation system is essential, and safety and security issues are being jointly addressed by the industry, DOT, and TSA.

FRA’s Railroad Safety Program

FRA is the DOT agency charged with carrying out the Federal railroad safety laws. The laws provide FRA, as the Secretary’s delegate, with very broad authority over every area of railroad safety. In exercising that authority, the agency has issued and enforces a wide range of railroad safety regulations. Several of FRA’s rules have been developed with specific consideration of security concerns. For example, FRA’s January 2002 final rule barring most extraterritorial dispatching of U.S. railroad operations is based in part on the agency’s concerns about the security of foreign dispatching facilities. Similarly, FRA’s rule on passenger train emergency preparedness, discussed more fully below, requires carriers to prepare plans that deal with criminal as well as accidental events. While most of FRA’s rules are focused on the safety of railroad operations and not explicitly based on security concerns, they also necessarily have some bearing on security. For example, a railroad inspector performing an inspection required by an FRA safety regulation could potentially uncover a hazardous condition that was intentionally caused by terrorist activity. Similarly, Federal passenger and freight equipment standards are intended to ensure that the equipment can withstand forces of derailments and collisions, whether caused by accidents or deliberate acts, thereby helping to protect passengers, employees, and surrounding communities.

In addition, FRA enforces in the rail mode of transportation the Hazardous Materials Regulations, which are promulgated by PHMSA. These regulations include requirements that railroads and other transporters of hazmat, as well as shippers, have and adhere to security plans and also train their employees involved in offering, accepting, or transporting hazmat on both safety and security matters, as discussed more fully below.

To address the key safety issues facing the railroad industry, in May 2005, DOT and FRA launched an aggressive and ambitious National Rail Safety Action Plan with the following strategy:

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

FRA’s plan includes initiatives in several areas: reducing human factor-caused train accidents, the largest category of train accidents; acting to address the serious problem of fatigue among railroad operating employees; improving track safety; improving emergency preparedness and enhancing hazmat safety, including evaluating and improving the integrity of tank cars used to transport hazmat; and improving highway-rail grade crossing safety. One of the primary elements of the Action Plan is the implementation of a National Inspection Plan, which uses sophisticated trend analysis to ensure that FRA is properly allocating its inspectors so that they are directing their efforts on areas of greatest safety concern. A summary of the steps FRA has taken in implementing the Action Plan is attached to my statement.

Though the Action Plan is focused on rail safety, rail security will also be improved. In particular, enhancements to hazmat safety and emergency preparedness will result in enhancements to rail security.

FRA’s Role in Railroad Security

FRA’s involvement in railroad security predates the terrorist attacks on September 11, 2001. From October 1995 (when a deliberate act of vandalism caused a fatal Amtrak derailment near Hyder, Arizona) through March 2006 (when the USA PATRIOT Improvement and Reauthorization Act of 2005 was enacted), FRA helped develop and worked with Congress to secure the enactment of Federal criminal legislation to deter and punish more effectively terrorist attacks against railroads and mass transportation systems. Additionally, in 1998 FRA issued a regulation requiring passenger railroads to prepare, and secure FRA approval of, plans to address emergencies, including security threats, to train employees on the plan, and to conduct emergency simulation drills, as noted above and discussed more fully below. FRA will be exploring leveraging the National Labor College, George Meany Training Campus, to assist in providing security awareness training for railroad employees who are not receiving security training under FRA’s emergency preparedness regulation or PHMSA’s security regulation.

Since the September 11^th terrorist atrocities, FRA has been actively engaged in the railroad industry’s response to the terrorist threat. The railroads have developed their own security plans, and FRA has worked with the railroads, rail labor, and law enforcement personnel to develop the Railway Alert Network, which permits timely distribution of information and intelligence on security issues. Working with DOT’s Federal Transit Administration (FTA), we have participated in security risk assessments on commuter railroads, and we have conducted security risk assessments of Amtrak as well. FRA’s security director works on a daily basis with government agencies and the railroad industry to facilitate communications on security issues, and also participates in security training, reviews security plans, and performs other activities to promote rail security. For example, FRA intends to conduct at least 15 security training sessions for rail labor organizations in 2007, as well as four sessions at the FBI Academy on railroad security and emergency response for law enforcement personnel.

In September 2004, DOT and DHS entered into a memorandum of understanding (MOU) concerning their respective roles on security issues. The MOU notes that DHS has primary responsibility for security in all modes of transportation but also recognizes that DOT has responsibilities in the area of transportation security. The MOU reflects the agencies’ shared commitment to a systems risk-based approach and to development of practical solutions, recognizing that each agency brings core competencies, legal authorities, resources, and expertise to the railroad mission. The MOU requires early coordination between the parties on the development of regulations affecting security. Separate annexes have been signed concerning the implementation of the Homeland Security Council’s recommendations concerning TIH materials, and concerning the coordination between FRA and TSA, FTA and TSA, and PHMSA and TSA on security matters.

The FRA-TSA annex provides for close cooperation between the two agencies on railroad security regulations, legislation, research and development, inspection activities, and response to threats to railroad security in order to maximize passenger and freight railroad security while minimizing disruptions to railroad operations to the extent practicable. The agreement provides that if an FRA inspector observes a significant security issue, the information will be provided to TSA and the railroad; similarly, if a TSA inspector observes a significant rail safety issue, the information will be provided to FRA and the railroad. FRA has one full-time employee addressing rail security matters, and all of our 71 hazmat inspectors and specialists, along with 17 State inspectors, devote a portion of their time to reviewing railroad and shipper security plans for compliance with PHMSA’s security regulations discussed below.

Freight Railroad Security

Railroads have voluntarily developed and adopted security plans based on comprehensive risk analyses, and the national intelligence community’s best practices, that address the security of not only hazmat but of freight in general. The Association of American Railroads (AAR) has established guidance for the major freight railroads in the form of a model strategic security plan. The railroad industry has also developed a detailed protocol (AAR Circular OT-55-I) on recommended railroad operating practices for transportation of high-risk hazardous materials (including TIH). FRA, PHMSA, and TSA have jointly worked with the railroad industry to build upon the railroads’ security efforts through vulnerability assessments, development of voluntary security action items, and rulemakings. Additionally, FRA has arranged a conference to permit railroads and chemical shippers to discuss routing options for the movement of TIH materials, as explained more fully below.

A special focus for FRA and DOT, collectively, is the security of hazmat transported by rail. A major initiative has been PHMSA’s March 2003 regulation requiring each shipper and carrier of significant quantities (placardable amounts) of hazmat to adopt and comply with a security plan. See 49 CFR § 172.800 et seq. Under the PHMSA regulation, security plans must include an assessment of security risks and appropriate countermeasures or mitigation strategies, or both, to address those risks. The plans must, at a minimum, address three specific areas: the security of company personnel; unauthorized access to company property; and the security of hazmat shipped or transported by the company from its origin to its destination. To assist railroads that transport hazmat and shippers that offer hazmat for transportation by rail to comply with this regulation, particularly small- and medium-sized companies, PHMSA developed a program on how to write and implement security plans for their companies.

FRA recognizes that railroad and shipper employees’ awareness and understanding of the PHMSA regulation and procedures governing the safe and secure transportation of hazmat shipments are critical. Therefore, PHMSA’s regulation provides for safety and security training for employees engaged in the transportation of hazmat. Specifically, each shipper and carrier of significant quantities of hazmat is also required to conduct two types of security training for its employees: security awareness training that provides an awareness of risks associated with hazmat transportation and methods designed to enhance hazmat transportation security, and in-depth security training concerning the company’s security plan and its implementation. These training requirements are also recurrent; employees must receive the required training at least every three years. To date, FRA personnel have reviewed more than 6,105 security plans (including plans for shippers by rail and the plans for all Class I freight railroad carriers) and conducted 4,054 inspections for compliance with the security training requirements. Moreover, FRA’s security director is currently working with the American Short Line and Regional Railroad Association to provide hazmat security training and conduct security reviews at approximately 125 short line railroads in 2007.

In April 2004, DHS and DOT took specific actions to improve the security of rail shipments of TIH materials. As part of this initiative, DHS and DOT, in cooperation with the railroads, are assessing the vulnerabilities of High Threat Urban Areas (HTUAs) through which TIH materials move by rail in significant quantity. These assessments helped result in the railroads agreeing to voluntarily implement 27 Security Action Items designed to improve the security of rail movements of TIH materials. The Action Items address system security and access control (i.e., practices affecting the security of railroads and their property), as well as en-route security (the actual movement and handling of railcars containing TIH materials), particularly in HTUAs. Full implementation of the Action Items is expected to raise the security baseline for the transportation of TIH materials. Implementation of the first 24 Action Items had begun when they were announced in June 2006, and implementation of the remaining 3 Action Items dealing with HTUAs had also been initiated when they were announced on November 21, 2006.

In August 2004, DOT and TSA published a notice and request for comments in the FederalRegister asking for input on aspects of TIH rail shipments, the DOT security program requirement, and the need for additional regulation. Following review and consideration of the comments received, PHMSA, in consultation with FRA and TSA, published a notice of proposed rulemaking on December 21, 2006, to revise current requirements for the safe and secure rail transportation of hazmat. See 71 FR 76833. Likewise, TSA concurrently proposed enhancements to rail security requirements. See 71 FR 76852. Specifically, PHMSA’s proposal would require railroads to—

compile annual data on specified hazmat rail shipments;
use the data annually to analyze safety and security risks along rail transportation routes where those materials are transported and one possible alternative to each route;
utilize the analyses in selecting the safest and most secure commercially practicable routes the carrier is authorized to operate over in transporting these materials;
address the security risks associated with shipments delayed in transit or temporarily stored in transit as part of their security plans;
notify consignees if there is a significant unplanned delay affecting the delivery of certain types of hazardous material;
work with shippers and consignees to minimize the time a rail car containing certain types of hazardous materials is placed on track awaiting pick-up or delivery or transfer from one carrier to another;
notify storage facilities and consignees when rail cars containing certain types of hazardous materials are delivered to a storage or consignee facility; and
conduct security visual inspections at ground level of rail cars containing hazardous materials to inspect for signs of tampering or the introduction of an improvised explosive device (IED).

PHMSA and FRA will hold two public meetings, one on February 1, 2007, in Washington, D.C., and the second on February 9, 2007, in Dallas, Texas, to obtain oral comments on the proposed requirements.

DHS has provided funding to the Railroad Research Foundation, a nonprofit organization devoted to sustaining a safe and productive railroad industry, to develop a Web-based tool to calculate rail route specific hazmat risks, and assist in route selection decisions. This tool would be available to rail carriers in performing route analysis, and to DOT, TSA, and government emergency planners.

In late 2005, FRA granted a request by the AAR and the American Chemistry Council to convene a section 333 conference to discuss ways to minimize security and safety risks flowing from the transportation by rail of TIH materials. Section 333 of title 49 of the United States Code authorizes the FRA Administrator, as delegate of the Secretary of Transportation, to convene conferences at the request of one or more railroads to address coordination of operations and facilities of rail carriers in order to achieve a more efficient, economical, and viable rail system. Persons attending a section 333 conference are immune from antitrust liability for any discussions at the conference, and can also receive immunity for any resulting agreements that receive FRA approval. The conference has been carefully structured to minimize antitrust concerns involving the chemical manufacturers and shippers. The conference provides the railroads and chemical manufacturers and shippers with the opportunity to meet and discuss approaches to reduce the amount of TIH materials moved by rail, and to enhance the safety and security of TIH materials that are moved. FRA, PHMSA, and representatives from the Department of Justice, the Federal Trade Commission, TSA, and the Surface Transportation Board (STB) are participating in these discussions. The initial efforts of the conference are focused on chlorine and anhydrous ammonia rail transport because they represent over 80 percent of all TIH rail shipments. FRA has met with the rail carriers to discuss modeling and routing options. Further meetings with the rail carriers, as well as separate meetings with the chlorine and anhydrous ammonia shippers, are planned for early this year. In some instances, the projects agreed to at the conference may need the approval of the STB in order to be implemented.

While we must remain ever vigilant to secure hazmat shipments on our Nation’s railroads, for the sake of railroad employees and the public whom we all serve, it bears emphasizing that the vast majority of hazmat shipments arrive at their destinations safely. Considering just chlorine, for example, since 1965 (the earliest data available) there have been at least 2.2 million tank car shipments of chlorine–only 788 of which were involved in accidents (0.036 percent of all the shipments). Of those accidents, there were 11 instances of a catastrophic loss (i.e., a loss of all, or nearly all) of the chlorine lading (0.0005 percent of all the shipments). Of the 11 catastrophic losses, four resulted in fatalities (0.00018 percent of all the shipments). For all hazardous materials, in the 12 years from 1994 through 2005, hazardous materials released in railroad accidents resulted in a total of 14 fatalities. While one death is obviously too many, the record of transporting these commodities is very good, and we believe the initiatives underway will further improve upon that record.

Passenger Railroad Security

As discussed earlier, in the area of passenger railroad security, FRA requires each railroad that operates intercity or commuter passenger train service or that hosts the operation of such service to adopt and comply with a written emergency preparedness plan approved by FRA. See 49 CFR Part 239. The regulation makes clear that an “emergency” includes a security-related situation. Each plan must address employee training and qualification, and provide for both initial and recurrent training. Additionally, each railroad must establish and maintain a working relationship with emergency responders on its line by taking measures such as developing and making available a training program on the plan and inviting the emergency responders to participate in emergency simulations. The regulation requires railroads providing passenger service to periodically conduct full-scale passenger train emergency simulations (with actual equipment and simulated victims) and conduct a debriefing and critique session after actual or simulated passenger train emergency situations. FRA will continue monitoring passenger railroads for compliance with this regulation and attend each full-scale simulation and follow-up review session, such as one scheduled by the Long Island Rail Road for March with the New York City Fire Department.

In 2003, under the auspices of FRA’s Railroad Safety Advisory Committee (RSAC), FRA initiated a review of existing passenger train safety needs and programs for the purpose of developing any necessary recommendations on actions to advance the safety of passenger rail service. The RSAC is a forum for developing recommendations to FRA on rulemakings and other safety program issues, and it includes representatives from all of the rail industry’s major groups, State representatives, the National Transportation Safety Board (NTSB), and other stakeholders. As part of this effort, the Passenger Safety Working Group was established, as well as four smaller task forces, notably the Emergency Preparedness Task Force. The Emergency Preparedness Task Force is specifically devoted to consideration of passenger train emergency preparedness issues, and includes representatives from railroads, rail labor organizations, the NTSB, FTA, and TSA. Its efforts helped lead to the issuance of proposed enhancements and additions to FRA’s regulations for passenger train emergency systems (emergency systems NPRM). See 71 FR 50276; August 24, 2006.

Emergency communication is one of the main focuses of the emergency systems NPRM. Under the proposal, all existing passenger cars would be required to be equipped with a public address system by 2012 that provides a means for a crewmember to communicate to all train passengers in an emergency situation, and all new passenger cars would be required to be equipped with an intercom system that provides a means for passengers and crewmembers to communicate with each other in an emergency situation. An intercom system could be vital in enabling a passenger to quickly alert a crewmember of a security threat, and the crewmember in turn could contact the appropriate authorities to obtain emergency assistance and use the train’s public address system to provide any necessary direction to passengers. The proposed rulemaking would also promote passenger and employee safety in an emergency situation—whether resulting from an accidental or an intentional act—by enhancing requirements for emergency window exits in passenger cars and mandating that all passenger cars, including existing cars, have rescue windows for emergency responder access. FRA is in the process of preparing the final rule, which is expected to be issued by the middle of this year. Moreover, a separate regulatory proposal is also in development within the Emergency Preparedness Task Force, focusing on passenger car emergency signage, low-location exit path marking, and emergency lighting. The proposal will be based on American Public Transportation Association (APTA) standards for passenger safety, will augment current Federal requirements, and is expected to be published by the end of 2007.

Complementing FRA’s regulations, Amtrak and commuter railroads have instituted their own security plans and conduct security training. FRA assisted Amtrak in the development of its security plan. Specifically, in coordination with Amtrak’s Inspector General, FRA contracted with the RAND Corporation to conduct a systematic review and assessment of Amtrak’s security posture, corporate strategic security planning, and programs focusing on the adequacy of preparedness for combating terrorist threats. FRA’s security director is currently working with Amtrak to implement the recommendations of the RAND study. APTA is also leading commuter railroads in the development of voluntary industry standards for passenger rail safety and security.

FRA inspectors have conducted basic security reviews of Amtrak and commuter railroad security both after the 2004 train bombings in Madrid and after the 2005 transit bombings in London. In both cases, FRA inspectors were deployed immediately after the bombings to assess the security posture of passenger railroad facilities based on a checklist of major security criteria. In the aftermath of the London bombings, FRA worked closely on these security reviews with TSA’s new rail security inspectors. TSA focused primarily on urban rapid transit lines, while FRA inspectors concentrated on commuter and intercity passenger operations; in some situations, inspectors from the two agencies worked jointly. FRA will continue to support TSA in responding to rail security threats.

In partnership with FTA, FRA also participated in security risk assessments on the ten largest commuter railroads and contributed the funding for security risk assessments on three of these railroads. In addition, FRA participated in FTA’s “best practices tool kit” initiative, contributing our knowledge of commuter rail operations, infrastructure, and organization to ensure that the recommended security enhancement measures were sound and feasible in a railroad environment. FRA staff worked closely with many of the railroads that receive FTA grant funding, to plan and assist in the development and implementation of security simulations and drills. FRA also devoted staff with both railroad knowledge and facilitation skills to the 17 FTA-sponsored workshops across the country (called “Connecting Communities”) to bring together commuter railroads, emergency responders, and State and local government leaders so that they might better coordinate their security plans and emergency response efforts.

Research and Development

FRA conducts and supports research, development, and demonstration projects related to rail safety and rail security through its Office of Research and Development, in cooperation with DHS. Both theoretical and applied research on a wide range of issues has led to impressive results and tangible technology and process improvements.

A recent example of the application of FRA’s research efforts to both rail safety and security is the Passenger Rail Vehicle Emergency Evacuation Simulator, or “Rollover Rig.” This device, which began operation in 2006, can rotate a full-sized commuter rail car up to 180 degrees to simulate passenger train derailment scenarios. The Rollover Rig is already enhancing the ability of researchers to test strategies for evacuating passenger rail cars and to evaluate the performance of emergency systems in the cars, such as emergency lighting, doors, and windows. In addition, first responders nationwide now have a unique training tool to practice effective passenger rail rescue techniques safely when a rail car is on its side. FRA developed the Rollover Rig at a cost of $450,000. New Jersey Transit Rail Operations donated the commuter rail car used by the Rollover Rig, and the Washington Metropolitan Area Transit Authority agreed to house, operate, and maintain the simulator at its emergency response training facility located in Landover, Maryland.

We also continue to look for ways to improve tank car survivability, to reduce the likelihood that a tank car may be breached either by accident or by intentional act. PHMSA’s and FRA’s efforts to improve tank car survivability have a long and effective history. Working with the industry, all tank cars carrying hazardous materials now have top and bottom shelf couplers, and, as appropriate, tank cars are equipped with head shields, thermal protection, and skid protection for protruding bottom outlets. Tank cars carrying specific product groups, such as TIH and other particularly hazardous substances, are subject to additional requirements which became fully effective July 1, 2006, after a 10-year phase-in period.

Prior to the August 2005 enactment of Section 9005 of the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU), FRA had initiated tank car structural integrity research stemming from the circumstances of the 2002 derailment in Minot, North Dakota, involving the release of anhydrous ammonia from a tank car punctured during the derailment. Current research involves a three-step process to assess the effects of various types of train accidents (e.g., a derailment or collision) on a tank car. The first phase is development of a physics-based model to analyze the kinematics of rail cars in a derailment. The second phase is development of a valid dynamic structural analysis model; and the third phase is an assessment of the damage created by a puncture and entails the application of fracture mechanics testing and analysis methods. DOT’s Volpe National Transportation Systems Center is doing the modeling work now, and FRA will dovetail this ongoing research with the requirements of Section 9005. FRA, in conjunction with PHMSA, hopes to develop new hazardous material tank car safety standards in 2008, and we are currently consulting with railroads, shippers, and car manufacturers and have solicited pubic comments to assist us in this effort. In this connection, FRA just signed a Memorandum of Cooperation with Dow Chemical Company, Union Pacific Railroad, and the Union Tank Car Company to participate in their Next Generation Rail Tank Car Project and advance rail tank car safety.

FRA has other research and development projects underway related to rail security which we would be happy to discuss with Committee staff.

Conclusion

FRA will continue to support TSA in carrying out its security responsibilities, and work with the rail industry to secure the Nation’s freight and passenger railroad network. Together, DOT, TSA, and the rail industry are helping to ensure that security initiatives and programs are directed at potential threats to the Nation’s railroad network and that rail employees and others responsible for its security are prepared to identify and address such threats.

Attachment

SUMMARY OF THE STEPS FRA HAS TAKEN TO IMPLEMENT ITS NATIONAL RAIL SAFETY ACTION PLAN

In response to various rail safety concerns, including some recent major train accidents, such as Graniteville, SC, and the lack of substantial improvement in the train accident rate in recent years, Secretary of Transportation Norman Mineta launched the National Rail Safety Action Plan in May 2005. FRA has made real and substantial progress in bringing its aggressive and ambitious National Rail Safety Action Plan to fruition.
To reduce the number of train accidents caused by human factors (the largest category of train accidents), FRA—

* Issued a proposed Federal rule in October 2006 that would address top causes of human factor train accidents (such as failing to return a track switch to its proper position, which led to the Graniteville accident). The final rule is expected to be issued in mid-2007.

* Implemented an ongoing research program to identify human performance problems. Railroads, their employees, and FRA are entering into agreements that permit the employees to report unsafe events that do not result in a reportable accident but could have done so, without the fear of discipline.

* Made available to railroads and their employees a fatigue model that can assist them in developing crew scheduling practices based on the best current science.

* Approved the first positive train control system capable of automatically controlling train speed and movements to prevent train collisions and other accidents–the system will be installed on many BNSF Railway Company (BNSF) rail lines.

* Completed a pilot project, in partnership with BNSF, to develop a low-cost system that electronically monitors, detects, and reports a misaligned switch on mainline track located in non-signaled track territory. BNSF plans expansion of this and other similar systems on other non-signaled lines of their company.

To help prevent track-caused train accidents (the second-leading category), FRA—

* Developed an automated track inspection system that uses high-resolution video to detect cracks in joint bars and that can be deployed on a hi-rail vehicle to detect visible cracks in joint bars without having to stop the vehicle. Testing showed that the high-resolution video system detected visual cracks that were missed by the traditional visual inspections. The system was demonstrated to the railroads during summer and fall of 2006.

* Issued a final rule requiring track owners to develop and implement a procedure for the detailed inspection of rail joints in continuous welded rail track.

* Contracted for the construction of two automated track inspection vehicles, to be delivered in February and March, which will bring FRA’s fleet to five, allowing FRA to inspect nearly 100,000 track-miles each year, which triples the present capacity. This additional capability will permit FRA to inspect more miles of major hazardous material (hazmat) and passenger routes, while also having the ability to follow up more quickly on routes where safety performance is substandard.

To improve hazmat safety and emergency response capability, FRA improved emergency responders’ timely access to hazmat information. As discussed in FRA’s testimony today, FRA also accelerated its tank car structural research, hopes to issue new tank car performance standards in 2008, and has issued an NPRM on passenger train emergency systems.
To strengthen FRA’s rail safety inspection and enforcement program, FRA has made better use of data to direct FRA safety inspectors and other resources to where problems are likely to arise. FRA’s new National Inspection Plan was fully implemented for all FRA safety disciplines in March 2006, and further training will be provided to FRA safety personnel on how to best use the data during the scheduled national technical conferences this year.
To foster further improvements in highway-rail grade crossing safety, FRA—

* Built partnerships with State and local agencies by issuing, in May 2005, and extensively distributing a safety advisory describing the roles of the Federal and State governments and of the railroads in crossing safety. The advisory also reminds railroads of their responsibilities in relation to crossing accident reporting and investigation and offers assistance to local authorities in the investigation of crossing collisions where information or expertise within FRA control is required to complete the investigation.

* Aided the State of Louisiana in developing a crossing safety action plan. This State has consistently ranked among the top five with the highest number of crossing collisions and fatalities. The State approved the plan in April 2006.

* Launched an ongoing public safety inquiry into safety at private crossings.

We would be glad to provide the Committee with additional information on the current status of FRA’s implementation of the National Rail Safety Action Plan.

Financing the Next Generation Air Transportation System

STATEMENT OF

MARION C. BLAKEY,
ADMINISTRATOR,
FEDERAL AVIATION ADMINISTRATION,

BEFORE THE

HOUSE OF REPRESENTATIVES COMMITTEE ON WAYS AND MEANS,
SUBCOMMITTEE ON SELECT REVENUE MEASURES,

FINANCING THE NEXT GENERATION AIR TRANSPORTATION SYSTEM,

AUGUST 1, 2007

Good afternoon, Chairman Neal, Representative English, and Members of the Subcommittee.

It is a pleasure to be here today and I thank you for the opportunity to address an issue of great national significance. Indeed, it is a scenario that affects every man, woman and child in this great nation. It impacts every business, from blue chips to the corner store. And, it is a situation that requires prompt action by this Committee and the Congress. September 30th—and the expiration of the aviation taxes that currently fund over 80% of the Federal Aviation Administration’s (FAA) budget—is only 60 days away, and only 27 that the House will be in session. Mr. Chairman, you have recognized the significance of that date and the urgent need for timely action by holding this hearing today prior to the August recess, and I thank you for that.

Need for change

As you are well aware, the volume of traffic in the national airspace system is rapidly approaching critical mass. For years, the word “gridlock” has been bandied about. For years, experts have pointed to a system that is stretched too thin, a system that simply will not be able to accommodate all those looking to use it. We had a glimpse of this problem with the delays in the summer of 2000, and then the pressure eased with the drop in demand after 9/11. But, thanks to the hard work of the industry, aviation has bounced back and we are now at a critical decision point.

John F. Kennedy once said: “The time to repair the roof is when the sun is shining.” For our air transportation system the storm clouds aren't just on the horizon, the raindrops are starting to fall.

As passengers, we know, and not just from headlines, that 2006 was the worst in history for air transportation delays—even worse than 2000. Based on the first six months of this year, it is clear 2007 will be even worse.

Notably, these record-setting delays are occurring simultaneously with the safest period in American aviation history. This is no surprise, because the FAA’s top priority is safety. We will never sacrifice safety, even in the face of rising congestion.

However, the system is in trouble and everyone who flies knows it. We are doing everything in our power to squeeze out extra capacity from the existing model. We are building runways, redesigning airspace, and working with our stakeholders to get the most out of what we have. But the fundamental problem is we are working within the constraint of air traffic control technology that is half a century old. The amount of traffic the system can handle is limited by radars, a 1950’s technology, that update too slowly, and by the speed of voice communication between pilots and air traffic controllers. That system is simply not going to accommodate future aviation demand.

What lie ahead, according to our forecasts, are over a billion commercial passengers annually by 2015, 36% more than in 2006. At the same time, the aviation system will have to contend with an ever-increasing number of business jets, including the new very light jet models. In fact, our forecasts report the number of general aviation (GA) and air taxi jets will grow twice as fast as commercial aircraft over the next fourteen years. This results in three and a half times as many GA and air taxi jet flight hours by 2020 as there were in 2006. This growth is fantastic for the future of aviation, but we can’t get there with our current air traffic control system.

NextGen

Fortunately, there is the potential for good news on the horizon. We know the answer to the challenge that brings us here today. America needs the Next Generation Air Transportation System (NextGen). Without it, we will cease to set the pace for global aviation. We will be the country others use as a “lessons-learned” example—the country that identified its problem but couldn’t fix it.

We have a clear vision for NextGen and a plan to execute it, including $4.6 billion of NextGen-related investments over the next five years. These plans were developed in partnership with stakeholders from across the spectrum of aviation, from pilots and airlines to mechanics to Wall Street and beyond. In fact, every segment of aviation agrees we need NextGen—and we need to begin implementing it now. The capacity, safety, and environmental benefits are enormous. The tough issue is how to pay for it, and how do we put a financing system in place that sends the right price signals to aviation users.

Cost-based funding

I firmly believe a cost-based funding structure is our best chance of transforming the aviation system into NextGen quickly and efficiently. This is not a new idea. Numerous bipartisan commissions have recommended cost-based funding for the FAA over the last two decades, and air traffic control providers in every other developed country have cost-based funding. We do not. That is economically inefficient, unfair to those who fly in the system, and will hinder the implementation of NextGen.

Presently, there is little connection between what users pay into the system and the costs they generate, and this detachment leads to chronic over-consumption of air traffic services relative to available supply—in other words, congestion. We know the system is not cost-based from the results of the FAA’s most recent study. Using comprehensive cost accounting and activity data, we put together the most detailed and transparent cost allocation ever done by the FAA or, we believe, by any other air traffic control provider.

Costs in our study were classified by type of air traffic service. This includes dividing airports into large, medium, and low activity categories. We evaluated over 600 cost accounting projects and divided the costs between two main user groups—high performance turbine aircraft and piston aircraft. The study considers piston users to be “marginal” and assigns them virtually none of the system’s fixed costs, except at the low activity towers. Our allocation recognizes that a jet in the middle of Montana does not drive the same costs as a jet going into O’Hare. But a business jet using exactly the same air traffic services as a commercial jet does drive the same costs.

However, under the current tax system, business jets contribute very little tax revenue despite often using virtually the same airspace and services as a commercial airliner. For example, a typical commercial airliner flying from New York to Miami would pay approximately $2,015 in taxes. In contrast, a large private jet, flying the same distance, through the same airspace, using the same air traffic services, would pay roughly $236 in fuel taxes. On a flight from Washington to Hartford/Springfield, a commercial airline flight would pay nearly $900, while a large business jet pays less than $90. On a flight from Shreveport to Atlanta, an airline regional jet would pay almost $400, while a small business jet pays about $70. This boils down to the passengers flying on commercial airlines subsidizing the flights of corporate executives and others who fly private jets.

On a system-wide basis, our cost allocation found that general aviation drives about 16% of the costs of the air traffic control system, while only paying about 3% of the taxes, a situation that is unsustainable, given the growth in GA flight time that we expect. I recognize there has been a lot of rhetoric about fairness over the last few months. However, the sheer numbers are hard to refute. It’s important to note that in the Administration’s proposal, we only proposed that GA users pay 11% of the total tax burden, with 10% coming from turbine users and 1% from piston users. That’s a particular break for piston users, who would pay less than one-quarter of the air traffic costs allocated to them.

Some have argued that the FAA’s cost allocation study departed from international standards. However, these criticisms confuse cost allocation with cost recovery. In fact, every other country with an air traffic control system that we studied uses accounting principles similar to the FAA’s for cost allocation. However, our methodology does differ from other service providers in that it is much more detailed and transparent. DOT’s Inspector General (IG) has said the FAA cost allocation is reasonable and that it makes tradeoffs that “result in fewer costs being allocated to general aviation and some air carriers than other possible methods.” The General Accountability Office (GAO) has not finished its review of the FAA’s cost allocation, but has stated the general conclusion that general aviation is underpaying is likely to hold. The International Civil Aviation Organization (ICAO) specifically calls on member countries to ensure that no users are burdened with air navigation services costs that are not properly allocable to them according to sound accounting principles. FAA’s proposal does this.

Thus, there is a basic fairness issue in terms of how much users pay for the services provided. Also, in the case of commercial operators, there is another disconnect with how taxes are determined. The primary source of the commercial tax revenue comes from the 7.5% excise tax that we all pay on the price of commercial airline tickets. Back when the Airport and Airway Trust Fund was established in 1970, the Civil Aeronautics Board regulated the operations of the commercial airlines, including prices and routes. Under that system, the passenger ticket tax was a fair proxy for a cost-based funding system. Whereas today, ticket prices and airline routes are deregulated making a tax based on the price of a passenger ticket completely divorced from the cost of providing air traffic services to users of the system. This results in different passengers on the same airplane paying different amounts into the Airport and Airway Trust Fund. The same flight on two different days would generate two different amounts of revenue, depending on how many passengers are on the plane and what they paid for their tickets.

In short, tying the aviation system’s revenue to the price of a ticket may have made some sense before airline deregulation, but it now has nothing to do with the cost to provide service and is an unfair way to fund the operation of our national airspace and the transformation to NextGen. Similarly, it may have made sense back in 1970 for GA to pay little into the system. However, the number of high performance non-airline aircraft has significantly increased in the system over the last 37 years to the point today where such operators are 18% of all flights in the en route system. And, their use of this system is forecasted to grow at twice the rate of airline growth.

I know there are some who argue that the current tax system can support the FAA, even if it is not cost-based. While it may be possible to finance pieces of NextGen through the existing taxes, the existing system is inflexible and will not enable the implementation of NextGen as quickly or as rationally as a cost-based funding structure. For instance, some users have said that they would pay additional fees to achieve the efficiencies of NextGen sooner; under the current tax system, this type of flexibility is not possible. We do project revenue to grow under the current system, but the fact that revenue is projected to grow over the long term really misses the point. The basic baseline analysis that some stakeholders are using to conclude that the status quo is fine has a number of caveats, assumptions and uncertainties associated with it. GAO, the Congressional Budget Office (CBO) and the DOT IG have at various times noted this. These variables that can impact both spending levels and revenue include the level of the general fund contribution, the future cost of NextGen investments, the volume of air traffic, the future costs of operating the national airspace system, future appropriation levels for AIP, and changes in the aviation industry. Furthermore, even with CBO’s baseline assumptions, there is minimal room for additional spending until after 2010, which is problematic because we need to start making significant investments in NextGen now. In addition, seven independent commissions over the last two decades have recommended reform of the current funding system.

Keep in mind that not only are we facing the implementation costs of NextGen--which is a two-decade long project--but we also have to operate and manage traffic growth within the current system immediately. Without a cost-based revenue structure that encourages the most efficient use of the airspace, we are vulnerable to short-term increases in delays throughout the system and to long-term funding volatility for NextGen as ticket prices fluctuate.

With cost-based financing, the factors that drive our costs—such as how many flights users make and how far they fly—would also drive our revenues. Under the current taxes, there are limited incentives to use resources efficiently, since system users do not pay based on costs. With a cost-based structure, users would understand the impact of their actions and also see a direct relationship between investments we make and the costs they pay. Finally, without cost-based financing, as noted above, commercial airline passengers will continue to subsidize business jets, and the disparity will only get worse since private jet activity will grow significantly faster than commercial flights.

In short, cost-based financing will improve the efficiency and fairness of the system, and set us on a predictable path towards a NextGen system of technology that allows us to use a lot more of the sky.

This year is a once-in-a-generation opportunity, presenting a rare chance to leave an extraordinary legacy for our children. But, to develop the NextGen system successfully, we need a revenue stream that is tied to the actual cost of our operations. We need a revenue stream that’s equitable and rational. Our financing system should be balanced, fair, and provide predictability, reliability, and stakeholder involvement. It must also take into account the valuable and unique role that aviation plays in small communities across the country.

Consistent with these principles, we proposed a hybrid system of cost-based user fees, cost-based taxes and a general fund contribution to pay for the cost of specific public good services. The key to such a financing system is to have a clear link between costs and revenues. And, of course, if it is to be truly cost-based, the amount of money coming in must be adjustable as costs change—both upwards as we invest in NextGen and downwards as we reap the benefits of a more efficient system in future years. That sort of adjustability is more challenging to do with taxes than with user fees.

Building flexibility into our revenue stream is also important to allow us to spend the revenue we generate where and when we need it. Without the ability to spend what comes in, we will not be able to support the NextGen transformation. One of the ways our bill would achieve this is by directly counting the incoming user fees against the spending of those fees in annual appropriations.

I commend Chairman Oberstar, Chairman Costello, and Ranking Members Mica and Petri for their swift action in moving forward on the Committee’s aviation reauthorization bill, H.R. 2881. The Science Committee should also be recognized for their timely action on reporting their reauthorization measure, H.R. 2698. We are heartened by the recognition that the American public would not be well-served if the aviation programs were allowed to expire. We appreciate the support for transforming our air traffic control system to NextGen as well as the fact that many of the program reforms and environmental provisions from the Administration’s bill have been incorporated in H.R. 2881, including updating fees for the services provided by the FAA’s Aircraft Registry in Oklahoma City.

At the same time, we are disappointed that H.R. 2881 does not include cost-based financing reform. Instead, we understand that Chairman Oberstar and Chairman Costello have recommended to this Committee that you should keep the status quo by simply extending current taxes, with modest adjustments to two of the taxes (aviation jet fuel and aviation gasoline). This does not address or remedy the fundamental problems with the current aviation tax system that I have outlined above: that the current tax system is not fair to all users; it is not cost-based and therefore does not provide the right incentives for efficient use of the system; and the system’s revenues are not stable or predictable. The Transportation and Infrastructure Committee has generally acknowledged that the current tax system is inequitable, but this proposal does not seriously address that issue. Unfortunately, without real funding reform, the past will be prologue and progress toward NextGen will be shortchanged.

Price of inaction

As I mentioned at the outset, there is an urgent need for action. The expiration of the current taxes is less than two months away. Ten years ago, the last funding debate resulted in a series of lapses in aviation taxes during two years of short term fixes. During that time the Airport and Airway Trust Fund lost 10 months of tax revenues. At that time, the uncommitted balance of the Trust Fund was sufficient to sustain the FAA, but the start-stop nature of the short-term fixes caused serious problems for programs such as AIP. Today, the Trust Fund’s uncommitted balance is equivalent to less than two months of appropriations. Thus, a lapse in tax authority would have real and significant consequences. The aviation system cannot afford a lapse that puts air transportation – the lifeblood of our economy - at risk.

Short-term extensions without a long-term solution are not a good option either. Extensions would not address the need for reform or congestion relief, would postpone the hard decisions, and would make it difficult to implement the airport grant program in particular. Additionally, immediate legislative action is necessary to advance NextGen initiatives. If funding reform is not approved with sufficient lead time to implement the new system at the start of FY 2009, $450 million in new FY 2009 NextGen investments are particularly at risk. Critical investments in automation, advanced communications systems, facilities, and system integration could be significantly delayed.

Outyear Costs

Finally, we note that section 601 of H.R. 2881 would not only impose binding arbitration on the FAA in the event of a labor negotiation impasse, but also roll-back the current controller contract to the one that was negotiated nearly ten years ago. This would significantly threaten the FAA’s ability to control its costs in the outyears. The Administration strongly opposes legislative efforts that would limit the FAA’s ability to manage its workforce and that would threaten investment in NextGen and critical aviation safety programs.

Also, the authorization levels in H.R. 2881 are significantly higher than those proposed in the Administration’s bill for the airport grants program. Authorization levels consistent with the Administration’s proposal would adequately support the capital program and reduce the need for higher taxes to support the authorization levels.

Conclusion

This Subcommittee will make some serious decisions over the coming weeks affecting the future of the aviation system. Before you make these determinations, I ask that you take a step back and look at the big picture. In it, you will see passengers crowded into terminals, delays piling up—from large hubs to small communities, but you will also see an opportunity to make real progress, in a balanced, fair way for the aviation community as a whole, not just for a select few.

So far, in the House’s action on the aviation reauthorization, I have been impressed by the recognition of two undeniable facts. First, NextGen technology and programs are necessary to carry U.S. aviation into the first quarter of this century and lay the foundation for what lies beyond. Second, there is a great deal of inequity built into the current tax structure and this is an opportunity to correct it.

It is clear that we share many of the same goals for the future of aviation. A more efficient, safer, higher-capacity and more environmentally-friendly aviation system is essential to the continued vitality of America’s economy. NextGen is that system, and we must seize the opportunity this year to deliver it with a cost-based and fair financing structure. I look forward to working with you to achieve that goal by September 30^th.

Mr. Chairman, that concludes my prepared statement. I would be happy to answer your and the other Members’ questions at this time.

Financing the Next Generation Air Transportation System

STATEMENT OF

MARION C. BLAKEY,
ADMINISTRATOR,
FEDERAL AVIATION ADMINISTRATION,

BEFORE THE

SENATE COMMITTEE ON FINANCE,

FINANCING THE NEXT GENERATION AIR TRANSPORTATION SYSTEM,

JULY 12, 2007

Good morning, Chairman Baucus, Senator Grassley, and Members of the Committee.

It is a pleasure to be here today and I thank you for the opportunity to address an issue of great national significance. Indeed, it is a scenario that affects every man, woman and child in this great nation. It impacts every business, from blue chips to the corner store. And, it is a situation that requires prompt action by this Committee and the Congress. September 30th—and the expiration of the aviation taxes that currently fund over 80% of the FAA’s budget—is only 80 days away, and only 51 that Congress will be in session. Mr. Chairman, you have recognized the significance of that date and the urgent need for timely action by holding this hearing today, and I thank you for that.

Need for change

As you are well aware, the volume of traffic in the national airspace system is rapidly approaching critical mass. For years, the word “gridlock” has been bandied about. For years, experts have pointed to a system that is stretched too thin, a system that simply won’t be able to accommodate all those looking to use it. We had a glimpse of this problem with the delays in the summer of 2000, and then the pressure eased with the drop in demand after 9/11. But, thanks to the hard work of the industry, aviation has bounced back and we are now at a critical decision point.

John F. Kennedy once said: “The time to repair the roof is when the sun is shining.” Well, for our air transportation system the storm clouds aren't just on the horizon, the raindrops are starting to fall.

However, the system is in trouble and everyone who flies knows it. The problem is we have already squeezed out virtually every ounce of capacity that’s available to us. We are building runways, redesigning airspace, and working with our stakeholders to get the most out of what we have. But the fundamental problem is we are working within the constraint of air traffic control technology that is half a century old. The amount of traffic the system can handle is limited by radars, a 1950’s technology, that update too slowly, and by the speed of voice communication between pilots and air traffic controllers. That system is simply not going to accommodate future aviation demand.

What lie ahead, according to our forecasts, are over a billion commercial passengers annually by 2015, 36% more than in 2006. At the same time, the aviation system will have to contend with an ever-increasing number of business jets, including the new very light jet models. In fact, our forecasts report the number of GA and air taxi jets will grow twice as fast as commercial aircraft over the next fourteen years. This results in three and a half times as many GA and air taxi jet flight hours by 2020 as there were in 2006. This growth is fantastic for the future of aviation, but we can’t get there with our current air traffic control system.

NextGen

Fortunately, there is good news on the horizon. We know the answer to the challenge that brings us here today. America needs the Next Generation Air Transportation System (NextGen). Without it, we will cease to set the pace for global aviation. We will be the country others use as a “lessons-learned” example—the country that identified its problem but couldn’t fix it.

Cost-based funding

I firmly believe a cost-based funding structure is our best chance of transforming the aviation system into NextGen quickly and efficiently. This is not a new idea. Numerous bipartisan commissions have recommended cost-based funding for the FAA over the last two decades, and air traffic control providers in every other developed country have cost-based funding. We do not. That is unfair to those who fly in the system and will hinder the implementation of NextGen.

Presently, there is little connection between what users pay into the system and the costs they generate, and this detachment leads to over-consumption of air traffic services, and ultimately congestion. We know the system is not cost-based from the results of the FAA’s most recent study. Using comprehensive cost accounting and activity data, we put together the most detailed and transparent cost allocation ever done by FAA or, we believe, by any other air traffic control provider.

Costs in our study were classified by type of air traffic service. This includes dividing airports into large, medium and low activity categories. We evaluated over 600 cost accounting projects and divided the costs between two main user groups—high performance turbine aircraft and piston aircraft. The study considers piston users to be “marginal” and assigns them virtually none of the system’s fixed costs, except at the low activity towers. And our allocation recognizes that a jet in the middle of Montana does not drive the same costs as a jet going into O’Hare. But a corporate jet using exactly the same air traffic services as a commercial jet does drive the same costs.

However, under the current tax system, corporate jets contribute very little tax revenue despite often using virtually the same airspace and services as a commercial airliner. For example, a typical commercial airliner flying from LaGuardia to Miami would pay approximately $2,015 in taxes. In contrast, a large private jet, flying the same distance, through the same airspace, using the same air traffic services, would pay roughly $236 in fuel taxes. This boils down to the passengers flying on commercial airlines subsidizing the flights of corporate executives and others who fly private jets, and a system that incentivizes incredible growth in general aviation traffic. On a system-wide basis, our cost allocation found that general aviation drives about 16% of the costs of the air traffic control system, while only paying about 3% of the taxes, a situation that is unsustainable given the growth in GA flight time that we expect. I recognize there has been a lot of rhetoric about fairness over the last few months. However, the sheer numbers are hard to refute. And it’s important to note that in the Administration’s proposal, we only proposed that GA users pay 11% of the total tax burden, with 10% coming from turbine users and 1% from piston users. That’s a particular break for piston users, who would pay less than one-quarter of the air traffic costs allocated to them.

The commercial taxes are currently not cost-based either. The primary source of the commercial tax revenue comes from the 7.5% excise tax that we all pay on the price of commercial airline tickets. This results in different passengers on the same airplane paying different amounts into the Airport and Airway Trust Fund. The same flight on two different days would generate two different amounts of revenue depending on how many passengers are on the plane and what they paid for their tickets. In short, tying the aviation system’s revenue to the price of a ticket may have made some sense before airline deregulation, but it now has nothing to do with the cost to provide service and is an unfair way to fund the operation of our national airspace and the transformation to NextGen.

I know there are some who argue that the current tax system can support the FAA, even if it is not cost-based. While it may be possible to finance pieces of NextGen through the existing taxes, the existing system is inflexible and will not enable the implementation of NextGen as quickly or as rationally as a cost-based funding structure. For instance, some users have said that they would pay additional fees to achieve the efficiencies of NextGen sooner; under the current tax system, this type of flexibility is not possible. We do project revenue to grow under the current system, but the fact that revenue is projected to grow over the long term really misses the point. Keep in mind that not only are we facing the implementation costs of NextGen—which is a two-decade long project--but we also have to operate and manage traffic growth within the current system immediately. Without a cost-based revenue structure that encourages the most efficient use of the airspace, we are vulnerable to short-term increases in delays throughout the system and to long-term funding volatility for NextGen as ticket prices fluctuate. With cost-based financing, the factors that drive our costs—such as how many flights users make and how far they fly—would also drive our revenues. Under the current taxes, there are limited incentives to use resources efficiently, since system users do not pay based on costs. With a cost-based structure, users would understand the impact of their actions and also see a direct relationship between investments we make and the costs they pay. Finally, without cost-based financing, commercial airline passengers will continue to subsidize corporate jets, and the disparity will only get worse since private jet activity will grow significantly faster than commercial flights.

This year is a once-in-a-generation opportunity, presenting a rare chance to leave an extraordinary legacy for our children. But to develop the NextGen system successfully, we need a revenue stream that is tied to the actual cost of our operations. We need a revenue stream that’s equitable and rational. Our financing system should be balanced, fair, and provide predictability, reliability, and stakeholder involvement. It must also take into account the valuable and unique role that aviation plays in small communities across the country.

We are pleased S. 1300 supports the need to transform the aviation system by providing funding through a modernization surcharge that supports NextGen-related capital projects. I hope the Finance Committee will use this building block in the construction of a fair and cost-based financing system for the FAA. We know that the Administration’s bill has led to a spirited debate over financing the air transportation system. Regardless of what type of financing mechanism is ultimately adopted, we believe it is imperative that such a system mirror actual costs and charge those responsible for the services provided to them.

Price of inaction

As I mentioned at the outset, there is an urgent need for action. The expiration of the current taxes is less than three months away. Ten years ago, the last funding debate resulted in a series of lapses in aviation taxes during two years of short term fixes. During that time the Airport and Airway Trust Fund lost 10 months of tax revenues. At that time, the uncommitted balance of the Trust Fund was sufficient to sustain the FAA, but the start-stop nature of the short-term fixes caused serious problems for programs such as AIP. Today, the Trust Fund’s uncommitted balance is equivalent to less than two months of appropriations. Thus, a lapse in tax authority would have real and significant consequences. The aviation system cannot afford a lapse that puts air transportation – the lifeblood of our economy - at risk.

Outyear Costs

Finally, we note that section 313 of S. 1300 threatens the FAA’s ability to control its costs in the outyears. Under this provision, in the event of a negotiation impasse, the matter would go to binding arbitration. The Administration opposes legislative efforts that would limit the FAA’s ability to manage its workforce and that would threaten investment in critical aviation safety programs.

Also, the authorization levels in the Senate Commerce bill are significantly higher than those proposed in the Administration’s bill for the airport grants program. Authorization levels consistent with the Administration’s proposal would adequately support the capital program and reduce the need for higher taxes to support the authorization levels.

Conclusion

This committee will make some serious decisions over the coming weeks affecting the future of the aviation system. Before you make these determinations, I ask that you take a step back and look at the big picture. In it you will see passengers crowded into terminals, delays piling up—from large hubs to small communities, but you will also see an opportunity to make real progress, in a balanced, fair way for the aviation community as a whole, not just for a select few.

So far, in the Senate’s action on the aviation reauthorization, I have been impressed by the recognition of two undeniable facts. First, NextGen technology and programs are necessary to carry U.S. aviation into the first quarter of this century and lay the foundation for what lies beyond. Second, there is a great deal of inequity built into the current tax structure and this is an opportunity to correct it.

Mr. Chairman, that concludes my prepared statement. I would be happy to answer your and the other Senators’ questions at this time.

The Next Generation Air Transportation System Financing Reform Act of 2007

STATEMENT OF

MARION C. BLAKEY,
ADMINISTRATOR,
FEDERAL AVIATION ADMINISTRATION,

BEFORE THE

HOUSE TRANSPORTATION AND INFRASTRUCTURE COMMITTEE,
SUBCOMMITTEE ON AVIATION,

THE FAA’S REAUTHORIZATION PROPOSAL,

THE “NEXT GENERATION AIR TRANSPORTATION SYSTEM FINANCING REFORM ACT OF 2007,”

ON MARCH 14, 2007.

Chairman Costello, Representative Petri, Members of the Subcommittee:

I am happy to appear before you today to provide an overview of the Administration’s proposal to reform the funding structure for, and reauthorize the programs of the Federal Aviation Administration (FAA). Because we view this proposal as the foundation for the future, we entitled it the “Next Generation Air Transportation System Financing Reform Act of 2007.” I want to thank Chairman Oberstar, Mr. Mica, Chairman Costello, and Mr. Petri for introducing our proposal, H.R. 1356, by request, and I also want to thank the Committee for holding a series of early hearings on reauthorization. They will certainly provide us with an opportunity to fully explore the important issues facing aviation today and, hopefully, lead to the development of consensus solutions. The simultaneous expirations at the end of September of the funding authorization for the FAA’s current programs as well as the ten-year term for existing taxes that fund the Airport and Airway Trust Fund (Trust Fund) present us all with a unique opportunity to make a better system possible. Moreover, ten years ago, the last funding debate resulted in a lapse of the taxes. At that time, the uncommitted balance of the Aviation Trust Fund was sufficient to sustain continued funding of the aviation accounts without disruption to the system. Today, the Trust Fund balance cannot support such a lapse, and thus such a lapse would have potentially significant consequences. We all understand the importance of this industry, just as we are all committed to its success. It is because of our shared values and goals for aviation that I am confident that hard work and dedication will result in a new and better system for funding the FAA by September 30th.

When I was here last month to testify on our fiscal 2008 budget, Secretary Peters had sent our proposal to Congress that day. Even though during that hearing we touched on some of the major elements of the bill, I am grateful for the opportunity to return and discuss our proposal in greater depth. While our proposal has generated some spirited debate already, I think we can all agree that we share two fundamental goals for reauthorization: first, that we continue to keep our air transportation as safe as we possibly can, and, second, that we have the ability to grow the system to meet our nation’s future air transportation needs. The Administration’s proposal leads us towards these goals by supporting the transformation of our air transportation system, responding to a changing aviation industry, and creating a rational funding system that ties revenues to costs.

The Administration’s proposal supports the transformation to the Next Generation Air Transportation System (NextGen). Without this transformation, the current system is simply incapable of accommodating future demand. As we look out into the future, we see a system that will need to grow to accommodate the demands of our stakeholders and the flying public. These issues will be front and center at our annual Aviation Forecast Conference, which begins tomorrow. Passenger demand has returned to pre-9/11 levels and we project that the system must be ready to serve over 1 billion passengers annually by 2015, and continuing growth through 2025. It will be difficult to meet this challenge under the current system, where the needs of NextGen must compete with other funding priorities in the appropriations process. The Administration’s proposal meets this challenge by largely funding NextGen investments through user-supported offsetting collections.

The current financing mechanisms, both in terms of taxes and spending, are not tied to FAA’s cost to deliver services, and therefore are not scalable to meet these growing demands. This can be illustrated by example. Consider two identical aircraft, flying the same route from Boston to Miami, one full of passengers, and the other only half–full. Although both planes impose the same air traffic control costs on the system, the full plane will contribute far more to the funding of the air traffic control system. As another example, consider an airline that is replacing a large aircraft flying between two cities, with two smaller aircraft flying the same number of people between those cities. This change in service will impose twice as much cost on the air traffic control system, but under the current system, there is no incentive for the airline to consider those additional costs in its decision. Finally, the greatest flaw in the current system becomes apparent when one considers that while a corporate jet consumes the same air traffic control services as a commercial airline, because the corporate jet has no passengers, under the current financing system, it contributes far less to the funding of air traffic control services than ticketed passengers flying on the commercial airline. The following table highlights this issue for a number of illustrative flights from the Los Angeles area to the San Francisco area:

Operator Type	Aircraft Type	# of Passengers	Estimated Current Taxes
Airline	Boeing 777	203	$2,000
Airline	Boeing 757	138	$1,334
Airline	Airbus 319	86	$837
Airline	Bombardier CRJ-200	33	$331
Air Taxi	Learjet 35	5	$116
Corporate Jet	Citation II	N/A	$58
GA Piston	Bonanza 36	N/A	$7

Under the current tax structure, it is clear that taxes paid by different user categories do not generally reflect the costs those users impose on the system. Commercial airline passengers currently pay over 95 percent of the Trust Fund taxes, but our cost allocation shows that the aircraft carrying them account for approximately 73 percent of air traffic costs. In many cases, “high end” turbine (jet and turboprop) general aviation (GA) flights are consuming similar FAA and airspace resources as the commercial operators, but paying only a fraction of what commercial operators pay through the passenger taxes. For example, as the table above shows, a corporate jet flying from Los Angeles to San Francisco today pays only 17% of what a 50-seat regional jet pays, and less than 5% of what a Boeing 757 pays. In other words, commercial operators and everyday passengers are subsidizing use of the system by corporate jets. I do not believe this is equitable.

Because of the fundamental disconnect between the existing tax structure and the FAA’s workload, we strongly believe that the FAA needs to move to a different, more rational funding mechanism. The Administration’s proposal creates a transparent financing system where aviation users pay for FAA services through user fees and fuel taxes, so that all users pay their fair share of air traffic control services. Most commercial aviation operators would pay for their fair share of the costs of air traffic control services through user fees, while general aviation users and some commercial users would pay for these services through a cost-calibrated fuel tax. This linkage between what users pay and what FAA invests in will be critical to facilitate our transition to the NextGen modernization the air traffic control system.

I want to be clear that the primary purpose of this proposal is not about collecting more money for the FAA, it is about creating a more rational, equitable, and stable system that provides appropriate incentives to airspace users to efficiently use increasingly congested airspace, to the FAA to control costs. However, by adopting new discretionary user fees and authorizing borrowing, the Administration’s proposal does allow the FAA the flexibility to meet the financing challenges of NextGen and facilitates modernization of the aviation system on an assured and predictable basis.

The new system will facilitate more reliable, more predictable, and less congested air travel for the traveling public. The FAA will continue to have strong congressional and public oversight, and our proposal adds additional oversight through a newly created Air Transportation System Advisory Board to play a role in key agency financial decisions and provide strong incentives for the FAA to control costs and meet the demand for services efficiently. The financing proposal is the product of both significant consultation with the public, including our aviation stakeholders, as well as a detailed analysis of the current financing system and various alternatives. We have attempted to balance the diverse views that our stakeholders have expressed with the need for a stable, equitable, and cost-based funding structure. Our recommended solution builds on the work of numerous bi-partisan commissions from the past two decades, including the National Civil Aviation Review Commission that Congress created and that former Secretary Mineta chaired approximately ten years ago.

Let me describe in greater detail how our proposal would fund the different parts of the FAA.

Proposed Funding for the Air Traffic Organization (ATO)

The cost of ATO’s services will primarily be funded by those operating in the system. The manner of contribution will vary depending on the type of operation. Turbine commercial flights would primarily pay user fees; general aviation and all piston-powered flights would primarily pay fuel taxes; and the General Fund would finance the costs of services provided to public users and other programs that are in the general public interest.

User fees would apply to turbine commercial flights, including those by U.S. and foreign airlines, passenger and freight carriers, domestic and international flights, charter operators, and regional airlines. They would cover all flights by jet aircraft that are considered commercial under the current tax code, including air taxis and flights operated under fractional ownership. Collecting user fees for air traffic services is an internationally accepted practice in widespread use around the world, and would be consistent with the recommendations of at least seven bi-partisan commissions that have studied this issue over the last two decades. These fees would be based on data derived from the agency’s cost accounting and cost allocation systems—including the operations, maintenance, and overhead expenses for the services provided, the facilities and equipment used in such services, and the projected costs for the period during which the services are provided. Existing U.S. overflight fees would be integrated into these new user fees. While the proposal gives the FAA and its users latitude in how the fees would be structured, these fees would clearly tie FAA revenues much more closely to the actual cost of the services provided. We anticipate that approximately three-fourths of the Air Traffic Organization’s budget would come from these user fees.

The fees would be dedicated to air traffic control and related services and would be subject to oversight through the annual budget and appropriations process and treated as discretionary offsetting collections for budget purposes. Congressional appropriators would receive credit for these collections and would make them available for expenditure through annual appropriations action. The user fee spending would be fully offset by the user fee collections. It would rise or fall based on FAA’s costs and would not compete with any other discretionary budget priorities (as spending Trust Fund revenues do today).

The general aviation (GA) community and piston commercial operations would contribute their allocated share of air traffic control costs primarily via a fuel tax. We have considered stakeholder feedback from this community and accept the argument that the efficiency and simplicity of the fuel tax mechanism merit its continued use as the primary mechanism for GA’s contribution to FAA funding. We identified the costs associated with these users and then set the fuel tax rates to recover those costs. We anticipate that just over 10 percent of the ATO’s budget would come from these taxes, which would continue to be deposited in the Trust Fund and be subject to appropriation. The bill proposes periodically recalibrating the portion of the GA fuel tax dedicated to funding ATO based on updates to FAA’s cost allocation study.

In addition to the fuel tax, GA and piston commercial flights may be subject to a terminal user fee when they arrive or depart at one of a limited number of large hub airports. In general, these airports are the most congested terminal facilities in the aviation system, and all users at congested facilities contribute to congestion for other users. Given that large hub airports are in metropolitan areas that have alternative airports, which would not be subject to this fee, we believe it is appropriate to apply fees to all users of the most congested airports.

The costs associated with air traffic control service for military and other public users, as well as other functions and services deemed to be in the general public interest would be funded from the General Fund appropriation, as discussed below.

Proposed Funding for Aviation Safety

The funding proposal includes modest user fees to pay for the costs of 25 activities in the areas of certification and registration. These include issuance of certain certificates, appointment and training of designees, registration of aircraft and airmen, airmen medical certificates, and training provided to other aviation authorities. All of these activities are specific services that FAA provides for individual businesses; other federal, state and local government agencies charge for similar services, as do many international aviation authorities. They are FAA products and services that have value to those who receive them, and that are initiated by customer action. In fact, FAA currently charges fees for many of these services; however, the current fees are set significantly below the cost of providing the service—and below the price of other comparable services. For example, the $5 it currently costs to register an airplane would not go very far toward registering a car in most states. The legislation specifies the amount to be charged for 12 specific services. Thirteen other activities are identified for which fees will be collected, but do not have the unit charge specified as FAA’s cost accounting system is still being implemented with respect to regulation and certification activities. As with the ATO fees, the charges for these activities will be determined based on the available data derived from the agency’s cost accounting and cost allocation systems and revenue from the fees would be treated as offsetting collections. Based on the historical cost of these activities, DOT anticipates that approximately 10 percent of FAA’s Aviation Safety budget will come from user fees.

Regardless of the type of product or amount of fee determined for that product, FAA will always make fee decisions considering safety first. We are also mindful of the significant international leadership role of both the FAA and the U.S. industry, and the fact that benefits from many aviation safety functions (such as ongoing surveillance) are widely dispersed to the traveling and non-traveling public. No fee structure will compromise the FAA’s statutory safety responsibilities or the U.S. aviation community’s ability to remain the world’s principal system innovator. As a result, we are proposing that the vast majority of FAA’s aviation safety responsibilities remain funded from the General Fund.

General Fund Proposal

The Administration derived its General Fund proposal by evaluating specific activities to determine whether they are in the general public interest and have a compelling case for a General Fund appropriation. The dollar figures in the reauthorization proposal are based on the following activities and services:

Air traffic costs allocated to public users (military, other government aircraft, and air ambulances), because providing air traffic control services to these flights as serving the public good;
Flight service stations, because charging user fees for these services would encourage general aviation pilots to fly “outside the system,” which would have a negative safety impact;
Low activity towers, because they help provide safe access to the aviation system to numerous small communities and are a critical part of the national aviation infrastructure; the primary users of these terminals (piston aircraft) likely cannot bear the cost of funding them, even though many of these towers are contract towers, which are the FAA’s most cost-efficient facilities;
Safety regulation and oversight that are not recovered by user fees, because these regulatory functions benefit the general public by contributing to a safe and reliable air transportation system;
Commercial Space Transportation, because, given the early and volatile state of the industry, it would be virtually impossible to develop a schedule of fees that would generate significant revenue without unduly burdening the industry and placing U.S. companies at a competitive disadvantage compared to heavily subsidized firms from other countries; and
The portion of Research, Engineering and Development (RE&D), sponsored by FAA’s Aviation Safety organization, related to aging aircraft and aircraft catastrophic failure prevention (approximately $17 million of the RE&D budget[1]), because this research supports FAA’s “public good” regulatory functions.

Transition and Elimination of Other Aviation Excise Taxes

The Administration proposes that the changes to the aviation financing system take effect at the start of fiscal year 2009, in order to provide the FAA with sufficient time to establish user fees and implement a billing and collection system. Our proposal therefore extends the current excise taxes for one year to ensure that the FAA has sufficient funding in FY 2008.

As of FY 2009, the existing domestic ticket tax (including the tax on mileage awards), domestic segment tax, cargo waybill tax, and Alaska/Hawaii departure tax would expire under our proposal. The proposed user fees, adjusted fuel taxes, and the adjusted international arrival and departure tax would replace these taxes. This represents a significant simplification of the aviation excise tax system.

FAA Governance

A review of air traffic service providers around the world shows that one of the common changes accompanying the introduction of user fees is adoption of a “user pays, user says” policy – according users a significant role in decisions relating to the setting of fees and the use of moneys collected.

Therefore, our proposal creates an Air Transportation System Advisory Board, comprised of user representatives and public interest members appointed by the Secretary, which would have a significant role in the decisions of the agency. Although the FAA Administrator and the Secretary retain ultimate responsibility for the safety and operation of the National Airspace System and thus have the final decision authority, the Board would provide advice and recommendations on the creation and adoption of user fees, and would propose modifications to them on a periodic basis. Under our proposal, if the Board does not approve the establishment or modification of a fee, the Administrator can only implement it after publishing a written determination in the Federal Register. This Board would also review and make recommendations with respect to major capital infrastructure decisions and modernization projects, the agency’s strategic plan, and the development and adoption of ATO’s operational performance metrics. Finally, the Board would review and provide advice on FAA’s safety programs, budget, and cost accounting system. Of course, as the FAA is a government agency, Congress will always have the ultimate oversight authority.

The FAA Administrator and a representative from the Department of Defense would be Board members, along with members representing airports, air carriers, general aviation, business aviation, aviation manufacturing, and the public interest. The Management Advisory Council and Air Traffic Services Committee would be discontinued with the creation of this new Board.

Proposed Funding for AIP, RE&D and EAS

The Subcommittee has scheduled a separate hearing on the airport-related portion of reauthorization for later this month, at which time we will provide detailed testimony on those aspects of our proposal. For the moment, we would briefly note the funding aspects of our proposal. Airports are a key part of the system, and that includes small primary and general aviation airports that rely on AIP funding to help meet their capital needs. We have proposed changes to Federal funding programs that will stabilize and enhance these funding sources for airports. Our proposal ensures that smaller airports that cannot generate sufficient funding on their own can rely on their entitlement funds to complete strategic projects. These airports play an important role in the national aviation system.

We propose to continue financing the AIP program through taxes. The proposed taxes are administratively simple and build on existing collection mechanisms. Specifically, our bill would fund the AIP program via a set of simplified excise taxes, consisting of a flat, universal fuel tax for domestic commercial and all GA flights and an international passenger head tax for international commercial passenger flights. This universal fuel tax would be in addition to the proposed GA ATO fuel taxes for GA users and piston commercial users. Like the ATO taxes, these taxes would be deposited into the Airport and Airway Trust Fund and be subject to Congressional appropriation. The proposed taxes are expected to generate receipts sufficient to cover the proposed authorization levels for AIP, the Essential Air Service (EAS) program, and the Trust Fund’s portion of RE&D. If the enacted authorization levels are different from the proposed levels, the tax rates proposed could be adjusted accordingly. The bill also proposes indexing both the AIP portion of the fuel tax and the international passenger tax to keep pace with inflation.

The universal fuel tax and international passenger tax would also be the funding sources for all of EAS and most of RE&D. As in the case of AIP, it is appropriate for users to fund most research and development because it ultimately benefits them, but it is challenging to allocate research costs to specific users. Similarly, EAS has a long history of being funded by users through overflight fees; however, it is not part of air traffic control costs, and similar to AIP, is largely a grant program to assist small communities that cannot support service on their own. Therefore, the Administration has included EAS and RE&D funding requirements in the proposed universal fuel tax and international passenger tax rates. However, AIP is the primary driver of the tax rates.

NextGen – Funding of Major Capital Projects

Examples of FAA projects that may be appropriate for debt financing include safety-critical and mission-essential software and systems that controllers and traffic flow managers will use to support trajectory based operations in the NextGen system, enhancements to the global positioning system (GPS) technology related to civil aviation, surveillance technology for homeland security and defense, and potential facility consolidation. This authority would be targeted, as noted, for a limited time period (FY 2013 to FY2017) and would be capped at $5 billion. We think this innovative authority will give us what we need when we need it.

Congestion Charges at Certain Capacity-Constrained Airports

While our bill will provide us the tools to be prepared for the future, we must also manage our current system safely and efficiently. To that end, I wish to briefly note two provisions in our bill that would authorize the use of market-based mechanisms (e.g., auctions or congestion pricing) to control congestion and delay at capacity-constrained airports. While FAA’s policy is to expand capacity to meet demand, physical expansion is not feasible at certain airports, most notably at New York’s LaGuardia Airport. Therefore, specifically with regard to LaGuardia, our bill would give the Secretary and the FAA statutory authority to authorize the Port Authority of New York and New Jersey (Port Authority) to use market-based mechanisms at the airport. The language generally complements rulemaking FAA is currently undertaking with respect to LaGuardia to replace the expired High Density Rule (HDR). If the Port Authority implements a market-based mechanism and such mechanism produces annual revenue in excess of associated administrative costs, the Port Authority would have to deposit the excess revenue in an escrow account. It could then use those funds on otherwise eligible airport related projects or any other project that the Secretary finds is in the public interest. If the Port Authority fails to implement a market-based mechanism at LaGuardia within one year of the Secretary’s determination, the Secretary would have authority to implement such a mechanism at the airport.

Similarly, the second provision establishes a pilot program allowing for broader evaluation of market-based mechanisms. The Secretary could approve the participation of up to 15 airports in the program. For airports experiencing congestion that results in delays affecting the regional airspace, participating airports could implement a market-based mechanism, for domestic flights, to the extent necessary to achieve a target reduction in congestion and operating delays. The amount of the fee would be set by the airport operator. Any surplus revenue that results would be placed in an escrow account to be used only for airport related projects or any other project the Secretary finds is in the public interest with priority given to projects at the airport where the fees were collected. The program would also provide for participation of airports experiencing congestion that results in more widespread delays.

Environmental Stewardship and Streamlining

Part of our NextGen vision is to provide environmental protection that allows for sustained growth in our aviation system. Our proposal includes provisions to enhance the FAA’s ability to work cooperatively with our partners to preserve the environment by developing technologies, operational procedures, and best practices to minimize the impact of aviation. Our goal is an aviation future that is quieter, cleaner, and more energy efficient. Key environmental stewardship provisions include:

A research consortium for the development, maturing, and certification of lower energy, emissions, and noise engine and airframe technology over the next ten years;
A permanent Airport Cooperative Research Program for research and development specifically related to the airport environment; and\
n environmental mitigation demonstration pilot program to demonstrate the noise, air quality, or water quality benefits of promising research concepts at airports.

We have also proposed environmental streamlining provisions that are intended to improve the administration of current programs without affecting environmental quality in such areas as the state block grant program and the air tour management program.

Realignment and Consolidation of Aviation Facilities and Services

As we plan to transform our air transportation system, we must also transform ourselves as an agency—a provider of services to the aviation community. Our bill includes a proposal that would create a specific process for the comprehensive study and analysis of how we could realign and consolidate our services and facilities to help us reduce capital, operating, maintenance, and administrative costs on an agency-wide basis with no adverse effect on safety. In addition to our current authority, this provision would provide a critical tool that the FAA could use to operate in a more business-like fashion. Any realignments or consolidations recommended by the Administrator under to this section would only be implemented after a thorough review by a newly created Commission of experts, and the opportunity for the public, and ultimately, Congress, to examine the recommendations.

Extension of Aviation InsuranceProgram

Finally, I wish to mention our proposal for the FAA’s aviation insurance program. This is a program that has been very important in recent years to the continued operations of the industry, but which, we feel needs some adjustments. Our bill would extend the Secretary’s overall authority to provide aviation insurance, now set to expire on March 30, 2008, to March 30, 2013. It also removes current requirements for the program to provide first dollar coverage, thus permitting deductibles and the opportunity for commercial coverage of those deductibles. Current law allows the Secretary to limit an airline’s third-party liability to $100 million and also prohibits punitive damages against an airline, aircraft or engine manufacturer, as well as the Government for any cause resulting from a terrorist event. This authority to limit liability is also extended by this section.

Conclusion

Mr. Chairman, I want to conclude by emphasizing that I know we all share the same basic goals for an industry that we all care about deeply. We want a safe system that can meet future demand - one that is cost effective and efficient and that meet the needs of the flying public. We all appreciate the importance of this industry, not only to those of us lucky enough to be a part of it, but to every American. While I anticipate and look forward to a frank and wide-ranging discussion of this proposal and others that I am sure will be put on the table, I cannot overstate my personal commitment to the need for a funding system that better ties FAA’s costs to its revenues and its revenues to its spending. Changing how we fund and operate our system will be hard, but maintaining the status quo will not get us what we all want: a more efficient, modern aviation system.

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

[1] The remainder of RE&D would be funded from the Airport and Airway Trust Fund, and is included in the universal fuel tax rate discussed below under “Proposed Funding for AIP, RE&D and EAS”.

Financing Reform Proposal

STATEMENT OF

MARION C. BLAKEY,
ADMINISTRATOR,
FEDERAL AVIATION ADMINISTRATION,

BEFORE THE
SENATE COMMERCE COMMITTEE,
SUBCOMMITTEE ON AVIATION

FINANCING REFORM PROPOSAL,

ON FEBRURARY 15, 2007.

Chairman Rockefeller, Senator Lott, members of the Subcommittee, I am happy to appear before you today to discuss the Administration’s proposal to reauthorize the programs of the Federal Aviation Administration (FAA). I have mentioned in my previous appearances before you that we have been working very hard on this proposal for quite some time. With both our programs and our funding set to expire at the end of the fiscal year, we are presented with an important opportunity to make needed changes.

The essential question is: why should we change the current financing mechanisms? The answer, simply put, is that the current mechanisms are not well suited to support the transformation to the Next Generation Air Transportation System (NextGen). This transformation is essential. As we look out into the future, we see a system that will need to grow to accommodate the demands of our stakeholders and the flying public. The current financing mechanisms – both in terms of taxes and spending – are not tied to FAA’s cost to deliver services, and therefore are not scalable to meet these growing demands. To deliver the benefits of NextGen, it is essential that a reliable funding stream that better ties our income and our outgo are better tied to the services we provide. NextGen is a reachable goal only if its development and integration is not left to the characteristics of a funding system that does not cover the costs of the system and the services provided. A reliable funding foundation is essential and failure to provide one may well result in tangible programmatic problems in the near term.

Ten years ago, the last funding debate resulted in a lapse of the taxes. At that time, the uncommitted balance of the Aviation Trust Fund was sufficient to sustain continued funding of the aviation accounts without disruption to the system. Today, the Trust Fund balance cannot support such a lapse, and thus such a lapse would have potentially significant consequences. We must approach our work this year as being crucial to the future of aviation. I am sure the debate will be robust and I am anxious to take part in it. We all understand the importance of this industry, just as we are all committed to its success. It is because of our shared values and goals for aviation that I am confident that hard work and dedication will result in a new and better system for funding the FAA.

The Administration’s proposal creates a financing system where what users pay into the system – whether user fees or taxes – and the benefits they get out of the system will be more stable and transparent. The proposal adopts a cost-based financing system for the FAA through new user fees and fuel taxes. Most commerical aviation operators would pay for the costs of air traffic control services through user fees and general aviation would pay for these services through a cost-based fuel tax. The new user fees will allow aviation users to pay directly for the services that FAA provides in managing the use of the national airspace. This linkage between what users pay and what FAA invests in will be critical to facilitate our transition to the NextGen modernization the air traffic control system.

The new system will facilitate more reliable, more predictable, and less congested air travel for the traveling public. A newly created Board will give our stakeholders a significant role in key agency financial decisions and will provide strong incentives for the FAA to control costs and meet the demand for services efficiently. The financing proposal is the product of both significant consultation with the public, including our aviation stakeholders, as well as a detailed analysis of the current financing system and various alternatives. We have attempted to balance the diverse views that our stakeholders have expressed with the need for a stable, equitable, and cost-based funding structure. Our recommended solution builds on the work of numerous bi-partisan commissions from the past two decades, including the National Civil Aviation Review Commission that Congress created and that former Secretary Mineta chaired approximately ten years ago.

Today’s funding system is largely based on taxes that are, for the most part unrelated to the costs of the services provided by the FAA. While this system has worked well in the past, changes in the industry require that we replace it with something that better reflects the cost of providing service. The success of low cost carriers has been a tremendous benefit to the flying public, but in many instances it results in two identical operations, imposing identical costs to the FAA, paying very differently into the system because so much of the current revenue stream is based on the cost of the ticket. Similarly, as airlines work to control costs per enplanement, they are using increasing numbers of small aircraft. This trend adds to the workload of our air traffic system without increasing tax revenue commensurately. If an airline carries the same number of passengers (at the same fares) on two smaller jets instead of one larger jet, the tax revenues do not change, but the controller workload doubles. Our latest forecasts indicate that the trend to use smaller aircraft by airlines will continue, especially as the current system provides no incentives to the airlines to respond to the costs that a switch from large jets to regional jets imposes on air transportation system.

The results of these trends are best captured in the two charts that I have included with this statement. The first depicts the uncommitted balance in the Trust Fund in FY 2006. This information clearly supports the need for immediate action to prevent any lapse in funding. The second chart compares the Trust Fund revenue to the activity levels in the system. There is clearly no connection between the two. The recent industry changes I discussed have resulted in this disconnect being even more apparent. It is extremely important that a connection be established to ensure an uninterrupted, stable, reliable funding stream to transition us to NextGen.

Under the current tax structure, it is clear that taxes paid by different user categories do not generally reflect the costs those users impose on the system. Commercial airlines and their passengers currently pay over 95 percent of the Trust Fund taxes, but our cost allocation shows that they account for approximately 73 percent of air traffic costs. In many cases, “high end” turbine (jet and turboprop) general aviation (GA) flights are consuming similar FAA and airspace resources as the commercial operators, but paying only a fraction of what commercial operators pay.

Because of the fundamental disconnect between the existing tax structure and the FAA’s workload, we strongly believe that the FAA needs to move to a different, more rational funding mechanism. I want to be clear that this proposal is not about collecting more money for the FAA, it is about creating a more rational, equitable, and stable system that provides appropriate incentives to airspace users to efficiently use increasingly congested airspace, to the FAA to control costs. Moreover, by adopting new discretionary user fees, the Administration’s proposal gives FAA the flexibility to meet the financing challenges of NextGen and facilitates modernization of the aviation system on an assured and predictable basis.

Let me describe in greater detail how our proposal would fund the different parts of the FAA.

Proposed Funding for the Air Traffic Organization (ATO)

User fees would apply to turbine commercial flights, including those by U.S. and foreign airlines, passenger and freight carriers, domestic and international flights, charter operators, and regional airlines. They would cover all flights by jet aircraft that are considered commercial under current tax code, including air taxis and flights operated under fractional ownership. Collecting user fees for air traffic services is an internationally accepted practice in widespread use around the world, and would be consistent with the recommendations of at least seven bi-partisan commissions that have studied this issue over the last two decades. These fees would be based on data derived from the agency’s cost accounting and cost allocation systems—including the operations, maintenance, and overhead expenses for the services provided, the facilities and equipment used in such services, and the projected costs for the period during which the services are provided. Existing U.S. overflight fees would be integrated into these new user fees. While the proposal gives the FAA and its users latitude in how the fees would be structured, these fees would clearly tie FAA revenues much more closely to the actual cost of the services provided. We anticipate that approximately three-fourths of the Air Traffic Organization’s budget would come from these user fees. The fees would be dedicated to air traffic control and related services and would be treated as discretionary offsetting collections for budget purposes. The proposal also authorizes a reserve, funded by user fees, which FAA would use to minimize the need for increases in fee rates that might otherwise be required to avoid funding shortfalls attributable to unanticipated reductions in aviation activity, or to emergency requirements.

The general aviation (GA) community and piston commercial operations would contribute their allocated share of air traffic control costs primarily via a fuel tax. DOT has considered stakeholder feedback from this community and accepts the argument that the efficiency and simplicity of the fuel tax mechanism merit its continued use as the primary mechanism for GA’s contribution to FAA funding. Our goal is to identify the costs associated with these users and then to set the fuel tax rates to recover those costs.

We anticipate that just over 10 percent of the ATO’s budget would come from these taxes, which would continue to be deposited in the Airport and Airway Trust Fund and be subject to appropriation. The bill proposes periodically recalibrating the portion of the GA fuel tax dedicated to funding ATO based on updates to FAA’s cost allocation study.

Proposed Funding for Aviation Safety

The funding proposal includes modest user fees to pay for the costs of 25 activities in the areas of certification and registration. These include issuance of certain certificates, appointment and training of designees, registration of aircraft and airmen, airmen medical certificates, and training provided to other aviation authorities. All of these activities are specific services that FAA provides for individual businesses; other federal, state and local government agencies charge for similar services, as do many international aviation authorities. In fact, FAA currently charges fees for many of these services; however, the current fees are set significantly below the cost of providing the service. The legislation specifies the amount to be charged for 12 specific services. Thirteen other activities are identified for which fees will be collected, but do not have the unit charge specified as FAA’s cost accounting system is still being implemented with respect to regulation and certification activities. As with the ATO fees, the charges for these activities will be determined based on the available data derived from the agency’s cost accounting and cost allocation systems and revenue from the fees would be treated as offsetting collections. Based on the historical cost of these activities, DOT anticipates that approximately 10 percent of FAA’s Aviation Safety budget will come from user fees.

General Fund Proposal

Air traffic costs allocated to public users (military, other government aircraft, and air ambulances), because DOT views providing air traffic control services to these flights as serving the public good;
Flight service stations, because charging user fees for these services would encourage general aviation pilots to fly “outside the system,” which would have a negative safety impact;
Low activity towers, because they help provide safe access to the aviation system to numerous small communities and are a critical part of the national aviation infrastructure; the primary users of these terminals (piston aircraft) likely cannot bear the cost of funding them, even though many of these towers are contract towers, which are the FAA’s most cost-efficient facilities;
Safety regulation and oversight that are not recovered by user fees, because these regulatory functions benefit the general public by contributing to a safe and reliable air transportation system;
Commercial Space Transportation, because, given the early and volatile state of the industry, it would be virtually impossible to develop a schedule of fees that would generate significant revenue without unduly burdening the industry and placing U.S. companies at a competitive disadvantage compared to heavily subsidized firms from other countries; and
The safety portion of Research, Engineering and Development (RE&D) related to aging aircraft and aircraft catastrophic failure prevention (approximately $17 million of the RE&D budget[1]), because this research supports FAA’s “public good” regulatory functions.

Transition and Elimination of Other Aviation Excise Taxes

FAA Governance

Therefore, a new Governance Board (the “Air Transportation System Advisory Board”) comprised of user representatives and public interest members appointed by the Secretary would have a significant role in the decisions of the agency. Although the FAA Administrator and the Secretary retain ultimate responsibility for the safety and operation of the National Airspace System and thus have the final decision authority, the Board would provide advice and recommendations on the creation and adoption of user fees, and would propose modifications to them on a periodic basis. Under our proposal, if the Board does not approve the establishment or modification of a fee, the Administrator can only implement it after publishing a written determination in the Federal Register. This Board would also review and make recommendations with respect to major capital infrastructure decisions and modernization projects, the agency’s strategic plan, and the development and adoption of ATO’s operational performance metrics. Finally, the Board would review and provide advice on FAA’s safety programs, budget, and cost accounting system. However, the FAA Administrator would retain the safety and policy responsibilities and decision-making authority of the FAA with user input for these areas in a solely advisory capacity. Of course, as the FAA is a government agency, Congress will always have the ultimate oversight authority.

Proposed Funding and Programmatic Reforms for AIP, RE&D and EAS

The FAA is committed to a healthy national air transportation system. Airports are a key part of the system, and that includes small primary and general aviation airports that rely on AIP funding to help meet their capital needs. We have proposed changes to Federal funding programs that will stabilize and enhance these funding sources for airports.

This proposal ensures that smaller airports that cannot generate sufficient funding on their own can rely on their entitlement funds to complete strategic projects. These airports play an important role in the national aviation system. Therefore, we propose financing the program through taxes.

I am certain our proposed changes to these important programs will be the subject of future hearings before this subcommittee and look forward to sharing the details of that proposal with you. However, today I will focus my comments on how our new structure will fund AIP and our other important programs.

The proposed taxes are administratively simple and build on existing collection mechanisms. Specifically, DOT proposes funding the AIP program via a set of simplified excise taxes, consisting of a flat, universal fuel tax for domestic commercial and all GA flights and an international passenger head tax for international commercial passenger flights. This universal fuel tax would be in addition to the proposed GA ATO fuel taxes for GA users. Like the ATO taxes, these taxes would be deposited into the Airport and Airway Trust Fund and be subject to Congressional appropriation. The proposed taxes are expected to generate receipts sufficient to cover the proposed authorization levels for AIP, the Essential Air Service (EAS) program, and the Trust Fund’s portion of RE&D. The bill also proposes indexing both the AIP portion of the fuel tax and the international passenger tax to inflation to keep pace with inflation.

NextGen – Funding of Major Capital Projects

As I stated at the outset, one of the drivers of our proposed changes to how the FAA is funded is to the challenge of funding NextGen. Implementing NextGen will be a unique transition from the technology of 50 years ago to the technologies of tomorrow and it will require a substantial investment of capital. Financing this investment is something I have very strong views about. Business as usual is not an option. The new discretionary user fees will enable us to fund several important NextGen investments. However, to avoid spikes in the user fee levels the Administration’s proposal also would authorize us to borrow through the Secretary of the Treasury beginning in FY 2013 with debt service recovered from users of the system by FY 2017. This authority would contribute to a more business like funding structure, leverage limited resources, and further accelerate the transition to NextGen by better aligning payment for a project with the benefits that project generates and providing greater flexibility to take advantage of capital investment opportunities as technology changes. Examples of FAA projects that may be appropriate for debt financing include safety-critical and mission-essential software and systems that controllers and traffic flow managers will use to support trajectory based operations in the NextGen system, enhancements to the global positioning system (GPS) technology related to civil aviation, surveillance technology for homeland security and defense, and potential facility consolidation. This authority would be targeted, as noted, for a limited time period (FY 2013 to FY2017) and would be capped at $5 billion. We think this innovative authority will give us what we need when we need it.

I want to end by saying that I know we all share the same basic goals for an industry that we all care about deeply. We want a safe system that can meet future demand - one that is cost effective and efficient and that meet the needs of the flying public. We all appreciate the importance of this industry, not only to those of us lucky enough to be a part of it, but to every American. While I anticipate and look forward to a frank and wide-ranging discussion of this proposal and others that I’m sure will be put on the table, I cannot overstate my personal commitment to the need for a funding system that better ties FAA’s costs to its revenues and its revenues to its spending. It is the fundamental component that supports all of our important initiatives. So, let the debate begin.

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

[1] The remainder of RE&D would be funded from the Airport and Airway Trust Fund, and is included in the universal fuel tax rate discussed below under “Proposed Funding for AIP, RE&D and EAS”.

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Testimony

FRA’s Role in Railroad Security

Need for change

Price of inaction

Outyear Costs

Conclusion

Need for change

Outyear Costs

Conclusion

We have also proposed environmental streamlining provisions that are intended to improve the administration of current programs without affecting environmental quality in such areas as the state block grant program and the air tour management program.

Realignment and Consolidation of Aviation Facilities and Services

Extension of Aviation InsuranceProgram

Conclusion

This concludes my prepared statement. I will be happy to answer your questions at this time.[1] The remainder of RE&D would be funded from the Airport and Airway Trust Fund, and is included in the universal fuel tax rate discussed below under “Proposed Funding for AIP, RE&D and EAS”.

U.S. Department of Transportation

Want to know more?

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

[1] The remainder of RE&D would be funded from the Airport and Airway Trust Fund, and is included in the universal fuel tax rate discussed below under “Proposed Funding for AIP, RE&D and EAS”.