H.R. 2169 -- DEPARTMENT OF TRANSPORTATION
AND RELATED AGENCIES APPROPRIATIONS BILL, FY 1998
(Sponsors: Livingston (R), Louisiana; Wolf (R), Virginia)

The Administration is pleased with many aspects of the Committee bill, particularly funding support provided for transportation safety and transportation infrastructure programs. As discussed below, the Administration will seek restoration of certain of the Committee's reductions from the President's request. We recognize that it will not be possible in all cases to attain the Administration's full request and will work with the House toward achieving acceptable funding levels.

The Administration is committed to working with the House to identify reductions in the bill in order to find offsets for the restoration of funds that the Administration seeks. The Administration suggests that virtually all of its priorities could be funded through limited reductions in infrastructure programs for which the Committee's funding levels are in excess of the Administration's requests. We urge the House to reduce funding for lower priority programs, or for programs that would be adequately funded at the requested level, and to redirect funding to programs of higher priority.

NEXTEA

The Administration realizes that the Committee has not funded several requested programs because they have not yet been authorized as part of the National Economic Crossroads Transportation Efficiency Act (NEXTEA). The Administration reiterates its support for State Infrastructure Banks, the Transportation Credit Enhancement program, and the Access to Jobs and Training program. These programs will significantly increase the impact of Federal transportation investment and help to make "welfare to work" a reality. They can be accommodated within the overall funding levels agreed to by the Committee.

Federal Aviation Administration

The Administration is concerned that the overall funding level provided by the Committee for the Federal Aviation Administration (FAA) Operations account is $36 million less than requested. Although the Committee has attempted to target its reductions to administrative and non-safety areas, certain reductions could indirectly affect safety-related programs. For example, the shortfall in contract maintenance funding would likely be absorbed within base resources, possibly to the detriment of other critical activities. In addition, the reduction to the Chief Counsel's office would eliminate the new positions established in 1997, in the aftermath of the Valujet accident, to implement the Dangerous Goods and Cargo Security initiative. To ensure that the FAA has adequate resources to maintain the safe and efficient operation of the Nation's airspace system, it is important that the request for FAA Operations be fully funded.

The Committee's $15 million reduction to Research, Engineering, and Development could delay deployment of explosive detection and anti-terrorism technology needed to assure the security of the traveling public at airports nationwide. In addition, for the Facilities and Equipment account, the House is encouraged to provide FY 1998 funding to accelerate the deployment of security enhancement equipment, with offsets from excess infrastructure funding. The Administration urges the House to provide the $100 million in advance appropriations requested for this equipment in FY 1999 so that continuity can be assured in the procurement process.

Amtrak

The Administration is deeply concerned about the level of funding provided for Amtrak. While we applaud the Committee's decision to provide Amtrak with total funding at a level close to the President's request, we strongly urge the House to reallocate some of those funds from capital to operating grants to address Amtrak's critical need for operating support as indicated in the President's FY 1998 Budget.

The budget justification prepared by the Department of Transportation notes that Amtrak requires $344 million in operating grants, plus $445 million in capital assistance, to meet its financial obligations and to continue reducing its need for operating grants. The Committee's decision to provide Amtrak with only $283 million in operating grants falls $61 million short of the amount needed. The Administration strongly supports the funding levels proposed in the President's budget, which are not affected by certain technical scoring issues raised during markup.

The Federal operating subsidy supports Amtrak's day-to-day operations. Even at the funding levels proposed by the President, Amtrak will be able to remain solvent only by further increasing revenues and reducing costs. If Congress appropriates an amount for operating grants that is less than the $344 million requested by the President, it is questionable whether Amtrak would have cash reserves sufficient to meet its obligations. In light of these considerations, we strongly urge the House to provide Amtrak with operating grants of $344 million in FY 1998.

The Administration is concerned with provisions of the Committee bill that would authorize an Amtrak Commission to review and recommend changes to Amtrak's route structure. Amtrak has cut routes substantially in the recent past, and enactment of the Administration's current reform proposal ("Amtrak Restructuring Act of 1997") would allow Amtrak even greater flexibility to restructure its operations as necessary.

The Administration objects to the Committee bill's prohibition against using Amtrak capital funds to pay debt service. As noted in the Administration's NEXTEA proposal, funds for capital investment are appropriately used to pay for expenses related to debt service (i.e., principal and interest).

Earmarking

The Administration commends the Committee for not funding highway demonstration projects. However, the Administration objects to the Committee's earmarking of 42 transit projects for which Full Funding Grant Agreements (FFGAs) have neither been signed nor are expected to be signed. More than half of these projects have yet to complete required planning and engineering studies to determine their costs and benefits. The Federal share of the cost to complete only those projects for which cost data is available would be more than $4 billion, and the cost for all of the projects could be as much as $29 billion. This is in addition to the $3.7 billion outstanding Federal share of projects with existing FFGAs. Such earmarking obviously risks creating expectations that may be difficult to meet under a balanced budget.

The Committee has provided substantial funding to conduct several earmarked operational tests within the Intelligent Transportation Systems (ITS) program. The Administration has requested funding in NEXTEA to support operational tests and would prefer that, rather than setting aside funds for specific projects, these projects compete on an equal basis with other potential proposals. Furthermore, the ITS program's focus is shifting from operational testing to integrated deployment. NEXTEA provides $100 million for a new Deployment Incentives program to encourage integrated deployment. The operational tests funded by the Committee could be duplicative of previous tests.

Language Provisions

The Administration opposes the provision of the Committee bill that would prevent the use of funds by the FAA for the Flight 2000 demonstration program. The Flight 2000 program was recommended by the White House Commission on Aviation Safety and Security to demonstrate the efficiencies and expanded aviation capacity that can result from the use of new technologies to manage air traffic.

The Administration also opposes the language in the Committee bill that would prohibit any funds from being used for the FAA to plan, finalize, or implement any regulation that would promulgate new aviation user fees not specifically authorized by law. The Administration considers cost-based user fees to be a viable and appropriate means of financing the FAA. Restricting the FAA from developing new user fee proposals is a threat to responsible planning for the future financing of the agency.

The Administration opposes the provision of the Committee bill that would prohibit any funds from being used for changes in the Corporate Average Fuel Economy (CAFE) standards. The provision would effectively dictate that any CAFE rulemaking not deviate from existing standards. The Administration believes that any rulemaking related to CAFE standards should be addressed in an open proceeding in which relevant issues are considered and in which all interested persons and parties are able to participate in fashioning the appropriate outcomes.

Finally, a provision in Title I of the bill purports to require congressional approval before Executive Branch execution of the Transportation Administrative Service Center provisions in the bill. The Administration will interpret this provision to require notification only, since any other interpretation would contradict the Supreme Court ruling in INS vs. Chadha.

Additional Administration concerns with the Committee bill are contained in the attachment.

Attachment

Attachment

ADDITIONAL CONCERNS
H.R. 2169 -- DEPARTMENT OF TRANSPORTATION
APPROPRIATIONS BILL, FY 1998
(AS REPORTED BY THE HOUSE COMMITTEE)

Coast Guard

• NEXTEA. The Committee has not supported the Administration's NEXTEA proposals for fully mandatory funding for the Boating Safety program and for funding the Alteration of Bridges program from the Highway Trust Fund. The Administration reiterates its support for these proposals. Mandatory funding for Boating Safety would put it on equal footing with the Sport Fish Restoration program, which is also funded from the Aquatic Resources Trust Fund and is entitled to funds not appropriated to Boating Safety. Under the Alteration of Bridges proposal, $17 million from the Highway Bridge Replacement and Rehabilitation Program (HBRRP) would be set aside annually for the purpose of repairing bridges deemed hazardous to navigation. The funding would be administered in accordance with the Truman-Hobbs Bridge Act, rather than the HBRRP. The Coast Guard would continue to select the projects and determine their funding levels.

• Operating Expenses. The Committee has reduced funding for Coast Guard Operating Expenses by $32 million from the Administration's request. Included in the reduction are FTE staff-year savings of $19.6 million based on slow hiring rates and a cut of $1 million in active duty recruiting. The Administration believes that these reductions are shortsighted. The Coast Guard is implementing a plan to achieve the military workforce level requested by the Administration, but will be unable to do so without adequate funding for recruiting and pay.

• Governors Island. Also included in the Committee's Operating Expenses reduction is the elimination of $8.3 million for the FY 1998 caretaker costs of Governors Island, New York, which the Coast Guard will excess in FY 1997. The Committee assumes that these costs can be paid by the General Services Administration (GSA). Pursuant to Section 483(b) of the Federal Property and Administrative Services Act of 1949, the Administrator of GSA has established that disposing agencies will fund protection and maintenance of excessed property for the quarter in which the property is reported as excessed and not more than 12 months thereafter. Without the requested funding, the Coast Guard would be forced to absorb Governors Island caretaking costs within its Operating Expenses base.

• Pennsylvania Station. The Committee has failed to provide the $23 million request for the Pennsylvania Station Redevelopment Project. The Administration reiterates its support for this request. These funds are needed to proceed with the expeditious redevelopment of this vital rail terminal.

• Proposed Relocation. The Administration objects to the language that would require the Federal Railroad Administration (FRA) to move back to the DOT headquarters building. The current rental rate paid by FRA at its Vermont Avenue space is exactly the same as that charged for rental of space in the Nassif Building, which is currently being fully utilized by DOT units. Any move would entail added expenses to the Government.

• National Motor Carrier Safety Program. The Committee has provided $85.3 million for the National Motor Carrier Safety Program, $14.7 million below the Administration's request. This funding shortfall would delay the progress DOT continues to make in reducing commercial motor vehicle crashes and fatalities and would hobble efforts to move the program towards performance-based criteria.