STATEMENT OF EMIL H. FRANKEL

ASSISTANT SECRETARY FOR TRANSPORTATION POLICY

BEFORE THE

COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS

UNITED STATES SENATE

 

BORDER TRANSPORTATION ISSUES

 

April 11, 2003

 

 

Chairman Inhofe and Senator Cornyn, thank you for the opportunity to appear before you today to discuss border transportation.   

 

There is no better place to hold such a hearing than in the State of Texas, and there are not many issues more important in transportation than those associated with the movement of goods and people across our vast land borders in the South and North. 

 

President Bush knows well the transportation needs for the State of Texas, including the myriad of issues that border traffic creates.  His leadership both as President and as former Governor of Texas has focused on the value of a strong transportation system.  Secretary Mineta has also been a leader on border issues throughout much of his remarkable career in transportation. 

 

With Mexico recently surpassing Japan as America’s second largest trading partner, Canada and Mexico now stand as the biggest and second biggest trading partners for the United States.  Together, they represent almost 35% of total U.S. imports and exports. 

 

While Canada is the United States number one trading partner, the U.S.-Mexico trading relationship has experienced recent dramatic growth.  When the North American Free Trade Agreement was implemented in 1994, exports to Mexico constituted less than 10% of total U.S. exports.  In less than 10 years, exports to Mexico have soared over 70% and now represent more than 14% percent of total exports.  Total U.S. trade with Mexico increased 186% in the first 8 years following NAFTA implementation. 

 

The two major trade agreements from the 1990s, NAFTA and the Uruguay Round, are producing between $1,200 and $2,000 in annual benefits to the average American family. And one out of every 12 American jobs depends on trade.  In 1973, international trade in goods and services represented just 13.2% of total U.S. Gross Domestic Product.  Today, that number stands at 23.5%.

 

Nowhere has this growth been felt more strongly than in Texas, Mexico’s largest trading partner.  Texas ports, bridges and airports handle over 70% of all U.S. exports to Mexico.  Texas ports handle 85% of total Southern Border train crossings and 87% of rail containers.  In 1994, there were less than three million truck-crossings at the U.S.-Mexico border.  By the year 2000, the number was approaching four and a half million.  Much of this traffic is handled by just four locations in Texas: Laredo, El Paso, Hidalgo and Brownsville.  As President Bush’s vision for a Free Trade of the Americas comes closer to reality, the Mexico-U.S. trade relationship, and consequently, the state of the Mexico-U.S. border, will grow even more crucial to the economic well-being of both countries.

 

Given these recent trends, the timing is ripe to address border transportation issues in the context of the reauthorization of the Transportation Equity Act for the 21st Century.  The Bush Administration’s recently released reauthorization proposal entitled the Safe, Accountable, Flexible and Efficient Transportation Equity Act of 2003 (SAFETEA) offers several proposals to improve the flow of people and commerce across the Mexican and Canadian borders.

 

Most importantly, SAFETEA would replace the current National Corridor Planning & Development Program and the Coordinated Border Infrastructure Program (NCPD/CBI) with two separately funded programs both administered by the Federal Highway Administration (FHWA).   TEA-21 funded NCPD/CBI out of a single source.  A history and detailed discussion of the trends over the life of the program under TEA-21 was just recently placed on the FHWA website at: http://www.fhwa.dot.gov/hep10/corbor/ncorbor.htm.

 

The underlying concept of TEA-21’s NCPB/CBI was simple, yet insightful: recognize the trend toward a north/south orientation of trade flows under NAFTA and designate resources to remove bottlenecks and facilitate the trade.  While visionary, the program did not live up to its potential under TEA-21.  Specifically, important border projects too often were unable to obtain funding under TEA-21.  In 2003, only five percent of the combined NCPD/CBI went to border-related activities.  Only two Texas border projects received program awards in FY 2001 and 2003 and one in FY 2002.  Moreover, every award under NCPD/CBI was Congressionally-designated in FY 2002 and FY 2003.  As a result, the Secretary has been stripped of his ability to implement any coherent strategy to improve border transportation operations.

 

SAFETEA proposes to increase the focus on land borders through the establishment of a new Border Planning, Operations, and Technology program (Border Program).  The purpose of this proposed program is to improve bi-national transportation planning, operations, efficiency, information exchange, safety, and security for the U.S. borders with Mexico and Canada.  SAFETEA would authorize $496.5 million over the life of the bill for the Border Program.  In FY 2004, $47 million of these funds would be used for construction of State border truck safety enforcement facilities in Arizona, California, New Mexico, and Texas, fulfilling a 3-year commitment for this purpose and helping to prepare the way for eventual safe implementation of NAFTA’s commercial truck and bus access provisions.

 

Eligibility under the Border Program would be restricted to States and MPOs at or near the borders of Canada and Mexico.  The proposal envisions a wide range of eligible border activities such as improvements to safety inspection and port of entry facilities; enhanced technology and information exchange; planning and environmental studies; technology facilities improvement implementation; and right-of-way acquisition, design, and construction related to safety and technology improvements.

 

The Secretary would retain discretion to allocate funds under the SAFETEA proposal given certain selection criteria.  Those criteria include the benefits of the project relative to its costs, the prospects for early completion of the study or project, strong support from bi-national organizations, the existence and significance of signed and binding multi-jurisdictional agreements, contributions from other sources over and above the minimum required, and the extent to which the project benefits are multi-modal.  The Federal share payable on account of any project carried out under this proposal is capped at 80% of the total costs of such project. 

 

SAFETEA also includes a new Multi-State Corridor Planning program.  This program would emphasize multi-state planning efforts.  The proposed program would provide an opportunity for States and regional agencies to plan jointly for a variety of geographic areas, in addition to tradition metropolitan or statewide areas.  The principal objective would be to address the gap created by formula programs, which do not provide specific funds for multi-State, multi-modal, and multi-jurisdictional decision-making on corridors.  SAFETEA would authorize $496.5 million for the program over the life of the bill. 

           

Although the aims of the NCPD/CBI program have not been fully realized over the life of TEA-21 due to the practice of Congressional designation, the program receives a high level of interest from States and MPO’s and has made significant contributions to our national transportation system.  From shortening the time spent crossing the U.S. borders with Canada and Mexico to improving roads in high-traffic trade corridors, projects funded by the NCPD/CBI program contribute to economic growth and more efficient travel across the country.  The NCPD/CBI program also encourages multi-state project efforts.

 

The success of the NCPD/CBI program may be seen in projects such as the World Trade Bridge in Laredo, Texas.  Few cities have been forced to address the transportation implications of growth in U.S.-Mexican trade more than Laredo.  Approximately 35% of all incoming trucks and nearly half of all incoming trains to Texas pass through Laredo.  With the downtown Laredo Juarez-Lincoln Bridge stretched to capacity, Mexico, the State of Texas, the City of Laredo, and the City of Nuevo Laredo began planning in the late 1980’s for a new bridge outside the central business district that would carry commercial traffic. By 1993, the bridge project and various other improvements to highways, ramps and other facilities that would serve the crossing were placed on the Texas multi-year transportation improvement program. 

 

In 1995, a comprehensive funding agreement was reached.  With traffic backups on the existing bridge reaching four miles on many occasions in the late 1990’s, timing was of the essence.  The total cost of the new bridge and related improvements was approximately $100 million.   The State of Texas provided about 35 percent of the total cost including short and long-term State Infrastructure Bank (SIB) loans made available by the state and federal government. Federal aid amounted to another 65 percent comprised of formula funding and a $6 million discretionary grant from the NCPD/CBI during FY 1999.  The City of Laredo and other local government sources together provided the right of way (ROW) property and easements necessary for the construction of the project. The City of Laredo also participated with short and long-term SIB loans.  Although the bulk of financing came from other Federal and State sources, the $6 million NCPD/CBI contribution was an important boost to the project. 

 

The new bridge opened on April 15, 2000.  Crossings typically now take about 5 minutes between the time the vehicle leaves the Interstate main lane and the time the vehicle crosses into Mexico.  Local traffic moves much more efficiently and traffic safety in the area has improved.  Many new businesses have located along the highway and Laredo experienced substantial job growth in FY 2001, due in part to the business opportunities created by the new bridge. 

 

Some construction projects currently in progress that have benefited from NCPD/CBI funds include the FAST (Freight Action Strategies) corridor in Washington State and the Bridge of the Americas and the Paso del Norte Bridge between El Paso, Texas and Ciudad Juarez.  The FAST project will replace a number of highway/rail grade crossings with grade separations will improve safety, relieve congestion, and improve operation of the water ports and rail lines.  In El Paso, a modest expenditure (about $3 million for each bridge) will improve physical inspection capacity on each bridge by as much as 40 percent.

 

While the proposed Border Program is the most specific border program contained in SAFETEA, it is not the only proposal that can improve the efficiency of our borders.   SAFETEA eliminates most discretionary highway grant programs and makes these funds available under the core formula highway grant programs, thus giving States and localities tremendous flexibility and certainty of funding under core Federal-aid highway programs.  States like Texas have used these core program funds in the past to address border transportation issues, and SAFETEA proposes to increase the percentage of Federal transportation assistance that is funneled through these flexible programs.  Because of its significance to the nation, however, one of the only new discretionary programs proposed in SAFETEA is the Border Program.  

 

As the successes of ISTEA and TEA-21 have shown, State and local decisionmakers have the greatest capability to address State and local transportation problems.  The success of the World Trade Bridge project in Laredo hinged on sustained involvement and leadership from the city of Laredo and the State of Texas, as well as FHWA.  SAFETEA continues this principle and expands upon it.  The Federal Government can facilitate and enable State and local transportation decisionmakers, while bringing multiple States and localities to the table in addressing regional and national issues.

 

SAFETEA also establishes a new performance pilot program under which States, including States with significant border activities, can manage the bulk of their core formula highway program funds on a performance basis, cutting across the programmatic lines by which the Federal-aid highway program is normally structured.  Under the pilot program, States would work with the Department to develop and meet specific performance measures that reflect both State and national interests.

 

  

We all know that it takes a long time to take a transportation project from concept to completion, and this Administration is committed to streamlining this process.  Border projects in particular can be extremely complex and difficult to complete.  Projects that were cutting edge while in the concept stage too often end up turning into “catch-up” projects after years of delay. 

 

The Department has made great strides in addressing those delays related to environmental review, including better coordination during the environmental review process, and other improvements that have resulted from implementing the President’s Executive Order on Environmental Stewardship that was issued last fall.  However, certain legislative changes are necessary.  In the environmental review area, SAFETEA provides a menu of solutions, all of which should help reduce the time it takes for a sponsor to deliver a transportation project.  These include:

 

o      Strengthening the provisions of current law that establish timeframes for resource agencies to conduct environmental reviews and make decisions on permits;

o      Improving the linkage between the transportation planning and project development processes;

o      Simplifying the processing of Categorical Exclusion approvals;

o      Clarifying the legal standard under “section 4(f)” applicable to determinations as to whether a possible project alternative is feasible and prudent;

o      Resolving the current overlap between Section 106 of the National Historic Preservation Act and “section 4(f)”;

o      Establishing an exemption for the Interstate Highway System as an historic resource, unless the Secretary deems an individual element worthy of protection under the National Historic Preservation Act. 

o      Providing for timely resolution of outstanding legal disputes by establishing a six-month statute of limitations for appeals on the adequacy of projects’ environmental impact statements and other environmental documents; and

o      Expanding the ability of States to provide Federal-aid highway funds to resources agencies to expedite the environmental review process.

 

            Improving the movement of freight and goods is a top priority of SAFETEA.  Recent estimates indicate that Import/Export Freight Tonnage could double by 2020 and Domestic Freight Tonnage could increase by about 70 percent over that same period.  As stated above, international trade now comprises over 25 percent of U.S. GDP and is expected to rise to one-third in less than 20 years. 

 

In Brownsville, the sixth biggest border crossing on the US-Mexican border in value of shipments, over $10 billion in trade moves between the two NAFTA partners each year.  Most of this trade is moved in the 250,000 and 300,000 truck crossings and over 600 train crossings per year.

 

Today’s intermodal freight network is not equipped to handle the growing volume of intermodal freight, especially container freight.  The resulting congestion degrades the reliability and performance of carriers, shippers, and terminal operators—a serious problem for businesses.  Predictable travel times are vital in an economy where just-in-time delivery and tightly scheduled production and distribution processes are the norm. Through the implementation of sophisticated logistics policies to manage massive numbers of containers, an inventory management revolution is currently taking place that we must be very careful to protect and promote.   To support and complement this revolution in inventory management and global trade, good governance demands investment at our borders to reduce existing inefficiencies and costly bottlenecks.

 

The goal of linking production decisions to the shifting pace of consumer demand that seemed elusive just 20 years ago is suddenly very attainable.  With it comes the even more elusive hope of smoothing out business cycles.  The ability to actually move freight quickly across various modes of the transportation system, however, is the linchpin of this revolution.  The benefits attributable to dramatically lower inventory costs and increased liquidity for businesses that do not need to spend capital on unused inventory can be severely compromised by inefficient border operations.

 

            Although carriers and shippers are by and large private entities, their financial health is inextricably linked to the health of public transportation infrastructure.  As a result, cooperation between the private sector and government must be improved through an increase in public-private partnerships.  The United States, with the most vibrant and dynamic private sector in the world, is unique in its lack of private sector involvement in transportation infrastructure.  In addition to improving the overall condition of the Nation’s surface transportation network, SAFETEA specifically targets the capacity and efficiency of the Nation’s freight system by:

 

 

While virtually every other industry in the world has gone through a technological revolution, the implementation of technology in the management of transportation infrastructure could be greatly increased.  SAFETEA continues to foster the research, development, and implementation of Intelligent Transportation Systems technologies but places a much greater emphasis on using these technologies to improve the performance and operation of transportation systems and motor vehicles in a way that directly benefits transportation customers.  Because operational efficiencies are so integral to border activity, improving technology applications can substantially speed the flow of people and goods through major international gateways.

 

The technology proposals contained in SAFETEA build upon technology implementation activities already underway at the Department.  In coordination with our partners in State and local governments and the private sector, the Department has initiated several operational tests on the use of electronic manifests, electronic seals, and asset cargo tracking. 

 

First, the Air Cargo Electronic Supply Chain Manifest System of biometric “smart cards” will confirm the identity of truck drivers and will provide cargo movement and access information to reduce the time spent on processing manifests, verifying loads, and validating truck driver identities.  Second, the Electronic Seal project affixed electronic seals to containers to track cargo from its point of origin to its point of destination, using a radio frequency that emits a signal as it passes reader devices, displaying information about container tampering, thus assuring security and expediting movement across the border.  Finally, the Asset Cargo Tracking project was designed to improve visibility and productivity via the monitoring of transport assets and cargo during movement between freight terminals and customers and to provide asset and cargo information in a standard format to a variety of users.  This prototype electronic tracking system collects data on cargo location, status, and time-stamped information via sensors affixed to transport assets.  The tracking system reduced costs through improved efficiencies in chassis and container utilization and enhanced recognition of potential security and routing issues.

 

Beyond technology tests, the Department is working with other Federal agencies and our partners in Mexico to assess border crossing improvements.   Developed cooperatively with the General Services Administration, Bureau of Customs and Border Protection, and other Federal inspection services, the BorderWizard, a border Port of Entry simulation model, identifies infrastructure and operational needs internal to the Port of Entry.  States are able to use Border Wizard to help with their border investment decisions.

 

Because good data is central to any efficient border crossing system, the Department is working with other Federal agencies to establish the International Trade Data System (ITDS). This project will modernize, for the first time in decades, the information flows that accompany trade movements.  The ITDS will work with the Automated Commercial Environment, or ACE, to improve both the collection and sorting of trade data to expedite trade across our borders and to enhance our targeting of high risk cargoes. 

 

The new system will help overcome information stovepipes and enhance border security by providing interagency information sharing, and real-time, cross-government access to more accurate information.  Shipment information will be analyzed prior to arrival, allowing advanced inter-agency assessment of risks and threats.  Results will determine if, upon arrival, a shipment is to be examined or cleared for release.

 

Technology can also be particularly effective in the implementation of innovative demand management strategies.  SAFETEA provides more resources to expand capacity at our nation’s borders, but also provides new tools to States and localities to manage existing capacity more rationally.  Our proposal would allow States to establish user charges on Federal-aid highways, including the Interstate System, to improve these facilities.  It would also allow States to permit Single Occupancy Vehicles (SOVs) on HOV lanes, so long as time-of-day variable charges are assessed on SOVs for such access.   

 

There are other ways that U.S. DOT is currently working to directly improve border transportation. FHWA co-chairs the U.S.-Mexico Joint Working Committee (JWC) with the Mexican Secretariat of Transportation (SCT).  The JWC was established in 1994 by a Memorandum of Understanding (MOU) signed by the U.S. and Mexico.  The purpose of the JWC is to coordinate bi-nationally the various planning processes for border transportation activities.  In addition to FHWA and SCT, its members include representatives from the U.S. State Department, the Mexican Secretariat of Foreign Relations, the four U.S. border State Departments of Transportation, and the six Mexican border States. The General Service Administration and the Department of Homeland Security also participate in the meetings.  The JWC meets twice a year, most recently on July 10 and 11, 2003.  It will celebrate its 10th anniversary next August. 

 

            In 1994, the JWC initiated a bi-national transportation planning study to establish the framework for bi-national planning and coordination.  This $2.5 million study identified many opportunities for improving planning and operations at the border ports of entry.   The study included an inventory of transportation infrastructure; a description of commercial vehicle trade flow process, a description of U.S. and Mexican transportation planning processes, an analysis of the economic impacts of U.S.-Mexico trade, an evaluation of U.S. and Mexican border area capabilities to forecast trade, and port of entry case studies.

 

            A key product of the bi-national study is a databank containing information on trade and traffic flows, socioeconomic data, traffic flows at the ports of entry, and existing and planned border infrastructure improvements.  The JWC is committed to updating and maintaining this databank. 

 

The JWC activities are guided by two-year action plans negotiated by the group.  The 2001 to 2003 work plan included a Border Infrastructure Needs Assessment study, geographic information systems platform development, and the Analysis of Coordination Systems for Operation of Border Ports of Entry study.  The Texas Department of Transportation led the Analysis of Coordination Systems for Operation of Border Ports of Entry study.  The current work plan (2003-2005) includes an Innovative Financing study, the Analysis of Coordination Systems for Operation of Border Ports of Entry pilot project (spearheaded by the Texas State Department of Transportation in El Paso), a Transportation Infrastructure and Traffic Management Analysis of Cross Border Bottlenecks study, and further development of geographic information systems, including a training program.  The JWC also plans to convene the first ever U.S.-Mexico Safety Conscious Planning Forum during 2004.

 

The JWC also helps to promote effective coordination and communications.  It has resulted in the formation of many new professional relationships within the U.S. and with Mexico.  An example of one of these new partnerships is the Border Technology Exchange Program (BTEP).  BTEP was developed and implemented in conjunction with the work done by the JWC. Funded by FHWA, with additional funding provided by Mexico and southern border states in the U.S., the mission of BTEP is to improve the safety, efficiency, and security of the trans-border movement of people and goods. BTE is used as a support for JWC work plan activities, providing training and dissemination of work plan products, currently for the geographic information systems training.

 

The five objectives of BTEP are to create a permanent technology exchange process; to increase institutional, technical, and legal compatibility and understanding; to improve transportation systems in the border region; to enhance professional and cultural understanding; and to strengthen professional and technical capabilities.  This program resulted in the creation of two technology transfer centers in Mexico and four more are planned in the remaining Mexican border states in the next few months.  BTEP also has provided several training opportunities as well.  For example, it is estimated that over 1,500 Mexican engineers, lab technicians and other transportation stake holders have participated in the Texas program alone.

 

Although primary transportation security functions no longer rest with our Department, we intend to maintain an important partnership with the Transportation Security Administration (TSA) and other relevant agencies at the Department of Homeland Security (DHS).  Both of our massive land borders present daunting transportation, commercial, and security challenges.  None can be solved independently of the other.  Successfully incorporating security improvements into a commercial framework will test the abilities of the Federal government and the States in ways that they have not been tested previously. 

 

            The early results are quite promising.  For example, the Container Working Group (CWG), made up of elements of DHS, the Office of the Secretary of Transportation and a large number of private sector participants, is focusing on addressing key components of the process through which a container is packed, secured, loaded and transported to the U.S.  The CWG’s aim is to ensure integrity of the shipment at all points of the international transportation chain.  Another example is the Border Station Partnership Council (BSPC) headed by Bureau of Customs and Border Protection at DHS.  The BSPC is a group of Federal inspection services that plans for internal infrastructure decisions for land Ports of Entry.  The BSCP includes a representative from the Federal Highway Administration and is working to collaborate with the State Departments of Transportation.  

 

            TSA and the Federal Railroad Administration (FRA) have been working closely to develop transportation security guidelines for the rail sector along the principles of the threat based and risk management approaches used in other security areas.  Guidelines will be developed using critical rail infrastructure risk assessments and input from industry.  Working with the FRA, DHS has agreed to a process for targeting, screening, and examining rail shipments transported into the U.S. from Canada the two largest cross-border rail carriers has been agreed to with the Canadian Customs and Revenue Agency. 

 

            Pending the opening of the Southern border to Mexico-domiciled commercial vehicles, the Federal Motor Carrier Safety Administration (FMCSA) has border inspectors and auditors conducting inspections and safety audits on commercial zone carriers.  Border safety investigators are assisting other FMCSA staff in conducting compliance reviews to maintain their skills and conducting compliance reviews on commercial zone carriers.   Eighty-four FTEs will be redeployed to border crossing locations to conduct truck inspections. 

 

This group is comprised of 46 auditors, 30 safety investigators, and 8 inspectors and will perform the following duties: Vehicle inspections of CMVs (including those transporting HAZMAT), motor coaches, Camionetas, and southbound CMV traffic; ensure compliance with Out of Service (OOS) trucks towed from the compound and oversee traffic control in the compound; train less-experienced inspectors; review defects discovered during inspections; conduct registration and CDL checks using Personal Digital Assistants (PDAs); participate in strike force activity at various border patrol check points and state Ports of Entry to check for unauthorized long-haul transportation by Mexican carriers; continue outreach and education efforts.

 

The high level of cooperation and support between our Department and DHS extends throughout the operating administrations.  The relationship will continue to grow and change in the coming years, and the intersection of transportation activity and security demands that it will always be a close one.

 

As the economies of the U.S., Canada and Mexico become more interdependent, the demands on the immense land borders between us will continue to grow.  Transportation issues are at the heart of these demands.  This Administration and our Department are working to ensure that U.S. border operations promote economic growth and improve security. 

 

Thank you, again, for giving me the opportunity to testify.