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[Senate Hearing 109-595]
[From the U.S. Government Publishing Office]

                                                        S. Hrg. 109-595
 
 THE PRESIDENT'S FISCAL YEAR 2006 BUDGET REQUEST FOR THE DEPARTMENT OF 
         HOMELAND SECURITY ADMINISTRATION AND RELATED PROGRAMS

=======================================================================

                                HEARING

                               before the

                         COMMITTEE ON COMMERCE,
                      SCIENCE, AND TRANSPORTATION
                          UNITED STATES SENATE

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                               __________

                             APRIL 26, 2005

                               __________

    Printed for the use of the Committee on Commerce, Science, and 
                             Transportation

                    U.S. GOVERNMENT PRINTING OFFICE
30-055                      WASHINGTON : 2006
_____________________________________________________________________________
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       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                     TED STEVENS, Alaska, Chairman
JOHN McCAIN, Arizona                 DANIEL K. INOUYE, Hawaii, Co-
CONRAD BURNS, Montana                    Chairman
TRENT LOTT, Mississippi              JOHN D. ROCKEFELLER IV, West 
KAY BAILEY HUTCHISON, Texas              Virginia
OLYMPIA J. SNOWE, Maine              JOHN F. KERRY, Massachusetts
GORDON H. SMITH, Oregon              BYRON L. DORGAN, North Dakota
JOHN ENSIGN, Nevada                  BARBARA BOXER, California
GEORGE ALLEN, Virginia               BILL NELSON, Florida
JOHN E. SUNUNU, New Hampshire        MARIA CANTWELL, Washington
JIM DeMINT, South Carolina           FRANK R. LAUTENBERG, New Jersey
DAVID VITTER, Louisiana              E. BENJAMIN NELSON, Nebraska
                                     MARK PRYOR, Arkansas
             Lisa J. Sutherland, Republican Staff Director
        Christine Drager Kurth, Republican Deputy Staff Director
                David Russell, Republican Chief Counsel
   Margaret L. Cummisky, Democratic Staff Director and Chief Counsel
   Samuel E. Whitehorn, Democratic Deputy Staff Director and General 
                                Counsel
             Lila Harper Helms, Democratic Policy Director

                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on April 26, 2005...................................     1
Statement of Senator Ensign......................................    18
Statement of Senator Inouye......................................     1
    Prepared statement...........................................     1
Statement of Senator Lautenberg..................................    20
Statement of Senator Pryor.......................................    22
Statement of Senator Stevens.....................................     1

                               Witnesses

Barclay, Charles, A.A.E.; on behalf of the American Association 
  of Airport Executives/Airports Council International-North 
  America........................................................     4
    Prepared statement...........................................     5
May, James C., President/CEO, Air Transport Association of 
  America, Inc...................................................    11
    Prepared statement...........................................    13

                                Appendix

Letter, dated April 25, 2005, to Hon. Ted Stevens and Hon. Daniel 
  K. Inouye from: Marc Rotenberg, Executive Director; Marcia 
  Hofmann, Director, Open Government Project; and Melissa Ngo, 
  Staff Counsel, Electronic Privacy Information Center (EPIC)....    27

 THE PRESIDENT'S FISCAL YEAR 2006 BUDGET REQUEST FOR THE DEPARTMENT OF 
         HOMELAND SECURITY ADMINISTRATION AND RELATED PROGRAMS

                              ----------                              

                        TUESDAY, APRIL 26, 2005

                                       U.S. Senate,
  Senate Committee on Commerce, Science and Transportation,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 2:30 p.m. in room 
SR-253, Russell Senate Office Building, Hon. Ted Stevens, 
Chairman of the Committee, presiding.

            OPENING STATEMENT OF HON. TED STEVENS, 
                    U.S. SENATOR FROM ALASKA

    The Chairman. There are a few extra-curricular activities 
going on around here today, but we'd like to start the hearing, 
if we may. We want to welcome back the witnesses who were 
scheduled to appear on February 15th. Today's focus will be on 
the effect of the Fiscal Year 2006 Transportation and Security 
Agency budget request on the aviation industry and the American 
economy.
    Now, some time ago, 15 members of our Committee signed a 
letter to the Appropriations Committee requesting that the 
passenger fee increase not be included in the Homeland Security 
Appropriations bill. Chairman Gregg is aware of our concerns, 
and has raised similar issues in the Appropriations hearings. 
We look forward to learning more about the impact of this 
proposal from our witnesses.
    Let me yield to Senator Inouye at this time.

              STATEMENT OF HON. DANIEL K. INOUYE, 
                    U.S. SENATOR FROM HAWAII

    Senator Inouye. Thank you, Mr. Chairman. I have a prepared 
statement I'd like to have made part of the record.
    The Chairman. It will be.
    Senator Inouye. May I just say that I concur with you, and 
I was 1 of the 15 who signed the letter in opposition of the 
security fee.
    [The prepared statement of Senator Inouye follows:]

 Prepared Statement of Hon. Daniel K. Inouye, U.S. Senator from Hawaii
    Mr. Chairman, as we begin this new session, I rank our oversight of 
the Transportation Security Administration as one of our highest 
priorities. As the primary Committee of jurisdiction for transportation 
security, I'm looking forward to a spirited and consistent review of 
TSA's work as we continue to make progress securing all modes of 
transportation.
    I have three principal areas of concern:

        1) Congress agreed in 2001, by nearly unanimous votes in the 
        House and Senate, that transportation security must be a 
        national security function. However, between TSA's endless 
        reorganizations and the recent rhetoric about returning to 
        private security screening companies, it is becoming apparent 
        that this central, guiding principle is being eroded. If we 
        lose sight of this principle, we will forget one of the most 
        important lessons of September 11th.

        2) Aviation security has received 90 percent of TSA's funds and 
        virtually all of its attention. There is simply not enough 
        being done to address port, rail, motor carrier, hazardous 
        material, and pipeline safety. That must change, quickly.

        3) The Administration is proposing to increase aviation 
        security fees. This makes no sense to me. The airline industry 
        is bordering on total bankruptcy, and the Administration wants 
        to add to its costs. Yet at the same time, the Administration 
        is demanding that its unaffordable tax cuts be made permanent. 
        I don't follow their thinking, and quite frankly, I don't 
        believe the proposal will go far.

    Mr. Chairman, over the years, and particularly since 9/11, this 
Committee has led the effort to make transportation security a matter 
of national security. We crafted two landmark bills, the Aviation and 
Transportation Security Act of 2001 and the Maritime Transportation 
Security Act of 2002, to ensure that funding and programs were 
developed to completely change the way we address security. The 
September 11th tragedy, the Madrid train bombing and many other attacks 
remain locked in our conscience as we try to do all we can to avoid 
another attack.
    The continued threat risk is real and the vulnerabilities are real, 
across all modes of transportation.
    We recently witnessed a rail tank cargo accident--not a terrorist 
attack--in Graniteville, SC. An entire town had to be evacuated, 
demonstrating the potential harm if someone does target a rail tank 
car. The District of Columbia was so concerned about rail cars carrying 
hazardous materials traversing the city, they adopted a resolution to 
ban them.
    Port security is of particular interest to me. My state of Hawaii 
is entirely dependent upon shipping and the steady flow of maritime 
commerce. The dock strike at the port of LA/Long Beach in 2001 caused 
people in my state to begin running out of basic supplies. If an attack 
occurs, it could be weeks before service is renewed.
    It is important to remember that 95 percent of the Nation's cargo 
comes through the ports, so a port incident will send devastating 
shockwaves through the entire economy, impacting every state. Yet the 
security initiatives at most ports have been, to this point, woefully 
underfunded, and most ports are ill-prepared for an attack. 
Unfortunately, our maritime system is only as strong as its weakest 
link. If there is an incident at any one port, the whole system will 
screech to a halt, as we scramble to ensure security at other ports. If 
we had to shut down our entire port system, the economic damage would 
be widespread, catastrophic and possibly irreversible.
    Considering these simple observations, I cannot comprehend the 
Administration's lack of serious attention and commitment to port, 
rail, motor carrier, hazardous material and pipeline safety 
initiatives.
    Security funding for all modes of transportation beyond aviation 
has been desperately lacking. The 9/11 Commission found, ``over 90 
percent of the Nation's $5.3 billion annual investment in the TSA goes 
to aviation . . . [and] . . . current efforts do not yet reflect a 
forward-looking strategic plan.'' And according to Senate Banking 
Committee estimates, the Federal Government has spent $9.16 per airline 
passenger each year on enhanced security measures, while spending less 
than a penny annually per person on security measures for other modes 
of transportation.
    But considering the real threat risk and the constant talk about 
our War on Terror, I find it even harder to understand how the 
Administration has forgotten that, in a post-September 11th world, 
transportation security is national security.
    Based on the President's Budget, there are apparently some in the 
Administration who seem to believe that our work is done. Their budget 
proposal suggests a wholesale dismantling of the Transportation 
Security Administration. In the last 2 years, we have witnessed a near 
constant reorganization that, under the current proposal, now makes 
Maritime and Land security virtually nonexistent at TSA. The changes 
suggest either a fundamental lack of understanding of what it will take 
to ensure the security of all transportation modes, bureaucratic 
mismanagement, or worse yet, the Administration's complete loss of a 
sense of national urgency.
    The President's Budget recommends shifting critical work away from 
the Transportation Security Administration (TSA) to other organizations 
within DHS that have neither the expertise nor the necessary authority 
to be effective. In my view, further decentralizing the 
responsibilities of TSA will destroy the remaining, limited 
accountability that TSA provides for transportation security.
    The problems with the Budget proposal go further: it offers 
inadequate funding for the U.S. Coast Guard to meet both its increased 
homeland security responsibilities and its traditional missions like 
search and rescue and enforcement of coastal laws; it creates an odd 
rearrangement of the security grant programs that not only defies 
Congressional directives, but adds bureaucracy and decreases 
accountability; it cedes TSA's regulatory authority of the 
Transportation Worker Identification Credential (TWIC) program; and the 
list goes on.
    On aviation security, the Administration's proposal creates as many 
problems as it aims to solve. While TSA spending in FY06 would increase 
by $156 million, this funding level depends on $1.5 billion generated 
by increased security fees on airline passengers. Since this proposal 
was unveiled, there has been no shortage of airline and industry 
analysts that have raised deep concerns over what effect this may have 
on the future of existing air carriers.
    The Administration cannot satisfy its budget needs on the backs of 
one industry. I know that several other countries and airport 
authorities impose security fees, but with perhaps one or two small 
exceptions, no one imposes all of the national security costs on the 
airlines. We can debate how much we need for security, but it does not 
make any sense to place the burden for new DHS revenue on an airline 
industry that is bordering on total bankruptcy, when at the same time 
the Administration is demanding that its unaffordable tax cuts be made 
permanent.
    The U.S. economy depends on a strong commercial aviation industry. 
Since September 11th, the U.S. air carriers have taken unprecedented 
steps to cut their costs, and their employees have been true heros. In 
the face of steep layoffs and cuts in pay and benefits, the workers 
have been selflessly supportive of the industry and still manage to 
provide the highest level of service possible day in and day out. I 
think we must be very careful in dealing with issues that will have 
wide ramifications for the aviation industry and its workers.
    TSA should be aggressively seeking improvements to the current 
transportation security regimes for all modes and promoting the 
technological and capital improvements that will save considerable 
money in the long run while improving security. Instead, we have been 
given a budget that seeks short-term solutions that, I believe, will 
have negative consequences in the long term.
    Given the many misplaced priorities that I see in the President's 
Budget proposal, it is clear that the Congress needs to help refocus 
the Department.
    I have been discussing the real needs of the U.S. transportation 
security system with my fellow Committee members, and we have been 
developing a transportation security reauthorization proposal to 
provide further direction to the Department's cargo security functions, 
to strengthen aviation, maritime, rail, hazardous materials, and 
pipeline security efforts, and enhance interagency cooperation. The 
proposal will incorporate several Commerce Committee-reported and 
Senate-passed bills from the prior Congress and will also put forth new 
ideas to enhance transportation security across all modes of 
transportation.
    We expect a fully funded, effective operating Administration that 
can:

   Provide security to the traveling public and instill 
        confidence in the first line of defense--be it an airport 
        screener or a seaport agent;

   Establish secure, efficient cargo systems for air, land and 
        sea;

   Deter people that seek to do harm.

    It is easy to set the goals, but often difficult to achieve them. I 
speak for my colleagues when I say that this Committee is fully 
committed to achieving these goals. And we have a record that 
demonstrates our ability to deliver a bipartisan, broadly supported 
result.
    The difficult work of securing all of our major modes of 
transportation, including our ports, railroads, intercity buses, 
pipelines, and motor carriers, is just beginning and the country demand 
a robust agency within DHS dedicated to that task.
    I thank the witnesses for their participation and I look forward to 
their testimony.

    The Chairman. May we have the witnesses, Mr. Barclay and 
Mr. May, come to the witness table. If it's agreeable, we'll 
put the statements in the record, if anyone has statements, and 
proceed to this hearing.
    As I said, these are the gentlemen who waited for us at the 
previous hearing, and we didn't get to them, so we agreed to 
have a hearing so we can put into the record their comments.
    Chip, let's call on you first.

STATEMENT OF CHARLES BARCLAY, A.A.E.; ON BEHALF OF THE AMERICAN 
      ASSOCIATION OF AIRPORT EXECUTIVES/AIRPORTS COUNCIL 
                  INTERNATIONAL-NORTH AMERICA

    Mr. Barclay. Thank you, Mr. Chairman.
    It's always a personal pleasure to appear before the 
Commerce Committee, airports are grateful for the Full 
Committee focus on transportation security, and thankful for 
the exceptional experience and knowledge that the Chairman and 
Ranking Member bring to the Committee leadership at this 
critical time for our industry. I'd also like to thank former 
Chairman McCain for his leadership through one of the most 
difficult periods in our industry's history.
    I want to discuss just three quick points on the TSA budget 
from our testimony, but given their critical nature, I'd like 
to first preface those remarks by saying that we appreciate 
very much the leadership at DHS, and TSA, and the service of 
all the men and women of TSA.
    Our members have formed important partnerships with TSA, 
both locally and nationally. We've solved a number of difficult 
problems with TSA, and we have some important policy 
disagreements, a few of which I want to talk about today.
    First, nothing frustrates our members more than seeing a 
cost increase being sold as a budget cut. Every time we incur 
the capital cost of building in-line explosive detection 
systems at airports, the operating cost savings that TSA 
realizes in personnel, pays off that capital cost exceptionally 
quickly, just over a year, according to GAO's analysis. And 
then that savings continues on into the future for TSA.
    The Administration's proposed cut in LOIs for EDS 
installations is just not smart government. It may be clever 
Federal budgeting in the very, very, very short term, but in 
the real world of economic effects, it increases TSA's costs, 
rather than lowering them. Smart government would be to 
increase LOIs and earn the permanent reduction in TSA's costs 
that that brings, and our testimony has a number of examples of 
how that occurs.
    Second, airports also disagree with the Administration 
proposal to increase security fees. Fighting a war on terrorism 
isn't the job of one industry that happens to be a popular 
target of terrorists due to its importance to our modern 
economy. Certainly users of any industry should pay for the 
costs they impose, but wars need to be fought by nations, not 
unlucky target industries. We think this user fee proposal gets 
that allocation philosophy wrong, and we would also question 
the wisdom of the timing of this proposal's impact on a 
seriously financially ailing industry.
    Third, Mr. Chairman, as you pointed out in the new 
Secretary's confirmation hearings earlier this year, DHS cannot 
keep looking forward to ever-increasing funding to carry out 
all the missions that are on their plate. Airports agree, and 
we have more to offer than just criticism of the 
Administration's proposed budget cuts. As branches of local 
governments, with local law enforcement powers, and local 
police divisions, airports are willing and able to share 
security responsibilities. TSA and local law enforcement need 
to allocate more responsibilities through local mutual aid 
pacts, as occurs throughout the law enforcement field, rather 
than spending our time focused on each other as regulator and 
regulated party. We should both be pointed outward, looking for 
the bad actors, not inward watching each other. This simply 
takes the allocation of logical responsibilities among law 
enforcement agencies, rather than a regulatory approach. Some 
responsibilities have been allocated. They've saved TSA money. 
Our members tell us that more can be saved by operating 
precisely as multiple law enforcement agencies do, outside the 
boundaries of an airport.
    In closing, I'd like to mention the airports' strong 
objection to another Administration-proposed budget cut that's 
part of this Committee's jurisdiction, even though it's not 
subject to today's hearing--the exceptionally large proposed 
cut for the Airport Improvement Program would hit small 
airports and small airport states which can least afford it--
the hardest. Larger airports would be forced to choose between 
offering inadequate future capacity, or passing new costs on to 
financially ailing tenants when they can least afford it.
    We understand the need to cut the Federal deficit, and the 
moral imperative not to pass along debts to future generations, 
simply because we wanted to consume more than we could produce. 
But there is an equal imperative to pass along and invest in 
infrastructure that will allow those future economies to grow 
and prosper. Public infrastructure facilities that create 
wealth over their full, useful life are--we respectfully 
submit--the wrong places to cut. We owe it to future 
generations not to leave them broke, and we owe it to them not 
to leave them with broken infrastructure.
    Mr. Chairman, I'll be happy to answer any questions that I 
can.
    [The prepared statement of Mr. Barclay follows:]

    Prepared Statement of Charles Barclay, A.A.E.; on Behalf of the 
      American Association of Airport Executives/Airports Council 
                      International-North America

    Thank you for the opportunity to share with the Committee the views 
of the airport community on the President's Fiscal Year 2006 budget 
request for the Transportation Security Administration. I am testifying 
today on behalf of the American Association of Airport Executives 
(AAAE), Airports Council International--North America (ACI-NA), and our 
Airport Legislative Alliance, a joint legislative advocacy 
organization. AAAE represents the men and women who manage primary, 
commercial service, reliever, and general aviation airports. ACI-NA 
represents local, regional and state governing bodies that own and 
operate commercial airports in the United States, and Canada.
    Before moving to some of our specific thoughts and concerns on the 
TSA budget, I would be remiss if I didn't take the opportunity to tell 
you how delighted we are to be working with you, Chairman Stevens, as 
well as with Senator Inouye and the other distinguished Members of this 
Committee during this Congress to address the wide range of challenges 
facing the aviation industry. The depth of experience, particularly on 
the part of the Chairman and Ranking Member of this Committee, is 
unparalleled, and we look forward to having those talents at work on 
the important issues before us all.
    I also want to commend you, Mr. Chairman, for focusing attention on 
the TSA budget so early in the process. In a world of limited 
resources, it is absolutely critical that the TSA establish priorities 
within its budget that enable the agency to meet its core mission, 
offer the greatest benefits in terms of enhanced security, and 
effectively utilize taxpayer dollars. At a recent hearing before the 
Senate Homeland Security and Governmental Affairs Committee, Chairman 
Stevens, you said that the Department of Homeland Security needed to 
focus on doing more with the resources it has been given rather than 
relying on ever increasing budget allocations. Recognizing that there 
are limits to the amount of funding DHS and TSA will receive, it is 
imperative that TSA's provision of aviation services be made more 
efficient. Unfortunately, the President's Fiscal Year 2006 budget does 
not meet this test. It remains silent on the critical issue of more 
efficiently managing checked baggage screening, it reduces the general 
fund support available for aviation security, and proposes to pass 
along a $1.5 billion bill to the travelers who use our Nation's 
airports.
    The airport community, backed by a recommendation of the 9/11 
Commission, continues to believe that TSA can realize important savings 
if they would quickly move forward with the permanent installation of 
in-line explosive detection equipment in airports. Other personnel 
savings can be achieved through the rapid development, certification, 
and deployment of new technology. More can be done to focus on 
dangerous people rather than dangerous things so that the most 
effective screening takes place before a suspect individual ever has 
access to critical transportation assets. More can be done also by 
reducing the TSA's plethora of non-screening, overhead, liaison, and 
regulatory personnel who occupy offices at just about every commercial 
airport in the U.S. and some international locations as well. TSA and 
the department can also avoid unnecessary duplication and costly delays 
on key programs like Registered Traveler by working more closely with 
its industry partners.
    Additionally, TSA can be more proactive in partnering with airports 
and deferring to them to address security concerns such as perimeter 
security and access control, for which local airport operators have 
superior expertise and experience as well as ongoing responsibilities. 
Keeping these traditionally local duties in local hands allows TSA to 
leverage airport and local resources and enables the agency to better 
focus on its core missions of baggage and passenger screening and 
providing intelligence to local law enforcement.

EDS Installation: In-Line Systems Enhance Security and Reduce Personnel 
        Requirements
    The greatest area of opportunity in terms of enhanced security and 
potential long-term TSA budget savings comes from the permanent 
installation of explosive detection equipment in the Nation's airports. 
In order to meet Congressional deadlines to screen all checked baggage 
placed aboard commercial aircraft, TSA quickly placed thousands of 
explosive detection system (EDS) and explosive trace detection (ETD) 
machines in airports across the country. Many of those machines have 
been placed in airport ticketing lobbies without the kinds of 
integrated approaches that take maximum advantage of their certified 
throughputs and alarm reconciliation capabilities. The result, too 
often, is crowded airport lobbies (a safety and security hazard), major 
backups at a number of security screening checkpoints, and a huge 
increase in the number of TSA personnel necessary to operate the 
equipment.
    While virtually everyone agrees that the best solution at many 
airports is to move EDS equipment from crowded lobbies and place it 
``in-line'' as part of an airport's integrated baggage system, making 
the necessary changes at airports--reinforcing flooring, electrical 
upgrades, building new facilities, etc.--are neither easy nor 
inexpensive. Current cost estimates run in the $4 billion to $5 billion 
range for airports nationwide. These upfront capital costs are modest, 
however, when compared to the extraordinary expenses necessary to pay 
for literally thousands of extra screeners year after year using 
today's model. In-line screening, in airports such as Tampa 
International Airport, has also been shown to reduce the rate of TSA 
screener on-the-job injuries. The handful of airports that currently 
have ``in-line'' baggage systems report that they have paid for 
themselves with personnel cost reductions in as little as 16 months.
    The case of the Lexington Blue Grass Airport in Lexington, 
Kentucky, offers a perfect example. In Lexington, a $3.5 million 
investment to make the terminal modifications necessary to establish an 
in-line baggage system instead of the terminal lobby explosive trace 
detection (ETD) protocol that was offered as an alternative has 
resulted in annual personnel savings of more than $3 million. The TSA 
has been able to use four screeners for the in-line system per shift 
rather than the 30 that would have been necessary for primary checked 
bag screening using the ETD configuration. In addition, the in-line EDS 
option in Lexington allows for reduced congestion in terminal areas, a 
result that improves security and enhances passenger convenience. Large 
airports stand ready to achieve even bigger gains. Modeling in San 
Francisco, for example, shows savings of tens of millions of dollars 
annually for an in-line EDS solution.
    The Government Accountability Office in its February 15 appearance 
before the Committee noted that at the nine airports where the TSA has 
issued Letters of Intent (LOIs) to begin moving EDS equipment in-line, 
the agency estimates that the move will save the Federal Government 
$1.3 billion over seven years and that TSA will recover its initial 
investment in in-line systems at those airports in just over a year. 
GAO further noted that in-line EDS systems at those nine airports will 
reduce by 78 percent the number of TSA baggage screeners and 
supervisors required to screen checked baggage from 6,645 to 1,477.
    Through Fiscal Year 2005, Congress has appropriated $1.783 billion 
for EDS-related terminal modifications, although significant portions 
of those funds were used by TSA on the short-term challenges associated 
with getting EDS machines in airports to meet the original statutory 
deadlines. Conservative estimates show that the Federal Government 
needs to commit a total of $4 billion to $5 billion to get the job done 
at airports that require these solutions. The Federal Government has 
met less than half of that need since September 11.
    Unfortunately, the prospects for quickly addressing the existing 
funding gap remain bleak. The TSA budget request for FY 2006 calls for 
only $250 million for EDS installation projects, the amount mandated in 
law by VISION-100 FAA reauthorization legislation. While $250 million 
is certainly a significant amount of money, the fact is that it will 
allow TSA to move forward at only a handful of airports.
    TSA has estimated that roughly $240.5 million of the $250 million 
requested will be used to meet existing commitments at the nine 
airports covered by the existing eight LOIs with the agency (the LOI 
for Los Angeles World Airports covers both Los Angeles International 
Airport and Ontario International Airport). The $240.5 figure assume 
that the agency is allowed once again to ignore provisions in law that 
require the Federal Government to pay for 90 percent of the costs of 
those projects, otherwise it will be much higher.
    As you recall, the LOI process allows interested airports to 
provide immediate funding for key projects with a promise that the 
Federal Government will reimburse the airport for those expenses over 
several years. At Dallas-Fort Worth International Airport, for example, 
the airport used its strong rating in the financial market to leverage 
the LOI and to issue bonds to install these systems. This approach 
takes advantage of professional airport management capabilities and 
maximizes the use of limited Federal resources to ensure that key 
construction projects get underway as soon as possible.
    Under the LOI process, the Federal Government has committed to 
reimbursing airports for these projects over a three- to five-year 
period. The following lists the LOI airports and the total project cost 
at those airports:

                              LOI Airports
------------------------------------------------------------------------
                       Airport                             Total Cost
------------------------------------------------------------------------
Atlanta                                                     $125 million
Boston Logan                                                $116 million
Dallas/Fort Worth                                           $139 million
Denver International                                         $95 million
Las Vegas McCarran                                          $125 million
Los Angeles/Ontario                                         $342 million
Phoenix                                                     $122 million
Seattle/Tacoma                                              $212 million
------------------------------------------------------------------------
    Total LOI Airports:                                   $1.276 billion
------------------------------------------------------------------------

    Although airports contend that the cost of these projects should be 
met entirely by the Federal Government, given its direct responsibility 
for baggage screening established in law, in light of the national 
security imperative for doing so, and because of the economic 
efficiencies of this strategy, airports have agreed to provide a local 
match of 10 percent in the case of large and medium hubs and 5 percent 
for smaller airports. We continue to strongly oppose proposals by the 
Administration to dramatically increase the local share beyond the 
levels established in VISION-100.
    While the projects at those eight airports are necessary, critical, 
and a top priority, the simple fact of the matter is that incremental 
installments of $250 million a year will not get projects started at 
additional airports in the foreseeable future. Clearly, more resources 
are needed to address the dozens of other airports that do not 
currently have LOIs with the TSA. To give the Committee an idea of the 
scope of current needs that exist beyond the LOI airports, we have 
included the latest data we have from a number of airports that have 
identified EDS installation as a major challenge facing their facility.

    Airports Currently Without Funding in Place for EDS Installation
------------------------------------------------------------------------
                                                          Project Cost
                       Airport                              Estimate
------------------------------------------------------------------------
Albuquerque                                                  $48 million
Anchorage                                                    $27 million
Biloxi                                                        $5 million
Bismarck                                                     $20 million
Bradley                                                      $35 million
BWI                                                          $65 million
Charlotte                                                    $40 million
Chicago Midway/O'Hare                                        $90 million
Cincinnati                                                   $20 million
Cleveland                                                    $45 million
Colorado Springs                                             $15 million
Detroit                                                     $100 million
Elgin AFB                                                     $2 million
El Paso                                                      $15 million
Ft. Lauderdale                                               $85 million
Grand Rapids                                                 $20 million
Guam                                                         $14 million
Honolulu/Kahului                                             $78 million
Houston                                                     $115 million
Jackson                                                       $9 million
John Wayne                                                   $12 million
Kansas City                                                  $34 million
Memphis                                                      $42 million
Miami                                                       $200 million
Milwaukee                                                    $35 million
Minneapolis/St. Paul                                         $30 million
Nashville                                                    $40 million
Newark                                                       $99 million
New Orleans                                                  $14 million
New York LaGuardia                                           $98 million
New York JFK                                                $250 million
Oakland                                                      $30 million
Omaha                                                        $18 million
Orlando                                                     $140 million
Palm Beach                                                   $30 million
Panama City                                                  $10 million
Philadelphia                                                 $65 million
Portland                                                     $45 million
Port Columbus                                                $22 million
Providence                                                   $38 million
Raleigh-Durham                                               $40 million
Richmond                                                     $30 million
Rochester                                                    $10 million
St. Louis                                                    $90 million
St. Thomas                                                   $10 million
Salt Lake City                                               $20 million
San Antonio                                                  $40 million
San Diego                                                    $20 million
San Francisco                                                $22 million
San Jose                                                    $172 million
San Juan                                                    $130 million
SW Florida                                                   $28 million
Tampa                                                       $124 million
Tucson                                                       $10 million
Washington Dulles                                           $121 million
Washington Reagan National                                   $52 million
------------------------------------------------------------------------
    Total:                                                $3.019 billion
------------------------------------------------------------------------

    We believe that there are dozens of additional airports not listed 
here that have yet to develop comprehensive cost estimates or that have 
not responded to our requests for information.
    Despite these overwhelming needs, the Federal Government does not 
yet have a long-term EDS solution at a significant number of airports 
across the country. The TSA's task has not been made any easier by 
opposition from the Office of Management and Budget (OMB) to the 
issuance of additional LOIs to airports for these projects. It is our 
sincere hope that OMB will quickly move past what we believe is a 
short-sighted view of this problem and focus on the long-term benefits 
that can be achieved by immediately investing to make the terminal 
modifications necessary to accommodate EDS equipment.
    In-line systems require up-front capital expenditures, but they pay 
for themselves in short-order through major reductions in personnel 
costs. This is an example of budget rules that are ``penny-wise and 
pound foolish.'' One need only look to the real-world example of the 
dozen or so airports where EDS systems have been properly installed to 
get real examples of the dramatic personnel savings that can be 
achieved by moving forward with these projects. We appreciate the 
interest that you and Senator Inouye have shown in this problem, Mr. 
Chairman, and we look forward to continuing our work together to find 
creative approaches to addressing the existing EDS installation funding 
shortfall. Airports stand ready to support the LOI process and airport 
managers have repeatedly expressed to TSA their ability to accommodate 
a wide variety of financing options to help the Federal Government 
fulfill its responsibility.
    Beyond additional resources, we urge TSA to continue its work with 
airport operators and managers to ensure that proposed solutions and 
changes are really the best course at an individual facility. Airport 
professionals understand the configuration and layout of their 
facilities better than anyone and are uniquely suited to highlight 
where pitfalls lie and where opportunities exist. In addition, TSA must 
continue to work with airport operators to optimize the use of limited 
space in airport facilities and to pay airports for the agency's use of 
space in accordance with the law.
    Airports are pleased to see funding in the TSA budget request for 
ongoing maintenance of EDS machines. As the machines age and as their 
use continues to grow and their warranties expire, it is critical that 
funding is provided to keep the existing machines in operation and to 
restore machines that fail.

Encouraging Development and Deployment of New Technology
    In addition to investing in necessary infrastructure improvements 
and maintenance, the Federal Government needs to look toward the 
promise of new technology and invest in making those promises a 
reality. We remain convinced that there are a number of additional 
applications for new technology to improve baggage screening, for 
example. The key is for the Federal Government to encourage innovation 
in these areas and to make it a priority to investigate and approve new 
technology as quickly as possible. ``On-screen'' resolution using EDS 
equipment, for example, offers great promise in enhancing the 
efficiency of integrated in-line baggage systems, and the utilization 
of technology to achieve that goal should be encouraged.
    We must also look beyond our borders to learn from the experiences 
of the rest of the world. In many instances, the goals that we have 
been discussing over the course of the past several years both in terms 
of operations and technology are already a reality in many places. We 
would be wise to study those successes and incorporate best practices 
where appropriate.
    It is our hope that the proposed move of TSA research and 
development programs to the Science and Technology Directorate will 
achieve synergies and avoid duplication as the Department contends. As 
this process moves forward, however, we must ensure that research and 
development efforts are driven by real needs in the field and that 
efforts to centralize the process do not lead to a disconnect between 
research and system needs or a dilution of effort.

Screening Coordination and Operations Office
    The budget also includes a sweeping proposal to consolidate several 
critical programs under the Screening Coordination and Operations 
Office, which is an important and ambitious step toward a more focused 
approach on terrorist-related screening programs. As pointed out by the 
9/11 Commission Report and in the recommendations of Transportation 
Secretary Mineta's Aviation Industry Rapid Response Team, which was 
formed in the days immediately after the 2001 terrorist attacks, 
focusing on the people who know and can do harm by using our systems 
against us is the key to both protecting critical transportation assets 
and maintaining the efficiency that is critical to the aviation 
industry and the economy.
    Verifying and credentialing people who work in and pass through our 
transportation system and borders is the critical piece in allowing us 
to beat terrorists at their own game, and so we fully support the goals 
of the SCO. The key in moving forward will be to develop a common 
vision and to ensure that information is shared between these 
conceptually similar yet fundamentally different operations. At the 
same time, the SCO must design a process that gives members of the 
traveling public and the industry confidence that privacy rights are 
protected. This includes a process for allowing workers and travelers 
falsely identified by one of the systems to clear their names. In 
addition, these programs must always be managed by industry- and 
application-specific needs, an outcome made easier by consultation with 
industry and technology experts.
    The programs that are proposed to move from TSA to the newly 
created SCO have long histories with the aviation industry in 
development, deployment and daily operations. While gaining consistency 
through a coordinated SCO is important, we cannot allow centralization 
or reorganization-related distractions take programs and applications 
back to the starting line. Our experiences in the past three years have 
taught us that organizational realignments can stymie progress, so the 
challenge moving forward will be to ensure that we build upon the work 
that has been conducted to this point rather than recreate new systems 
and processes from scratch. The result will be better programs, brought 
on-line more quickly, at a lower cost.
    Additionally, the Department must take advantage of government/
industry partnerships as a way of moving programs forward. The 
Registered Traveler program for frequent flyers is a particular area of 
opportunity, and it is our hope that DHS will build on existing TSA 
pilot programs, make them interoperable, and expand them to a broader, 
standards-based cooperative program working with industry. We owe it to 
the traveling public to quickly deploy programs that improve security 
and reduce unnecessary delays. Cooperative approaches can likewise 
jump-start other long-stove-piped programs. We need more success 
stories of working together if we are to achieve greater security and 
improve efficiency and convenience for our citizens when they work and 
travel.

Focusing on TSA's Core Mission
    Given the enormous task that TSA has been given to ensure the 
security of the Nation's transportation system, the agency must rely on 
its airport partners to continue performing important functions that we 
have successfully performed for decades such as perimeter security and 
access control. Airports are organizations owned and operated by state 
and local governments and, therefore, have the necessary and 
appropriate incentives to perform security responsibilities at the 
highest levels. The primary mission of an airport is to establish and 
maintain a safe and secure environment for travelers and the general 
public and to serve the community and the national aviation system by 
encouraging competitive air service. Airports have always been 
responsible for the safety and security of their facilities and the 
people who use them, and this will continue to be so.
    Despite those facts, we continue to see efforts to expand TSA's 
mission into areas traditionally performed by airport operators and to 
expand the regulatory enforcement personnel at airports. This creates a 
natural conflict of interest by giving a single entity operational and 
oversight responsibilities. Clearly, there are a number of ways to 
better utilize limited TSA resources. Our members have been pursuing 
every opportunity to refine and improve our working relationship with 
TSA to avoid duplication and to develop more productive working 
relationships, and we will continue to do so. We firmly believe that 
these efforts will ensure that limited TSA resources are reserved for 
other priorities.

Additional Fees Should Be Rejected
    While more can be done to enhance the partnership between TSA and 
the aviation industry, that does not mean that the aviation industry 
and the traveling public should shoulder the entire burden of paying 
for aviation security as has been proposed in the President's budget 
request with the addition of $1.5 billion in new passenger security 
fees toward what the budget calls a full ``cost-recovery'' model for 
aviation. If enacted, this would set the stage for security fee 
increases as far as the eye can see. This is totally unacceptable. In 
addition to adding to the financial woes of an already beleaguered 
industry, the imposition of new fees ignores the national security 
implications of aviation security--a fact that was evident on 9/11--and 
breaks faith with the commitments the Federal Government made as part 
of the Aviation and Transportation Security Act to assume 
responsibility for passenger and baggage screening. Congress should 
reject the President's proposal and push TSA toward adopting more 
efficient means of using technology and personnel.

Proposed Cuts to AIP Will Impact Ability of Airports to Address 
        Security, Safety, Capacity
    Before closing, I want to highlight a related area of the budget 
where we cannot do more with less and that is the Airport Improvement 
Program, which the President has targeted for a $600 million cut from 
the authorized level and a nearly $500 million reduction from last 
year's enacted level. While I recognize that the FAA budget is not the 
topic of today's hearing, proposed cuts in AIP will have a profound 
impact on the ability of airports to address ongoing safety and 
capacity needs. In addition, at a time when congestion is returning to 
our airports and our skies, a reduction of airports' authorized share 
of the Airport and Airway Trust Fund is ill-advised.
    Under AIR-21 formula levels, for example, the minimum entitlement 
at smaller commercial service airports would be reduced to $650,000 
from $1 million and all primary entitlements would be halved if AIP is 
funded below $3.2 billion. Additionally, the cargo entitlement would be 
reduced, the set-aside for general aviation and non-primary commercial 
service airports would be scaled back and the general aviation 
entitlement of up to $150,000 per facility would be eliminated. It also 
is certainly worth noting that the Alaska supplemental entitlement 
would be halved as well.
    While these cuts would affect all airports, they would obviously 
have the greatest impact on smaller facilities that rely more heavily 
on AIP entitlements to support capital programs. As members of this 
Committee are well aware, smaller airports are already struggling to 
deal with a number of burdensome Federal security mandates. Dramatic 
cuts to AIP as proposed in the President's budget will exacerbate those 
problems and call into question these facilities' long-term viability. 
Even if entitlement cuts are restored, which is no guarantee, the 
overall reduction in AIP funding will have a ripple effect throughout 
the aviation system.
    Taken together, the President's budget is a $2.1 billion ``one-two 
punch'' on the aviation industry. Travelers and air carriers should not 
be asked to shoulder the burden of the $1.5 billion increase in 
security fees, and airports throughout the country cannot sustain a 
$600 million reduction in AIP from authorized levels.

Conclusion
    Mr. Chairman, thank you for the opportunity to appear before you 
today. We have highlighted a number of areas in which we believe 
limited TSA resources can be leveraged to produce enhanced security and 
better results for America's taxpayer and the traveling public. We look 
forward to working with you and the TSA to ensure that our nation's 
aviation system is the most secure and efficient in the world.

    STATEMENT OF JAMES C. MAY, PRESIDENT/CEO, AIR TRANSPORT 
                  ASSOCIATION OF AMERICA, INC.

    Mr. May. Thank you, Mr. Chairman, I appreciate being here, 
and I appreciate the Committee's indulgence in letting us come 
back to finish this abbreviated hearing, from our perspective.
    I'd like to thank you and the other members of this 
Committee who really have, a clear majority, really, who have 
expressed their clear opposition to the Administration's 
proposed tax increase. CBO has scored it at $2 billion, if it 
were enacted and passed through, it would add to the $3.2 
billion the carriers are already paying, and it would mean that 
at that junction, through our Aviation Security Fees, we would 
be paying some 85 percent of the overall operating budget of 
the TSA, and I think that's wrong. You should know that it's a 
tax that would not just hit legacy carriers, but regional and 
small carriers equally hard, and we deeply appreciate your 
opposition.
    Perhaps what's most disappointing is that this tax is 
contrary to a well-established public policy that aviation 
security is a critical component of maintaining national 
security of our country. Your Co-Chairman, Senator Inouye, 
authored an article that appeared in The Hill newspaper not 
long ago, and I'd like to quote from it, ``We all recognize 
that after September 11 transportation security is a matter of 
national security. It had to become national security. The vote 
in Congress to make this fundamental change was 100-0 in the 
Senate, 410-9 in the House.'' Co-Chairman Inouye went on in the 
article to say, ``After reviewing the Administration's budget 
request for the DHS and TSA, it becomes clear that the airline 
fee proposal is but one example of the Administration's failure 
to equate transportation security with national security.''
    Mr. Chairman, in fact, all Americans benefit from a secure 
aviation system, whether or not they happen to be on an 
airplane at a given time or shipping goods. In addition, the 
U.S. economy benefits broadly from a safe and vigorous air 
transportation system, and for these reasons, the ATA and its 
members vigorously oppose this tax.
    It's probably equally disturbing that TSA, in proposing 
this tax, has also failed to demonstrate a need for it in the 
face of well-documented and continuing weak financial 
management. Neither the security nor the business case for this 
tax increase was ever made to this Committee or anywhere else.
    Consequently, the net effect is that airlines would be 
confronted with the worst of two worlds, an additional $2 
billion tax on top of the $3.2 billion I mentioned a moment 
ago, with no apparent increase or enhancement to aviation 
security. It's equally troublesome that TSA wants to raise 
taxes without improved managerial oversight of its activities. 
As the GAO pointed out in a very recent report, managerial 
improvement is indispensable if important programs that will 
benefit the public are to move from the drawing board to 
reality. We've all read the stories, I don't need to repeat 
them here today.
    At the same time, continuing problems with the no-fly list 
and selectee list make headlines on a regular basis, and the 
effort to put into place a system to augment CAPPS I is 
beginning to look a little bit like the search for the Holy 
Grail. First it was CAPPS II, then it was reborn as Secure 
Flight. And after some two years of effort, numerous missteps 
and an unknown amount of employee time and money, TSA has still 
not moved past the testing phase. So, you've got CAPPS I, CAPPS 
II, Secure Flight. Now, in addition, we're in the testing phase 
of a Registered Traveler program. There are five different 
programs set up at five different airport locations with five 
different airlines, none of which talk to one another, or 
conveniently communicate in a central system. And let's not 
overlook the lack of coordination with an effort to test on an 
international arrival passenger system, initiated not by TSA, 
but by Customs and Border Protection. And then there's the 
APIS, the Advanced Passenger Information System for passengers 
on inbound international flights.
    In short, DHS is undertaking a wide variety of very 
important efforts that are simply not coordinated. And what's 
the solution? Two suggestions. First, to spend more wisely DHS 
needs the right plan and a strong management focus on 
coordination. Tell us what information you need, keep it within 
a central collection point, make it consistent, whether it's 
the State Department, or the Department of Homeland Security, 
or TSA, or Customs and Border Protection, so that we have a 
system that allows us to attack people, not things, which I 
think most of our security experts think is an important goal.
    I think it's also time for TSA, DHS and the Committee to 
take a step back to develop an analytical, risk-based approach 
to guide how it spends its limited resources. This view was 
echoed by a task force on homeland defense chaired by The 
Heritage Foundation, and CSIS. A key recommendation from that 
report is to rationalize government spending by establishing a 
risk-based mechanism for DHS-wide resource allocation and grant 
making. The 9/11 Commission made a nearly identical 
recommendation on making hard choices, we agree.
    In conclusion, three suggestions, three principles that the 
Committee and DHS and TSA need to keep in mind. One, establish 
once and forever that aviation security is a function of 
national security, and should be paid for accordingly. Two, 
make the hard choices using risk-based mechanisms in order to 
allocate resources more wisely, and three, manage the homeland 
defense structure more effectively to realize the efficiencies 
anticipated by Congress when they created TSA.
    Thank you, again, Mr. Chairman, for your strong support of 
our issue, and the leadership that you provide, along with 
Senator Inouye for this Committee.
    [The prepared statement of Mr. May follows:]

   Prepared Statement of James C. May, President/CEO, Air Transport 
                      Association of America, Inc.

    Mr. Chairman, at the outset I want to thank you and the Members of 
this Committee--a clear majority--who have expressed opposition to the 
Administration's increase of the September 11th Passenger Security Fee. 
This proposal has been scored by the CBO at $2 billion. Let me be 
clear, all carriers--low-cost, network and regional--will be harmed if 
this tax increase is approved. We appreciate your opposition.
    Perhaps what is most disappointing is that this tax is contrary to 
well established public policy that aviation security is a critical 
component of maintaining the national security of our country. A recent 
article penned by Co-Chairman Inouye published in The Hill brings home 
this point more than once. In his article, Senator Inouye observed:

        ``We all recognized after Sept. 11 that transportation security 
        is a matter of national security . . . It had to become a 
        national-security function. The vote in Congress to make this 
        fundamental change was 100-0 in the Senate and 410-9 in the 
        House.'' Co-Chairman Inouye goes on to note that ``After 
        reviewing the administration's budget request for the DHS and 
        TSA, it becomes clear that the airline-fee proposal is but one 
        example of the administration's failure to equate 
        transportation security with national security.''

    In fact, all Americans benefit from a secure aviation system, 
whether or not they fly or ship goods. In addition, the U.S. economy 
benefits broadly from a safe and vigorous air transportation system. 
For these reasons, the cost of aviation security should be borne just 
as broadly.

No Justification
    Equally disturbing is TSA's failure to demonstrate the need for 
this tax increase in the face of well-documented and continuing weak 
financial management. Neither the security nor the business case for 
the tax increase has been made.
    Consequently, airlines will be confronted with the worst of two 
worlds--a national security tax increase added to an already crushing 
$3.2 billion tax which holds no promise to enhance aviation security.
    Also troublesome is that TSA wants to raise taxes without improved 
managerial oversight of its activities. As the GAO has pointed out in 
recent reports, managerial improvement is indispensable if important 
programs that will benefit the public are to move from the drawing 
board to reality. We have all read the stories--I need not repeat them 
here.
    At the same time, continuing problems with the no-fly and selectee 
lists make the headlines on a regular basis, and the effort to put into 
place a system to augment CAPPS I is beginning to look like the search 
for the Holy Grail. First it was CAPPS II, and then it was reborn as 
Secure Flight. But after some two years of effort, numerous missteps 
and an unknown amount of employee time and money, TSA has not moved 
past the testing phase. In addition, the testing phase of the 
Registered Traveler program has made little sense, with five different 
systems unable to interface or lay the groundwork for a national 
system. Also not to be overlooked is the lack of coordination with the 
effort to test an international arrival passenger information system 
initiated by Customs and Border Protection, and the Advance Passenger 
Information System for passengers on inbound international flights. In 
short, DHS is undertaking a wide variety of important efforts that are 
simply not coordinated. What is the solution? Let me make two 
suggestions.
    First, to spend more wisely DHS needs the right plan and a strong 
management focus on coordination, and must establish an overall plan 
that identifies how the operations of each entity fit together without 
duplication and work on the basis of agreed upon data that can be 
collected by a single entity.
    Second, and most importantly the time has also come for TSA, 
supported by this Committee, to take a step back and develop an 
analytical, risk-based approach to guide how it spends its limited 
resources. This view was echoed by a task force on homeland defense 
chaired by The Heritage Foundation and The Center for Strategic and 
International Studies. The key recommendation from that report is to 
rationalize government spending by establishing a risk-based mechanism 
for DHS-wide resource allocation and grant making. The 9/11 Commission 
made a nearly identical recommendation on making hard choices in 
allocating precious resources. We agree.

Conclusion
    In the post-9/11 world, the number of projects which no doubt would 
improve security by some degree is virtually unlimited. The challenge 
is to determine where to draw the line. In our view, three principles 
must guide the Congress and TSA: (1) establish once and forever that 
aviation security is a function of national security and should be paid 
for accordingly, and (2) make the hard choices using a risk-based 
mechanism in order to allocate resources more wisely, and (3) manage 
the homeland defense structure more effectively to realize the 
efficiencies anticipated by Congress when it created DHS.

    The Chairman. Thanks very much to the two of you for 
returning. I know that it was a difficult time in the first 
hearing, and you sat with us patiently, so we appreciate you 
taking the time to come back and complete the hearing.
    Mr. Barclay, have your people worked on the Registered 
Traveler and Transportation Worker Identification Credential 
programs? Are you working with TSA on that?
    Mr. Barclay. We are, Mr. Chairman, and together with Jim 
and his folks and most of the people in the industry couldn't 
agree more with the necessity to get a program like that going, 
in order to know more about people willing to volunteer 
information on themselves. It helps us do a much better job of 
spreading resources.
    If I could just pass on, too, we have a number of important 
partnerships with TSA, one of which is on the background checks 
of airport workers, both airport and airline workers. One of 
the things that's happened since 9/11 is that good news has not 
been news, and we've worked together with TSA to do background 
checks on 1.6 million workers. Pre-9/11 that process used to 
take 52 days to do the check on a worker, now it takes 4 hours 
to do it. And that's a success story, that's saved hundreds of 
millions of dollars to the industry. It's a success story that 
we've worked together with TSA on, and we think there are more 
partnerships like that with Jim's organization and with ours, 
and with TSA on programs like Registered Traveler that can 
greatly benefit the system.
    The Chairman. You're familiar with the GAO report 
concerning the adequacy of the security of airport perimeters 
and the various access controls, you're familiar with that, 
aren't you?
    Mr. Barclay. Yes, sir.
    The Chairman. Have airports and TSA done enough to meet the 
comments of GAO, to respond to that report?
    Mr. Barclay. Airports, again, have local law enforcement 
there at each airport, and if we can get some consistent rules 
on how we want those local police departments to operate, 
you'll find very, very good compliance out there among local 
governments. So, we are working with TSA to respond to the 
specifics on that. On access control, we're way ahead of all 
other industries, because virtually every major airport already 
has a highly developed access control system to and from the 
secure areas of airports. We need to add biometrics to that, 
but we have to get standards out of the government before we 
can add those biometrics so we don't have to do it twice, and 
there is more we can do, but airports are determined to do that 
in the future.
    The Chairman. Are you satisfied there is a sufficient 
worker identification credential program? Is the one in place 
right now?
    Mr. Barclay. Well, there is at each airport, and we're 
doing the criminal history record checks, as I say, with the 
Federal Government. I do think there's more that needs to be 
done there, we--for example, when you run checks, even after 
you run people through the FBI process with a criminal history 
record check, you'll still find about 5 percent of people whose 
names won't match their Social Security number and their 
address. Now, folks that are not telling you the truth about 
who they are, that's a risk group I want to take a very, very 
close look at, as opposed to somebody who simply has been 
guilty of a crime when they were in college. We need to, and 
airports want to do more on these checks, particularly of our 
workers, but many of those same concepts apply to security in 
the system in general.
    The Chairman. Do we need to go further to mandate TSA to 
work with your industry on these issues: access, worker 
security, and basic transportation security?
    Mr. Barclay. We have proposals on that, Mr. Chairman, we'd 
like to share with the Committee that we do think that would be 
helpful. It would be helpful for TSA and DHS. It would be 
helpful for us, and they build on the example of successful 
partnerships I was mentioning earlier.
    The Chairman. Well, there seems to be some disconnect, so 
we'd like to have those. I'm sure the rest of the Committee 
would like to have a chance to look at those. With regard to 
the airlines themselves, we have some problems about passenger 
fees. I think that's the subject here, but why does the 
industry take the position that, with the current economy, that 
these fees would really be a greater detriment to travel? Isn't 
that your position?
    Mr. May. Well, sir, I think our position is that one, 
aviation security is national security and ought to be paid for 
accordingly. Two, we are already contributing $3.2 billion 
annually to the TSA. On top of that, we have about another $2 
billion in out of pocket expenses, that according to the 
enabling legislation were to have been reimbursed, that have 
never been reimbursed. Issues like cargo security, catering, 
screening and a whole range of other activities. So, we don't 
feel like we're not paying our fair share, since we're the only 
people paying into DHS or TSA of any industry. And I think that 
needs to change. And the idea that you're going to levy another 
$2 billion on an industry that just finished losing $10 billion 
last year, $33 billion over the last 3 years, and expect us to 
pass it through to the passenger in an environment where we 
literally don't have any pricing power, is just wholly 
unrealistic. It's going to come directly from the bottom line.
    Our carriers have done a terrific job of managing the costs 
they can manage. The ones they can't are the taxes, the fees, 
and the price of oil.
    The Chairman. Last question, as I understand it, this fee, 
if we approved it, would not increase the amount of money 
available to TSA, it would just replace some of the current 
sources of funds. Now, what if we said, OK, we'll approve the 
fee, but it all has to go to TSA, do you think it's needed?
    Mr. May. I think that TSA would have to prove that they've 
got a real use for that money that's going to substantially 
improve aviation security, number one, and they're going to 
have to demonstrate that they've got a functioning management 
team that knows what they're doing, number two, and I don't 
think those two hurdles can be achieved.
    The Chairman. Thank you.
    Senator Inouye?
    Senator Inouye. Mr. May, if I may follow up on my 
Chairman's questioning, isn't it true that at this moment, most 
of the legacy airlines have fiscal problems?
    Mr. May. Sir, we've got a number of carriers in Chapter 11, 
as I indicated a moment ago. We lost $10 billion last year as 
an industry. We've got $33 billion in losses over the past 3 
years, and we're projecting if oil stays where it is today or 
near it, that we'll lose another $5 billion this year.
    Now, the good news is that confluence of tough economic 
news has given carriers the opportunity to make changes to 
their operations, the likes of which they've never made. We've 
re-negotiated our labor contracts, we've achieved fuel 
efficiency, we've changed our routing systems, we've gotten all 
sorts of productivity gains in place, we've eliminated, 
unfortunately, 130,000 employees just from the airlines 
business, we've cut capital spending by billions of dollars 
annually. But there are some things that we can't control. 
Taxes and fees imposed by the Federal Government amount to $15 
billion annually on this industry, which only generates about 
$80 billion in revenue a year. So, that's a huge percentage of 
our annualized revenue. And on top of that, we've got oil 
prices that are probably $20 higher than any expert would have 
predicted a year and a half ago.
    Senator Inouye. Can the passenger transportation security 
fee be easily passed on?
    Mr. May. Not a prayer, Senator, not a prayer. It will come 
right from the carrier, bottom line.
    Senator Inouye. And from what you've described as to the 
fiscal position, to absorb that would be disaster.
    Mr. May. It would be absolutely disastrous and it would be 
an impact, not just on the so-called ``legacy'' carriers, but 
on regional airlines, on small carriers, independents, the so-
called low cost carriers.
    Senator Inouye. You've also indicated that you've had to 
re-negotiate your contract with labor, and I know that some of 
the airlines have had three pay cuts, and one, I think, had 
four pay cuts. Do you expect labor to keep on cutting?
    Mr. May. Sir, I think anybody that knows anything about 
this business has to feel the pain of the employees that work 
for our carriers. They have been major participants in the 
process of trying to keep us in business, but at some point, 
others that sit on your side of the desk have to understand--
and I think you clearly have demonstrated that, along with your 
colleagues here today--that proposals like this coming out of 
government are going to have a direct impact on the individual 
employees of these carriers.
    We've laid off, as I said a minute ago, 130,000 of those 
employees, $2 billion more in revenue out of the bottom line 
for these carriers is going to mean untold more employees are 
going to have to get laid off because we don't have the pricing 
power to put those charges through.
    Senator Inouye. If this fee becomes law, that would mean 
that you would be absorbing about 85 plus percent of the costs 
of security?
    Mr. May. Senator Inouye, that is exactly right. We would, 
if this went through, account for--in direct funds paid--for 
about 85 percent of TSA's budget.
    Senator Inouye. We have no idea as to what the other 
countries have done, but is this typical of what you find, say, 
in Europe?
    Mr. May. No, sir, it is not. It's not typical of Asia----
    Senator Inouye. How do the French handle this?
    Mr. May. I can not tell you specifically how the French 
handle it, but I know that there are very different regimes 
across the EC.
    Senator Inouye. They're much more helpful in the sense that 
they consider this a national security item?
    Mr. May. I think that is the case, sir, and I think 
overall, people in other parts of the world do not have the 
intense level of security that we see here in the United 
States. I think there's a different metric that gets used, they 
tend to worry more about people than they worry about things. 
You're an international traveler who spends a good bit of time 
in different parts of the world, and I know that as you go 
through security in other major airports, you'll see it's a 
very different environment than that which you find here in the 
United States.
    Senator Inouye. Mr. Barclay, it's been suggested by many 
that we're not looking into appropriate technology, we rely too 
much upon human power, is there any credence to that?
    Mr. Barclay. There is on the screening we're doing of 
baggage. As we were saying, there is actually technology out 
there right now, and if we build it in, we get enormous savings 
in personnel costs at TSA that can more than pay for the 
building in of that equipment. It speeds up the process, and 
not only does a better job of checking the bags, but it makes 
the experience much more convenient, and it saves personnel for 
the Federal Government, so, it's hard to come up with an 
argument against doing it, except that in a one-year 
appropriation process, you don't have enough money to do the 
capital costs in order to earn the return on the savings you 
get, and that's a formula we've been arguing we should figure 
out.
    Senator Inouye. Thank you very much. Thank you, Mr. 
Chairman.
    The Chairman. Senator Ensign?

                STATEMENT OF HON. JOHN ENSIGN, 
                    U.S. SENATOR FROM NEVADA

    Senator Ensign. Thank you, Mr. Chairman.
    I would like to start by addressing the Registered Traveler 
program, from both of your perspectives. It's something you 
both talk about supporting. The concept of it sounds good, that 
you move people through more quickly. How do you see it 
working? Right now I look at the employees at the airport, who 
are supposedly trusted travelers, but yet they go through this 
same security line the same way that everybody else does. They 
may have separate security lines, but it's still a security 
line. Is that what is foreseen? Are these lines just special 
because there are fewer registered people, so they'll have 
shorter lines? Kind of like a first class line? Or, do they 
actually go through less of a screening process? How do you 
foresee it working? Either one of you can start.
    Mr. Barclay. You're dead on, Senator, that with the 
Registered Traveler program, the thing to keep in mind is that 
we let hundreds of people every day on airplanes with guns, 
because we've done background checks on them, and we know 
they're not a threat to the system. The issue is not spending 
more of our resources looking for dangerous people rather than 
dangerous things. A trusted person with dangerous things on 
them is not a threat to the system, and an untrustworthy person 
with nothing on them is a threat to the system, and the lesson 
of 9/11 was that the powerful weapon there was knowledge. It 
was the hijackers' knowledge that the policy of that day was to 
do whatever it took to get the plane on the ground, be passive 
in the face of a hijacking, and they used that policy against 
us, and that frankly was a good policy, because it had saved 
thousands of lives in the decades prior to 9/11.
    So, you had people that, it wasn't the box cutters, as the 
fourth airplane showed, it was that knowledge that was used 
against us of our own system. So, it's those dangerous people 
we need to be looking hard for. The relationship to Registered 
Traveler is, if we can get people to volunteer lots of 
information on themselves, and we can be confident through 
biometrics that those people are not dangers to the system, 
having them take laptops out of their bags and take their shoes 
off when we're using background checks to let people on the 
planes with guns doesn't make any sense. We need to start a 
Registered Traveler program so we can explain some of these 
things more clearly to the public, I think, and get the public 
to understand that if you are volunteering information on 
yourself and you are part of a Registered Traveler program, 
you're really doing a lot for everybody's security.
    Senator Ensign. From what you've seen at the airports where 
TSA is trying this, is that what they're doing?
    Mr. May. No.
    Senator Ensign. That was the point that I was making. From 
my conversations with TSA--all they seem to be doing is 
gathering information in order to lessen the lines. The reason 
you can get somebody to sign up for a Registered Traveler 
program is so they can speed through a line faster, but if 
they're going through exactly the same thing they went through 
before, how does that get them through the lines?
    Mr. May. Sir, we've said the same thing, if you don't 
provide an incentive then you're not going to have people 
volunteer the information. The systems, we've got five in place 
today, they don't talk to one another, there were five 
different carriers, five different airports, and the sixth one 
is about to start.
    Senator Ensign. Let's take that a little bit further, 
regarding the whole way that TSA operates. TSA, it would seem 
to me, has identified risk from security checkpoints to the 
airport. OK, but they don't identify any of the lines they 
create in back of those security checkpoints. As you just 
talked about, the terrorists take advantage of their knowledge 
of where the weaknesses in the system are. Well, the weakness 
in the system now is the lines. If you walk in with a suitcase 
bomb, you're going to kill a lot of people. When you've got a 
couple of thousand people in line, like at Dulles airport or 
any of the other major airports during peak times, the CAPP 
system and all of these other various things that they're doing 
keep adding on. Like you have talked about, trying to go after 
that miniscule little cigarette lighter, or whatever it is that 
they're going after, slows the lines down, backs them up, and 
creates another opportunity for terrorists. It would seem to me 
that we need to start looking at a risk-based system. You're 
never going to get rid of everything, so how can you minimize 
the overall risk to the greatest degree for the amount of 
funding that you have to work with, because you can't have 
unlimited screeners and unlimited lines if you want to get 
people through quickly. Given what we have, it would seem to me 
that, using various computerized models where nobody could 
predict it, you let certain people through to keep the lines 
down at certain times. It seems to me that we need more 
feedback from the people on the ground, like yourselves, to put 
pressure on lawmakers, because lawmakers aren't thinking this 
way now. TSA is a bureaucracy. They're not going to take 
chances. They're not going to take a risk by themselves. As 
lawmakers, we have to make those choices. We have to tell TSA 
that we're the ones who created the monster in the first place, 
and we have to be the ones to fix it. But, we can only do that 
with your help, giving us the input that we need.
    Mr. May. Senator, I couldn't agree more, it's one of the 
principal three tenets I closed my remarks with, it's what the 
9/11 Commission said, it's what Heritage has said, it's what 
CSIS has said. Everybody who's looked at it says you have to 
have a risk-based assessment. We can have perfect security for 
airlines, nobody will fly, and that's the risk.
    I would suggest that there are probably some folks in your 
hometown that are pretty good at security, that are also very 
good at moving people and customer service that we could take 
some lessons from at TSA.
    Senator Ensign. All right, I appreciate that. Mr. Chairman, 
thank you. I know that for my state, and states like Hawaii 
that depend so much on tourism, it seems like every time that 
we start getting a handle on moving lines through, TSA comes 
out with a new rulemaking process. As we've seen with all of 
the reports, they're not doing any better of a job, but they 
keep adding new rules which make the lines back up again for a 
while. Until we get more resources, Mr. Chairman, we really 
need--as a Congress--to take a hard look at what we're doing 
with the money that we're spending. In the long run, we're just 
costing more and more in fees, we're costing the economy more, 
and we're making it a pain in the rear end to travel for anyone 
who does it on any kind of a regular basis. And I thank you.
    Mr. May. If I might, Mr. Chairman, the scary part is that 
we've got advanced bookings for the summer that are record 
bookings. We're going to have a lot of people at airports, a 
lot of people traveling on planes, and we're delighted for that 
good news, but it also means that if something doesn't happen 
soon to expedite that load of passengers through these airports 
headed to Hawaii and Las Vegas and New York and other places, 
then we're going to have a summer that both we and you hear 
from both of our collective constituents and customers as to 
why they've missed a flight because they couldn't get through 
security on time.
    The Chairman. Add Alaska next time.
    Mr. May. Yes, sir. Well, that's where I'm going, 
personally.
    The Chairman. Senator Pryor? Oh, pardon me, Mr. Lautenberg. 
Sorry about that, Senator Lautenberg.

            STATEMENT OF HON. FRANK R. LAUTENBERG, 
                  U.S. SENATOR FROM NEW JERSEY

    Senator Lautenberg. When age takes over, and all three of 
us have the same exact vintage problem, so--all three veterans 
of the Big War, two heroes and me.
    [Laughter.]
    The Chairman. My professors once told me I wouldn't make 
any money until my hair got grey, they were right. You did.
    Senator Lautenberg. I'm afraid to step out here, because he 
is still the Chairman, and probably going to be around for the 
next 20 years while I'm running.
    To get to a very serious subject and concern that we all 
share--the solutions are where we get to the problems. And when 
we hear, Mr. May, about the losses that the airlines have in 
front of them, a question for me is--is it primarily the costs 
for security? How about the costs for fuel? How about the fact 
that new airlines can come in with a lot less capital burden 
than the ``legacy'' airlines as we call them--isn't that where 
a lot of the problem is created, is that it's very hard for the 
well-established airlines, the names that we all know, to 
compete with the so-called upstarts, the newer airlines?
    Mr. May. Senator, your observations are very much on 
target, as always. I mentioned fuel in my testimony as one of 
the critical elements. There are really two--we've taken on all 
of those costs over which we have some degree of control, if 
you will--there are two areas where we have little or no 
control. One is the price of oil, which we had hoped would be 
in the high thirties, maybe low forties and is now, clearly as 
we all know, in the low fifties, and that's having just a 
devastating impact on the business. It is the difference 
between break-even and having lost a lot of money for most of 
our carriers. Add to that an unconscionable tax burden that, as 
I said, we're paying as an industry, and we don't have the 
luxury of paying income taxes in this mix, we're paying 
literally $15 billion a year on $80 billion in revenue. There's 
something wrong with that equation. That's a higher tax load 
than alcoholic beverages, tobacco, a variety of other sin 
products where the tax load is intended to discourage 
consumption. So, I think we need to address those areas where 
we have control. As to the other operational parts of the 
business, there are no effective barriers to entry, the market 
is awash in money. We've got some 16 to 18 applications at the 
FAA, as you and I are sitting here today, of people wanting to 
come into the business, as bad as it is. They've got a plan 
that they figure they're going to make some money, so you've 
got pressure on the FAA to issue new 121 certificates, and 
we've got a level of competition in the business that creates 
overcapacity on seats that is such that it is having a dramatic 
impact on pricing.
    Senator Ensign. But with your expectations for the summer, 
as robust as they are, it would sound like there won't be 
enough seats at the rate that we're going. It's really a long-
term question about whether or not in the days of regulation 
things operated a little better, there were fewer problems in 
terms of scheduling, et cetera. Now we've reduced the 
separation. We know more people are flying and that delays are 
not uncommon. I get delayed a lot when I fly out of Washington 
National. When I go north to Newark or New York, we've got to 
wait until they clear the decks up there, reduce the traffic 
volume. I chide the pilots often and say, ``You've got to get 
faster airplanes here.'' The fact of the matter is, you sit and 
wait an hour and a quarter to take off--as I did the other 
day--for a 36-minute flight, as it's advertised. We just can't 
seem to keep up with it. There's finite space in the sky and 
you just can't keep throwing more airplanes up there. In 
particular, Mr. Chairman, if one of the goals currently is to 
get rid of Amtrak, which carries 25 million passengers a year, 
that would raise problems that could not be dealt with except 
by some kind of re-regulation, and we don't want to go into 
that.
    Mr. May. Senator Lautenberg, I just spent 2 days at a 
conference sponsored by the FAA dealing with the whole business 
of funding for the Aviation Trust Fund and that expires in 
2007--September of 2007. I think one of the classic 
opportunities, as well as challenges, that this Committee is 
going to face, is what to do about the national air space, how 
do we collapse a system that was built in the 1950s and the 
1960s that is terribly antiquated that can't handle the 
capacity that we've got coming online. Put with it a 
reasonable, realistic funding mechanism, add in bonding 
authority where it's appropriate to do that, and that would 
become one of the great challenges of our time, to make the 
changes that are necessary in that system. And I think that if 
we don't do it, that hour and 30-minute wait, or 15-minute wait 
is going to be 2 hours and 15 minutes, because we have more 
planes in the system today than it can handle. The explosion of 
planes coming out of Teterboro, coming into the mess, and we've 
got to find a way to handle that, and it means new technology, 
getting rid of the old, duplicative, antiquated systems that 
we've got, finding new funding alternatives and making the 
changes that are going to be very difficult to make 
politically, because there are constituent jobs at stake and so 
forth. But I think it is going to be one of the great 
challenges this Committee faces.
    Senator Lautenberg. Mr. Barclay, could the airports pick up 
some of this increased cost that is being proposed? I sit here 
and I speak, not for my colleagues, but I haven't heard anybody 
speak up on behalf of adding this tax for security, 
purportedly. Can the airports come up with a way to fund it out 
of their revenue somehow?
    Mr. Barclay. I know that with your experience as a Board 
Member of the Port Authority, you know that airports really 
don't make money. If new costs come on, they figure out who to 
charge to pass that cost along, but you still wind up with the 
major airports back at the airlines and they'd have to then 
figure out, could they pass it along to the passengers.
    Senator Lautenberg. Having been a Board Member of the 
Commission of the Port Authority before I got here, it's always 
been my view that the best place to handle security would be at 
the airports themselves, by the airport management, people that 
are experienced with all of the movements that take place in 
that airport, instead of having to create an organization 
outside, amorphous, and I really think that TSA is trying its 
best. We've got a new Secretary, and I talk to him fairly 
frequently. He comes from New Jersey, that doesn't mean that he 
caters to New Jersey, but the fact of the matter is, he's 
trying to get the job done and we wish him well, and we just 
can't add costs without realizing that we will never, ever, 
ever, capture everyone who has malice intended for us, whether 
it's through their shoes or through some other system. Except, 
I now feel better, Mr. Chairman, flying better, the cockpit 
doors are fortified, for the most part, and I'll never 
understand why, simply--and I've mentioned this before--that we 
don't have a TV camera in the cabin and a monitor in the 
cockpit for at least the pilot or the flying crew to understand 
if something is wrong in the back.
    Thank you, Mr. Chairman, I appreciate it.
    The Chairman. Thank you very much, Senator. I don't know 
why we don't get some money out of people who have businesses 
in railroad terminals, or money from the people who ride 
railroads to provide their own security. But this is for 
another day, right?
    Senator Pryor?

                 STATEMENT OF HON. MARK PRYOR, 
                   U.S. SENATOR FROM ARKANSAS

    Senator Pryor. Mr. Barclay, I'd like to talk to you about 
in-line explosive detection systems, and I think the 
installation of in-line EDS systems at our airports is the 
single most important thing that we can do to increase 
efficiency in the baggage screening, while also improving 
safety and security at our airports. Do you agree with that?
    Mr. Barclay. Absolutely.
    Senator Pryor. OK, now let me ask this, if we had to make 
the initial investment in in-line EDS systems, or we make the 
investment now for in-line EDS systems now and we were to 
achieve all of the savings and efficiencies that we've seen at 
some of the participating airports, would it be necessary to 
continue increasing airline security fees? And let me give you 
a little background on that so you understand the context of my 
question. It just seems to me that this is one of those areas 
where if you make the initial investment, you have some upfront 
costs; we acknowledge that, that you do reap a lot of long-term 
savings. In fact, I think one of the things you talked about in 
your statement a few moments ago, was Lexington, Kentucky and 
that airport there, and if I understand your facts and figures 
and the facts coming out of Lexington is that, in a little over 
a year, a year and a few months, maybe the investment in the 
in-line EDS would have paid for itself. Am I understanding that 
correctly?
    Mr. Barclay. Exactly. They spent $3.5 million to build the 
in-line system, and they save $3 million a year, so in the 
second year, you're making money.
    Senator Pryor. So, that was my question, if we did make the 
initial investment, would we have to, over the long haul, 
increase the security fees because it seems that this 
investment does pay for itself rather quickly, do you agree 
with that?
    Mr. Barclay. Yes, sir. We'll do a calculation and get back 
to the Committee on what the savings over, like a ten-year 
period would be, and compare that to what the charges are. What 
we've been doing, mostly, is just trying to justify the initial 
building in. You can easily cover the $3 to $5 billion--
depending on whose estimate it is--to build them in, but you 
then earn the ongoing savings for TSA. I mean, in just the 
airports that have them, I think the numbers, I was trying to 
find them here, went from like 6,500 employees down to 1,400 
employees. It was an enormous drop in employment, so there are 
big savings there to be had over time.
    Senator Pryor. I did want to ask about Lexington, I don't 
know all the airports that are participating in this, but 
that's one that seems to be, you know demographically somewhat 
similar to the two biggest airports in my state at least, a 
little difference probably here and there, but nonetheless, 
some, a lot of similarities. And I was curious if there's 
something about Lexington that makes it unique, or could you 
take that Lexington model and sort of put it across the whole 
system, and apply what we've learned at Lexington to the whole 
system.
    Mr. Barclay. In fact, I was just recently down at Little 
Rock, and they've got a model in-line system. I don't have the 
numbers on what it cost and what they saved, but GAO examined 
just nine airports, and found that at those airports, over 7 
years you'll save $1.3 billion, after you pay for the cost of 
building, everything to build them in. So, it is across the 
system that you get this savings.
    Senator Pryor. Wait a minute, that's nine airports, and you 
save $1.3 billion over 7 years?
    Mr. Barclay. After you pay for the cost of installing, so 
if you extrapolate that in the system, you're talking about 
some big numbers. That's why we're saying it's smart government 
to earn that ongoing savings by doing upfront costs. We've had 
some people in governments say to us, ``Well you airports 
should go pay the cost to build those in.'' And the problem 
with that is the savings go to TSA, so you can't tell one party 
to absorb the capital costs, and then pass it on to your 
tenants, while somebody else is getting the savings, you've got 
to connect up that revenue stream of the savings. Airports will 
go out and float bonds to build in these systems at the bigger 
airports, but they need to know they've got a revenue stream 
coming in to pay that bond off, but then TSA gets a permanent 
savings in personnel for doing that.
    Senator Pryor. OK, well I think we in the Congress need to 
really think through that, and like you said, come up with the 
smartest approach on that because I think if we are smart, we 
can be efficient and effective at the same time.
    Mr. May, let me ask you now if I may, and I want you to be 
careful about how you answer this question, because you have 
three Senators here who have some small airports in their 
states, so we're all concerned about how what you all do 
impacts small airports, and I'm an advocate for small airports 
and smaller communities being able to access air travel, but 
how will increased fees affect small airports? Affect 
communities with small airports?
    Mr. May. Senator, I've never been very good about being 
careful about what I say, and so I guess just being right out 
with it, there is a thing--you're very familiar with it, I'm 
sure, called Essential Air Services--and there are subsidies 
that are effectively provided to provide service to a lot of 
small airports. I don't have to look any further than what's 
going on in my industry today to tell you what's going to 
happen. The first places that get cut from the service schedule 
are the places that are the least profitable, and then we begin 
to cut back on frequency to larger places, and all of that is 
happening, we're shutting down hubs, that's all part of the 
reorganization of the industry, and I will guarantee you that 
the people who get hit hardest by this tax, just in the way it 
would be collected, if you will, will be people in small 
communities. I will also guarantee you that, to the extent it 
has the devastating effect on our industry that we suggest it 
will, then the next place to go will be those least profitable, 
frequently smaller communities that we're serving today. And 
it's a pure economic choice. Do we eliminate service or do we 
let the company go bankrupt?
    Senator Pryor. So, not to put words in your mouth, but in 
summary, it sounds like what you're saying is that these 
increased fees may lead, or may be one of the factors in the 
closure of smaller airports.
    Mr. May. Senator, when you put those words together, you 
can put them in my mouth anytime you want. That's exactly 
right.
    Senator Pryor. Thank you.
    The Chairman. Senator, I'm told that the fees now 
collected, $2.3 billion, which support about $23 billion in 
bonding, assume that you don't have any of the screening 
processes for passengers, I was going to ask the question, 
whether there would be the opposition to the fees if we 
dedicated them to the payment of the bonding for the new 
baggage screening concepts that are before us.
    Mr. May. I suspect that you might have a difference of 
opinion at the table here on that, Senator. We very firmly 
believe that we're at the max of what we're paying into the TSA 
right now, we don't disagree that they need to have more 
equipment, and that it needs to have higher volume and that 
they need to be able to handle greater size of packages going 
through for cargo, in particular, and greater in-line EDS 
screening, but we very firmly don't believe that that ought to 
come out of the hides of the airlines.
    Mr. Barclay. Mr. Chairman, let me add that there wouldn't 
be a disagreement. We do, again, think the first place you want 
to look to for the funding source for building in-line are the 
people who are going to get the savings end of the cost of 
their personnel, because that savings more than pays back the 
cost of building them in. So, we really should look for a 
creative financing mechanism within government, because 
government's going to earn that savings, and it's going to be 
real and valuable to them in very short order, and airports 
will make it, will use their capital financing capabilities to 
make it even easier for government to do that.
    The Chairman. That would be all right, if we could find 
what portion that we could take away from TSA now to dedicate 
now to those bonds. Perhaps the next version of ``Aviation News 
Today'' will give us a solution.
    [Laughter.]
    The Chairman. You want another question, Senator?
    Senator Inouye. I want to make a motion.
    The Chairman. Oh, that's right, I was just going to say 
this hearing is over.
    Senator Inouye. But before I make a motion, I think it 
should be noted that we are not imposing any passenger security 
fee on railroad companies.
    The Chairman. Yes.
    Senator Inouye. Mr. Chairman, subject to the presence of a 
quorum, and that this motion be operational, after the first 
vote in the Senate chamber, I move that the Committee go into 
Executive Session to consider the nominations of Maria Cino to 
be Deputy Secretary of Transportation, Phyllis Sheinberg to be 
Assistant Secretary of Transportation, Joseph Boardman to be 
Administrator of the Federal Railroad Administration, Nancy 
Nord to be Commissioner of the Consumer Products Safety 
Commission, and William Cobey to be a member of the Board of 
Directors of the Washington Metropolitan Airport Authority. 
Will you second the motion?
    Senator Pryor. Seconded.
    The Chairman. Thank you very much gentlemen, that will mean 
that after the first vote on the floor that takes place after 
this Committee recesses today, we'll meet in the President's 
Room to vote on Senator Inouye's motion, that will be to 
consider them all in block, all of the nominations that have 
been put before the Committee by the Senator from Hawaii, our 
Co-Chairman. It will be our intent to hold the usual concept of 
members making their vote in person in the President's Room.
    We do thank you very much, gentlemen, I think we should 
find some way to deal with this question in the next generation 
of screening for baggage. That will save some money, as you 
indicated, but we have to find somebody to put it in before you 
save it, and I think we in this Committee should work with you 
to work it out so there isn't this apparent conflict, and 
somehow, there has to be an answer to that. And we will work 
with you to do that.
    I think also you should know that we're continuing our 
conferences with TSA on a security basis, and on a confidential 
basis to review the whole TSA program, and the classified 
portion of that program, so that we can find some way to reduce 
the costs of what's going on now. We will keep you informed of 
the outcome of that.
    Thank you very much, and we will announce our next 
scheduled hearing.
    [Whereupon, at 3:45 p.m., the hearing was adjourned.]

                            A P P E N D I X

               Electronic Privacy Information Center (EPIC)
                                     Washington, DC, April 25, 2005
Hon. Ted Stevens,
Chairman,

Hon. Daniel K. Inouye,
Co-Chairman,

Senate Committee on Commerce, Science, and Transportation,
Washington, DC.

Dear Chairman Stevens and Co-Chairman Inouye,

    We are writing on behalf of the Electronic Privacy Information 
Center (EPIC) concerning the proposed Transportation Security 
Administration (TSA) budget for Fiscal Year 2006. We would like to 
bring to your attention the significant increase in surveillance 
funding requested by TSA. We ask that this letter be included in the 
hearing record.
    EPIC strongly opposes this increase in Federal funding for TSA's 
surveillance programs. In its development and implementation of these 
surveillance programs, TSA has frustrated efforts to obtain openness 
and transparency under the Freedom of Information Act, and the agency 
has violated the spirit if not the letter of the Privacy Act. TSA also 
has shown a proclivity to using personal information for reasons other 
than the ones for which the information was gathered or volunteered. In 
addition, the public has had considerable difficultly with the agency's 
redress procedures. Furthermore, TSA has shown poor management of its 
financial resources.
    We urge you to inquire what steps the agency will take to protect 
privacy and ensure transparency in data collection and use. We also 
urge you to scrutinize TSA's current redress procedures. Finally, we 
recommend against funding the Office of Screening Coordination and 
Operations.
    President Bush's proposed budget would increase TSA spending by 
$156 million to $5.6 billion for FY 2006, but this increase is 
contingent upon $1.5 billion that will be generated by a 120 percent 
jump in security fees assessed to airline passengers. \1\ Assistant 
Secretary David M. Stone defended the increase at the February 15, 
2005, hearing before the Senate Committee on Commerce, Science and 
Transportation saying air passengers, not the general public, should 
pay for air travel security. \2\ However, this money will not go toward 
new security measures, but will replace funds now provided by the 
government for current air traveler security programs. \3\
    Assistant Secretary Stone also testified that this increased fee 
would mean ``resources from the general taxpayer could be used for more 
broadly applicable homeland security needs,'' but he did not define 
what these needs would be. \4\ Other programs under TSA that are 
receiving an increase in funding in the proposed FY 2006 budget include 
surveillance programs that have significant privacy implications for 
tens of millions of American citizens and lawful foreign visitors.
    When it enacted the Privacy Act, 5 U.S.C. Sec. 552a, in 1974, 
Congress sought to restrict the amount of personal information that 
Federal agencies could collect and required agencies to be transparent 
in their information practices. \5\ The Privacy Act is intended ``to 
promote accountability, responsibility, legislative oversight, and open 
government with respect to the use of computer technology in the 
personal information systems and data banks of the Federal 
Government[.]'' \6\
    The Supreme Court as recently as last year underscored the 
importance of the Privacy Act's restrictions upon agency use of 
personal information to protect privacy interests, noting that:

        ``[I]n order to protect the privacy of individuals identified 
        in information systems maintained by Federal agencies, it is 
        necessary . . . to regulate the collection, maintenance, use, 
        and dissemination of information by such agencies.'' Privacy 
        Act of 1974, Sec. 2(a)(5), 88 Stat. 1896. The Act gives 
        agencies detailed instructions for managing their records and 
        provides for various sorts of civil relief to individuals 
        aggrieved by failures on the Government's part to comply with 
        the requirements. \7\

    It is critical for TSA's programs to adhere to these requirements, 
as the programs have a profound effect on the privacy rights of a large 
number of American citizens and lawful foreign visitors every year. 
However, TSA has failed to follow the spirit of the Privacy Act during 
development of these surveillance programs.
Recent Government Reports Show Problems Within TSA Programs
    The Government Accountability Office (GAO) and the Department of 
Homeland Security Inspector General last month released reports that 
were critical of the Transportation Security Administration. \8\ These 
reports highlight the agency's failures concerning privacy rights, 
transparency, and redress procedures.
    The GAO's March report examined the Transportation Security 
Administration measures for testing the use of commercial data within 
Secure Flight, the agency's passenger prescreening program currently 
under development. The report, commissioned by Congress, found that the 
agency still has many issues to address before the viability of Secure 
Flight can be determined. \9\ The GAO was unable to assess, among other 
things, the effectiveness of the system, the accuracy of intelligence 
data that will determine whether passengers may fly, safeguards to 
protect passenger privacy, and the adequacy of redress for passengers 
who are improperly flagged by Secure Flight. \10\ The GAO specifically 
found that TSA ``has not yet clearly defined the privacy impacts of the 
operational system or all of the actions TSA plans to take to mitigate 
potential impacts.'' \11\
    TSA is requesting an increase of $49.3 million for its Secure 
Flight program to bring its FY 2006 budget to $94 million. \12\ The 
Secure Flight passenger prescreening program could affect the tens of 
millions of citizens who fly every year, but in the creation of the 
program, TSA has frustrated efforts to obtain information under the 
Freedom of Information Act, and its actions concerning openness and 
transparency have violated the spirit of the Privacy Act.
    Also in March, the Department of Homeland Security Inspector 
General issued findings on TSA's role in collecting and disseminating 
airline passenger data to third party agencies and companies. The 
report revealed that the agency has been involved in 14 transfers of 
data involving more than 12 million passenger records. \13\ The 
Inspector General found, among other things, that ``TSA did not 
consistently apply privacy protections in the course of its involvement 
in airline passenger data transfers.'' \14\ Furthermore, TSA did not 
accurately represent to the public the scope of its passenger data 
collection and use. \15\
    The Inspector General's critical report comes almost a year after 
the agency's admission that it had acted improperly with regard to 
passenger data collection and use. In June 2004 then-TSA Acting 
Administrator Admiral David Stone admitted to the Senate Governmental 
Affairs Committee that in 2002 TSA facilitated the transfer of 
passenger data from American Airlines, Continental Airlines, Delta 
Airlines, America West Airlines, Frontier Airlines, and JetBlue Airways 
to TSA ``cooperative agreement recipients'' for purposes of CAPPS II 
testing, as well as to the Secret Service and IBM for other purposes. 
\16\ Stone also stated that Galileo International and ``possibly'' 
Apollo, two central airline reservation companies, had provided 
passenger data to recipients working on behalf of TSA. \17\ Further, 
TSA directly obtained passenger data from JetBlue and Sabre, another 
central airline reservation company, for CAPPS II development. \18\ TSA 
did not observe Privacy Act requirements with regard to any of these 
collections of personal information. \19\ Stone's admission followed 
repeated denials to the public, Congress, GAO, and Department of 
Homeland Security Privacy Office that TSA had acquired or used real 
passenger data to test CAPPS II. \20\ TSA exhibited a proclivity for 
using personal information for reasons other than the ones for which 
the information was gathered or volunteered.
    Another example of TSA's failure to operate its programs with the 
openness and transparency necessary under the Federal open government 
laws is its recent creation of an Aviation Security Advisory Committee 
Secure Flight Privacy/IT Working Group. It appears to EPIC that, based 
upon the little public information that is currently available, the 
working group is subject to the Federal Advisory Committee Act (FACA), 
5 U.S.C. App. 1, which includes the requirement that the working group 
publish notices of their meetings in the Federal Register. However, the 
formation of this working group was not announced in the Federal 
Register, and neither TSA nor the Department of Homeland Security has 
publicly acknowledged its existence or defined its mission. EPIC sent a 
letter in January to TSA's privacy officer, Lisa Dean, to ask for an 
explanation as to why this working group is not operating with the 
transparency and openness required under FACA. \21\ In her March 
response letter, Ms. Dean advised us that Transportation Security 
Administration's position was that the work and materials of working 
group are subject to FACA. \22\ The agency was noncommittal about the 
FOIA status of the material. \23\

TSA's Lapses in Public Accountability
    The Freedom of Information Act (FOIA), 5 U.S.C. Sec. 552, 
establishes a legal right for individuals to obtain records in the 
possession of government agencies. The FOIA helps ensure that the 
public is fully informed about matters of public concern. Government 
agencies are obligated to meet the requirements of open government and 
transparency under the FOIA, but TSA has frustrated efforts to obtain 
information under the FOIA during the creation of these surveillance 
programs.
    In September 2004, TSA announced plans to test the Secure Flight 
program. Secure Flight is intended to replace the now-defunct CAPPS II, 
but it includes many elements of the CAPPS II program, which was 
abandoned largely due to privacy concerns. \24\ TSA said that ``Secure 
Flight will involve the comparison of information for domestic flights 
to names in the Terrorist Screening Database (TSDB) maintained by the 
Terrorist Screening Center (TSC), to include the expanded TSA No-Fly 
and Selectee Lists, in order to identify individuals known or 
reasonably suspected to be engaged in terrorist activity.'' \25\
    On September 28, 2004, EPIC submitted a FOIA request to TSA asking 
for information about Secure Flight. \26\ EPIC asked that the request 
be processed expeditiously, noting the intense media interest 
surrounding the program. Specifically, EPIC demonstrated that 485 
articles had been published about the program since TSA announced its 
plans for Secure Flight. EPIC also mentioned the October 25, 2004, 
deadline for public comments on the test phase of the system, 
explaining the urgency for the public to be as well informed as 
possible about Secure Flight in order to meaningfully respond to the 
agency's proposal for the program. TSA determined these circumstances 
did not justify the information's immediate release, and refused EPIC's 
request that the information be made public prior to the October 25 
deadline for these comments. TSA also denied EPIC a fee waiver, which 
the agency has never done before in its three-year existence. This 
maneuver imposed a significant procedural barrier to EPIC's ability to 
obtain the information. EPIC appealed TSA's decision, noting that the 
agency's actions were unlawful. Rather than defend its position in 
court, TSA has released a minimal amount of the information that EPIC 
requested. EPIC continues to seek from TSA information about the 
program that will affect tens of millions of airline passengers each 
year.

Problems With TSA Redress Procedures
    The recently enacted Intelligence Reform and Terrorism Prevention 
Act of 2004 directed TSA to create a system for travelers to correct 
inaccurate information that has caused their names to be added to the 
no-fly list. \27\ TSA maintains that it has an adequate redress process 
to clear individuals improperly flagged by watch lists; however, it is 
well known that individuals encounter great difficulty in resolving 
such problems. Senators Ted Kennedy (D-MA) and Don Young (R-AK) are 
among the individuals who have been improperly flagged by watch lists. 
\28\ Sen. Kennedy was able to resolve the situation only by enlisting 
the help of then-Homeland Security Secretary Tom Ridge; unfortunately, 
most people do not have that option.
    In March, Rep. Loretta Sanchez (D-CA) highlighted problems that 
everyday Americans have with the current TSA redress procedure. At a 
hearing of the House Subcommittee on Economic Security, Infrastructure 
Protection, and Cybersecurity concerning the proposed Fiscal Year 2006 
budget, Rep. Sanchez reported that many of her constituents continue to 
face lengthy delays, questioning, and at times are prohibited from 
boarding flights because they are misidentified as people sought on no-
fly lists. \29\ Her constituents continue to face these roadblocks even 
after they apply for, receive and then display to screener personnel 
the official Federal Government letters that establish their innocence. 
Rep. Sanchez questioned TSA officials about why current redress 
procedures have failed these American citizens. This issue remains 
important, as the GAO's March report examining Secure Flight found that 
``TSA has not yet clearly defined how it plans to implement its redress 
process for Secure Flight, such as how errors, if identified, will be 
corrected, particularly if commercial databases are used.'' \30\
TSA Has Violated the Spirit of Federal Privacy Laws
    The proposed FY 2006 budget accords TSA's Registered Traveler 
program $22 million. \31\ This is a pilot program TSA began conducting 
in July 2004 and is now operating at five airports. \32\ The 
preliminary results are being examined by TSA to determine whether the 
program should be expanded to other airports. Registered Traveler 
allows frequent travelers to submit digital fingerprints, iris scans 
and undergo a background check in exchange for receiving a fast pass 
through the airport checkpoint. (The International Registered Traveler 
program was announced in January.) \33\
    TSA first published a Federal Register notice about the program in 
June 2004. \34\ In July 2004, EPIC submitted comments to address the 
substantial privacy issues raised by the Registered Traveler program 
and the new system of records established to facilitate the program. 
\35\ EPIC requested that TSA substantially revise its Privacy Act 
notice prior to implementation of the final phase of Registered 
Traveler. TSA's subsequent Federal Register notice of the 
implementations of Privacy Act exemptions in the Registered Traveler 
program did not solve any the privacy right threats that EPIC 
highlighted in its comments.
    TSA's notice for the Registered Traveler system of records, 
however, exempts the system from many protections the Privacy Act is 
intended to provide. \36\ As proposed in the notice, Registered 
Traveler is a program for which TSA is asking individuals to volunteer 
information that will be used to conduct potentially invasive 
background checks in exchange for the determination that they have a 
relatively low likelihood of being terrorists or connected to 
terrorists, and may be subject to less security screening than others 
prior to boarding airplanes. However, TSA has unnecessarily exempted 
the system from crucial safeguards intended to promote record accuracy 
and secure the privacy of individuals whose information is maintained 
within the system. TSA will be under no legal obligation to inform the 
public of the categories of information contained in the system or 
provide the ability to access and correct records that are irrelevant, 
untimely or incomplete. The program will contain information that is 
unnecessary and wholly irrelevant to the determination of whether an 
individual poses a threat to aviation security.

Questions Remain About the Transportation Worker Identity Credential 
        Program
    TSA is requesting $244 million for its pilot Transportation Worker 
Identity Credential program (TWIC) for FY 2006. \37\ TWIC is an 
identification card given to transportation workers, authorized 
visitors and all other persons requiring unescorted access to 
transportation infrastructure secure areas. The program is operating at 
34 sites in six states, but TSA hopes to eventually extend the program 
to workers in all modes of transportation, which could encompass as 
many as 6 million people. \38\ Persons required to have the 
identification card submit sensitive personal and biometric information 
to a central TSA database used to validate a person's eligibility to 
access these areas. EPIC submitted comments in November 2004 
highlighting the dangers to travelers' privacy rights inherent in the 
program. \39\ TSA has not released information clearly explaining to 
the public how it intends to safeguard the sensitive personal 
information gathered on program participants. The lack of transparency 
and openness about TWIC is against the spirit of Federal open 
government laws.
    Another important reason not to increase the funding for TWIC is 
because TSA has not used its current funding judiciously. The GAO 
reviewed TWIC in December 2004, and found that because of program 
delays, some port facilities are forced to proceed ``with plans for 
local or regional identification cards that may require additional 
investment in order to make them compatible with the TWIC system. 
Accordingly, delays in the program may affect enhancements to port 
security and complicate stakeholder's efforts in making wise investment 
decisions regarding security infrastructure.'' \40\
    The financial problems encountered in TSA's TWIC program are 
emblematic of TSA's troubles managing its finances, according to the 
GAO. Cathleen Berrick, GAO Director of Homeland Security and Justice, 
told the Senate Committee on Commerce, Science, and Transportation on 
February 15, 2005, that TSA had not always ``conducted the systematic 
analysis needed to inform its decision-making processes and to 
prioritize its security improvements.'' \41\ Examples include the fact 
that in FY 2005, TSA was forced to transfer about $61 million from its 
Research and Development budget of $110 million, to support its 
operations, such as personnel costs for screeners. \42\
    A significant issue is that these surveillance programs are 
receiving substantial funding and TSA manpower while the current 
aviation program to screen passengers and their luggage for dangerous 
objects is woefully inadequate. Ms. Berrick reported at the February 15 
hearing that there has been only modest progress in how well screeners 
detect threat objects following a report last year that documented gaps 
in screener security. \43\ The increased funds that TSA has earmarked 
for surveillance programs can also be used in another important 
program: Threat Assessment of General Aviation. The GAO reported that 
``though the Federal Bureau of Investigation has said that terrorists 
have considered using general aviation to conduct attacks, a systematic 
assessment of threats has not been conducted.'' \44\ TSA has cited cost 
as the reason that TSA has conducted vulnerability assessments at only 
a small number of the 19,000 general aviation airports nationwide.

Office of Screening Coordination and Operations Raises New Privacy 
        Problems
    The Department of Homeland Security (DHS) has proposed the creation 
and funding of the Office of Screening Coordination and Operations 
(SCO), which would oversee vast databases of digital fingerprints and 
photographs, eye scans and personal information from millions of 
Americans and foreigners. This office would be responsible for United 
States-Visitor and Immigrant Status Indicator Technology (US-VISIT), 
Free and Secure Trade, NEXUS/Secure Electronic Network for Travelers 
Rapid Inspection, TWIC, Registered Traveler, Hazardous Materials 
Trucker Background Checks, and Alien Flight School Checks. \45\ This 
mass compilation of personal information has inherent dangers to 
citizens' privacy rights and it is imperative that SCO fulfill its 
legal obligations for openness and transparency under the FOIA and 
Privacy Act.
    According to the proposed FY 2006 budget, the mission of the 
proposed SCO is ``to enhance the interdiction of terrorists and the 
instruments of terrorism by streamlining terrorist-related screening by 
comprehensive coordination of procedures that detect, identify, track, 
and interdict people, cargo and conveyances, and other entities and 
objects that pose a threat to homeland security.'' \46\ The budget goes 
on to say that ``the SCO would produce processes that will be effected 
in a manner that safeguards legal rights, including freedoms, civil 
liberties, and information privacy guaranteed by Federal law.'' \47\ It 
is unclear, however, what steps the office intends to take to protect 
these rights.
    There is a significant risk that the creation and funding of the 
SCO would allow for mission creep--a risk that the data collected and 
volunteered by airline passengers, transportation workers and foreign 
visitors will be used for reasons not related to their original 
aviation security purposes. Though TSA has stated that it will not use 
the sensitive personal data of tens of millions of Americans for non-
aviation security purposes, TSA documents about the CAPPS II program 
collected by EPIC under the FOIA clearly show that TSA had considered 
using personal information gathered for CAPPS II for reasons beyond its 
original purposes. For example, TSA stated that CAPPS II personal data 
might be disclosed to Federal, state, local, foreign, or international 
agencies for their investigations of statute, rule, regulation or order 
violations. \48\ Again, TSA exhibited a proclivity for using personal 
information for reasons other than the ones for which the information 
was gathered or volunteered.
    The Transportation Security Administration has frustrated efforts 
to ensure openness and transparency under the Freedom of Information 
Act and has violated the spirit of the Privacy Act for the protection 
of privacy rights in the development of the above programs. TSA also 
has shown a proclivity for using personal information for reasons other 
than the ones for which the information was gathered or volunteered. 
The agency's current redress procedures have failed to resolve valid 
grievances of innocent citizens flagged by the no-fly lists. TSA also 
has shown poor management of its financial resources. For these 
reasons, EPIC strongly opposes the sharp increase in funding for TSA's 
surveillance programs proposed in the president's FY 2006 budget, and 
specifically opposes funding of the Office of Screening Coordination 
and Operations.
    Thank you for your consideration of these issues.
        Sincerely yours,
                                            Marc Rotenberg,
                                                Executive Director.

                                            Marcia Hofmann,
                                 Director, Open Government Project.

                                               Melissa Ngo,
                                                     Staff Counsel.

ENDNOTES
    \1\ Transportation Security Administration Statement of Assistant 
Secretary David M. Stone Before the Committee on Commerce, Science, and 
Transportation (Feb. 15, 2005).
    \2\ Id. at 6.
    \3\ Id.
    \4\ Id.
    \5\ S. Rep. No. 93-1183, at 1 (1974).
    \6\ Id.
    \7\ Doe v. Chao, 540 U.S. 614, 618 (2004).
    \8\ Government Accountability Office, Secure Flight Development and 
Testing Under Way, but Risks Should Be Managed as System Is Further 
Developed, GAO-05-356 (March 2005) (hereinafter ``GAO Report''). 
Department of Homeland Security Inspector General, Review of the 
Transportation Security Administration's Role in the Use and 
Dissemination of Airline Passenger Data (Redacted), OIG-05-12 (March 
2005) (``OIG Report'').
    \9\ GAO Report, supra  at 53. See generally EPIC's Secure Flight 
page at http://www.epic.org/privacy/airtravel/secureflight.html.
    \10\ GAO Report, supra  at 53-62.
    \11\ Id. at 7.
    \12\ Department of Homeland Security, Budget-in-Brief Fiscal Year 
2006, at 21 (Feb. 7, 2005) (``DHS Budget'').
    \13\ OIG Report, supra  at 6-7.
    \14\ Id. at 40.
    \15\ Id. at 42-48.
    \16\ See U.S. Senate Committee on Governmental Affairs Pre-hearing 
Questionnaire for the Nomination of Admiral David Stone to be Assistant 
Secretary of Homeland Security, Transportation Security Administration 
17, 19, available at http://www.epic.org/privacy/airtravel/
stone_answers.pdf.
    \17\ Id.
    \18\ Id. at 19.
    \19\ Id. at 18.
    \20\ See, e.g., Ryan Singel, More False Information From TSA, Wired 
News, June 23, 2004 (``After the JetBlue transfer was brought to public 
attention in September 2003, TSA spokesman Brian Turmail told Wired 
News that the TSA had never used passenger records for testing CAPPS 
II, nor had it provided records to its contractors. In September 2003, 
Wired News asked TSA spokesman Nico Melendez whether the TSA's four 
contractors had used real passenger records to test and develop their 
systems. Melendez denied it, saying,`` `We have only used dummy data to 
this point.' ''); U.S. Representative John Mica (R-FL) Holds Hearing on 
Airline Passenger Profiling Proposal: Hearing Before the Aviation 
Subcomm. of the House Transportation and Infrastructure Comm., 105th 
Cong. (March 2004) (Admiral Stone testifying that CAPPS II testing was 
likely to begin in June 2004); GAO Report at 17 (``TSA has only used 32 
simulated passenger records--created by TSA from the itineraries of its 
employees and contractor staff who volunteered to provide the data--to 
conduct [CAPPS II] testing''); Department of Homeland Security Privacy 
Office, Report to the Public on Events Surrounding jetBlue Data 
Transfer (Feb. 2004) 8 (``At this time, there is no evidence that CAPPS 
II testing has taken place using passenger data'').
    \21\ Letter from David Sobel, General Counsel, EPIC, and Marcia 
Hofmann, Staff Counsel and Director, Open Government Project, EPIC, to 
Lisa Dean, Privacy Officer, Office of Transportation Security Policy, 
TSA, Jan. 31, 2005 (on file with EPIC).
    \22\ Letter from Lisa S. Dean, Privacy Officer, Office of 
Transportation Security Policy, TSA, to David Sobel, General Counsel, 
EPIC, Mar. 2, 2005 (on file with EPIC.)
    \23\ Id.
    \24\ See Sara Kehaulani Goo and Robert O'Harrow Jr., New Screening 
System Postponed, Washington Post, July 16, 2004, at A02.
    \25\ System of Records Notice, Secure Flight Test Records, 69 Fed. 
Reg. 57345 (Sept. 24, 2004).
    \26\ Letter from Marcia Hofmann, Staff Counsel, EPIC, to Patricia 
Reip-Dice, Associate Director, FOIA Headquarters Office, TSA, Sept. 28, 
2004 (on file with EPIC).
    \27\ P.L. No. 108-458 (2004).
    \28\ See, e.g., Sara Kehaulani Goo, Committee Chairman Runs Into 
Watch-List Problem, Washington Post, Sept. 30, 3004; Leslie Miller, 
House Transportation Panel Chairman Latest to be Stuck on No-Fly List, 
Associated Press, Sept. 29, 2004; Richard Simon, Iconic Senator Is 
Suspicious to Zealous Airport Screeners, Los Angeles Times, Aug. 20, 
2004; Shaun Waterman, Senator Gets a Taste of No-Fly List Problems, 
United Press International, Aug. 20, 2004.
    \29\ Shaun Waterman, No Redress Mechanism in New DHS Terrorist 
Screening Office, United Press International, Mar. 2, 2005.
    \30\ GAO Report, supra  at 7.
    \31\ DHS Budget, supra  at 21.
    \32\ Press Release, U.S. Department of Homeland Security TSA, 
Secretary Ridge Unveils Registered Traveler Pilot Program At Reagan 
National Airport (Sept. 3, 2004).
    \33\ Press Release, U.S. Department of Homeland Security, Secretary 
Tom Ridge Announces Enhancement of Expedited Traveler Program Through 
New York's JFK Airport (Jan. 13, 2005).
    \34\ Privacy Act Notice, 69 Fed. Reg. 30948 (June 1, 2004).
    \35\ Comments of the Electronic Privacy Information Center on 
Registered Traveler Operations Files Privacy Act Notice, June 1, 2004, 
available at http://www.epic.org/privacy/airtravel/rt_comments.pdf.
    \36\ Privacy Act Notice, 69 Fed. Reg. 54256 (Sept. 8, 2004).
    \37\ DHS Budget, supra  at 21.
    \38\ TSA's fact sheet on the Registered Traveler program, available 
at www.tsa.gov/interweb/assetlibrary/RT_Factsheet.pdf.
    \39\ Comments of the Electronic Privacy Information Center on 
Transportation Security Threat Assessment System and Transportation 
Worker Identification Credentialing System Privacy Act Notice, Sept. 
24, 2004, available at http://www.epic.org/privacy/airtravel/
twic_comments.pdf.
    \40\ Government Accountability Office, Transportation Security: 
Systematic Planning Needed to Optimize Resources, Statement of Cathleen 
A. Berrick, Director Homeland Security and Justice, GAO-05-357T (Feb. 
15, 2005).
    \41\ Id. at 2.
    \42\ Id. at 31.
    \43\ Id. at 11.
    \44\ Id. at 17.
    \45\ DHS Budget, supra  at 6.
    \46\ DHS Budget, supra  at 19.
    \47\ Id.
    \48\ Transportation Security Administration, Department of Homeland 
Security, Draft Privacy Impact Statements (CAPPS II), April 17, 2003, 
July 29, 2003, and July 30, 2003, obtained by EPIC through FOIA 
litigation, available at http://www.epic.org/privacy/airtravel/
profiling.html.

                                  
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