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FEDERAL AVIATION ADMINISTRATION With a budget of $18.6 billion requested for FY 202311 and an international regulatory footprint, the Federal Aviation Administration (FAA) is DOT’s most visible mode. It needs reform. Air traffic control (ATC) operations account for two-thirds of FAA’s budget, and the Air Traffic Organization (ATO) is far behind its counterparts in Australia, Canada, and Western Europe in implementing 21st century technology. The FAA’s primary mission is ATC; its two smaller functions are distributing federal airport grants and regulating all aspects of aviation safety. The FAA was once considered the world’s best government aviation agency. Those days are long past. In the more than five decades since 1958 when the Federal Aviation Agency (precursor to the Federal Aviation Administration) was formed, there have been notable developments in air traffic control technology, aircraft avionics, and engine reliability, but despite many well-intentioned attempts, there have been few changes in the FAA’s funding structure. The FAA is still improperly organized and financed, and the management reforms provided in the late 1990s remain largely unused. The FAA is 10 years older than DOT. It provides two separate and functionally different services: the world’s largest and most complex Air Navigation Service Provider (ANSP) and, at the same time, the world’s largest civil aviation regulatory and certificatory agency. The first is a 24/7/365 air traffic service provider. The second is an inherently governmental organization responsible for ensuring that aerospace operators, vehicles, airports, and ANSPs are properly certified and follow all FAA regulations. These two different organizations ought to run separately. The FAA is the only modern Civil Aviation Authority (CAA) in the world that does not assess fees for its services. Its funding structure, subject to the annual appropriations process, stifles efficiency and innovation—and the FAA does not innovate well. It spends too much time and money on research and development (R&D) and is not very good at either one. It should get out of the R&D business and focus on testing, evaluating, and certifying private-sector innovation much more quickly than it does today. The FAA workforce needs to modernize. The agency needs safety and certifi- cation experts, not professional airframe and powerplant mechanics (A&Ps). It — 632 —Department of Transportation needs to hire people trained to oversee mechanics, engineers, and pilots. It is time to consider promoting the FAA’s top executive team from within and requiring strict professional requirements for its top appointees. Organizations such as the FAA whose sole responsibility is public safety should be fully auditable and led by experts in their field or industry with oversight from DOT leadership. For 60 years, the FAA was the global leader in aerospace, from general aviation to commercial space, but the U.S. lead has vanished. The FAA’s overly bureaucratic, legalistic, byzantine, and more recently hyperpoliticized way of processing regu- lations, adopting innovation, publishing rules, and procuring new technologies has been eclipsed by foreign CAAs and ANSPs that are eagerly certifying drones and creating environments in which new technologies and new entrants, such as air taxis, can thrive. To regain America’s global leadership in aviation, the next Administration should: l l Separate the FAA from DOT or, at a minimum, separate the ATO from the FAA. Completely restructure the FAA’s funding system so that the nation’s aviation system is not held prisoner to annual appropriations or used as a political football to solve nonaviation problems.  l Require the FAA to operate more like a business. The FAA has not made good use of the unique authority it has been given in areas like personnel and acquisition. In Europe, conventional control towers are being replaced by digital/remote towers with high-resolution cameras and other sensors on tall structures and at points adjoining runways. In Germany and Scandinavia, as many as 15 small air- ports can be controlled from one remote tower center. The FAA has yet to certify a single digital/remote tower. Text messaging between controllers and pilots is widespread over the oceans. The ATO began to implement what is now called DataComm in 2002 but sus- pended the project in 2003. This was restarted at airport control towers in 2016, but as of October 2022, it was available in only seven of the 20 high-altitude control centers. Current technology enables flights to be managed “anywhere from anywhere,” but the ATO resists consolidating its 20 aging centers into a much smaller number—and lacks the funds to consolidate them. The FAA as regulator and the ATO as traffic manager have no plans in place to handle millions of drones and other emerging technologies such as electric vertical take-off and landing (eVTOL) aircraft.

These shortcomings have been documented over many decades by the Govern- ment Accountability Office and DOT Inspector General. One peer-reviewed study for the Hudson Institute by scholar Robert Poole identified the ATO’s underlying problems as including an overly cautious culture, a growing lack of technological and managerial expertise, the inability to finance major capital projects with rev- enue bonds, and overdependence on aerospace/defense contractors.12 All of these problems are interrelated. Because of the ATO’s lack of top-notch engineers and program managers, it has become dependent on aerospace contrac- tors, unlike counterparts in Canada and the United Kingdom. Operating within the constraints imposed by the annual congressional appropriations process—and with no bonding authority—the ATO is forced to implement major projects piecemeal over many years. The ATO’s overly cautious culture appears to stem from its being embedded in a safety regulatory agency rather than being regulated at arm’s length (as are airlines and airports). Three organizational changes, all requiring legislation, offer the likelihood of dealing with these problems based on the experiences of air traffic providers in Canada and Europe. They could be implemented one at a time or together. Separate the ATO from the FAA and relocate it to separate headquarters outside the District of Columbia.

Shift from aviation user taxes to fees for air traffic services paid directly to the ATO. Allow the ATO to issue long-term revenue bonds for major projects. Shorter-term reforms could include implementing user fees for unconventional airspace users (for example, advanced air mobility, space launch, and recovery) and giving the ATO a deadline after which it could not authorize or fund any more nondigital/remote control towers. These reforms would also require legislation. FEDERAL TRANSIT POLICY The definition of “mobility” continues to evolve dramatically with the rise of new multimodal concepts, traveler needs, and emerging capabilities. These fun- damental changes in the way transportation services are offered also influence the form of our communities. New micromobility solutions, ridesharing, and a possible future that includes autonomous vehicles mean that mobility options—particularly in urban areas— can alter the nature of public transit, making it more affordable and flexible for Americans. Unfortunately, DOT now defines public transit only as transit pro- vided by municipal governments. This means that when individuals change their

commutes from urban buses to rideshare or electric scooter, the use of public transit decreases. A better definition for public transit (which also would require congressional legislation) would be transit provided for the public rather than transit provided by a public municipality. The COVID-19 pandemic caused a substantial decline in usage for all forms of transportation. Mass transit has been the slowest mode to recover, with October 2022 ridership reaching only 64 percent of the level seen in October 2019. The sustained increase in remote work has caused changes in commuting patterns. Since facilitating travel for workers is one of the core functions of mass transit systems, a permanent reduction in commuting raises questions about the viability of fixed-route mass transit, especially considering that transit systems required substantial subsidization before the pandemic.

Regrettably, the 2021 Infrastructure Investment and Jobs Act13 authorized tens of billions of dollars for the expansion of transit systems even as Americans were moving away from them and into personal vehicles. Lower revenue from reduced ridership is already driving transit agencies to a budgetary breaking point, and added operational costs from system expansions will make this problem worse. The Capital Investment Grants (CIG) program is another example of Washing- ton’s tendency to fund transit expansion rather than maintaining or improving current facilities. The CIG program, which began in 1991, funds only novel transit projects. These can include new rail lines (regardless of the demand for preexisting rail in the area) and costly operations such as streetcars. Because Americans have demonstrated a strong preference for alternative means of transportation, rather than throwing good money after bad by continuing federal subsidies for transit expansion, there should be a focus on reducing costs that make transit uneconomical. The Trump Administration urged Congress to eliminate the CIG program, but the program has strong support on Capitol Hill. At a minimum, a new conservative Administration should ensure that each CIG project meets sound economic standards and a rigorous cost-benefit analysis. The largest expense in transit operational budgets is labor. Compensation costs for transit workers exceed both regional and sector compensation averages. This is driven by generous pension and health benefits rather than by exorbitant wages. Since workers value wages more than they value fringe benefits, this has led to a perverse situation in which transit agencies have high compensation costs yet are struggling to attract workers. The next Administration can remove the largest obstacle to reforming labor costs. Section 10(c) of the Urban Mass Transportation Act of 196414 was initially intended to protect bargaining rights for workers in privately owned transit sys- tems that were being absorbed by government-operated agencies. The provision has mutated into a requirement that any transit agency receiving federal funds cannot reduce compensation, an interpretation that far exceeds the original statute. Returning to the original intent would allow transit agencies to adjust fringe ben- efits without fearing a federal lawsuit. It is also vital to move away from using the Highway Trust Fund to prop up mass transit. The fund was driven into insolvency (and repeated bailouts) through decades of transfers to transit without any increase in transit usage to show for it. With the federal government facing mounting debt, the best course of action would be to remove federal subsidies for transit spending, allowing states and localities to decide whether mass transit is a good investment for them.  FEDERAL RAILROAD POLICY

The Federal Railroad Administration (FRA) is making decisions based on political considerations that are at variance with its safety mission. Instead of basing regulatory decisions on the costs and benefits of the available alterna- tives, FRA is promoting actions that favor the status quo and inhibit the use of technology to improve railroad safety. FRA should be making decisions based on objective evidence of the most cost-effective way to accomplish the agency’s safety goals. FRA’s singular focus on job preservation is contrary to FRA’s mission, and it has a deleterious effect on the morale of FRA’s professional staff, as shown by the annual employee surveys conducted by the Office of Personnel Management. FRA needs to communicate clearly to its career employees a new commitment to making decisions that are consistent with the agency’s safety mission. FRA’s procedures call for decisions on waivers to be made by its Safety Board. Appeals can be taken to the Administrator. However, FRA has deviated from these procedures as the Administrator has injected himself into Safety Board decisions. FRA needs to review its actions with respect to specific proceedings where the agency’s direction cannot be justified. For example:

FRA’s Notice of Proposed Rulemaking (NPRM) on crew size is not based on safety considerations; it is designed to reduce flexibility by making it impossible for railroads to operate with crews of fewer than two in circumstances where there is no operational need for the second crew member. Although FRA could adopt a modern inspection program that takes advantage of technological ways to inspect track, it is refusing to amend 50-year-old track inspection requirements, leaving customers with higher costs. FRA is refusing to take final action on a rulemaking proceeding that would modernize brake inspection requirements by taking advantage of the ability — 636 —Department of Transportation to track brake inspections on rolling stock electronically instead of by using paper air brake slips, which would enable extending the interval between brake inspections for trains and eliminating restrictions on the ability to place/remove blocks of cars in trains.

FRA will be proposing certification requirements for dispatchers and signal employees despite the failure of the Railroad Safety Advisory Committee (RSAC) to identify any safety benefit. FRA is planning to propose emergency escape breathing apparatus requirements for train crews even though FRA staff long ago concluded that the costs of these requirements would far outweigh their very minimal benefits.

MARITIME POLICY

The Maritime Administration (MARAD) was established by President Harry Truman in 1950 and was transferred to DOT in 1981. A principal function is “main- tain[ing] the overall health of the U.S. Merchant Marine,”15 which is important both to national defense and to foreign and domestic commerce. MARAD is also in charge of the United States Merchant Marine Academy and operates ships and funding for the six state maritime academies. MARAD would be better served by being transferred from DOT to the Depart- ment of Homeland Security (DHS). MARAD is the only DOT modal administration that does not regulate the industry that it represents: The maritime industry is regulated by the U.S. Coast Guard (ships and personnel) and by the Federal Mari- time Commission (cargo rates and competitive practices). Furthermore, MARAD has responsibilities both in peacetime commerce and operationally in wartime/crisis sealift through its responsibility to manage the National Defense Reserve Fleet and 45-ship Ready Reserve Force for the U.S. Navy. These missions are unique to MARAD within DOT. As a result, MARAD’s missions

It is vital that the integrity of FRA’s research program be preserved. In 2022, FRA switched the management of the Transportation Technology Center (TTC) in Pueblo, Colorado, from a subsidiary of the Association of American Railroads (AAR) to Ensco, Inc. FRA seems determined to direct research to TTC, even when there are better choices with respect to the research in question, in an effort to support TTC financially and justify its decision to change management at TTC. This change in approach threatens the collaborative approach to research between FRA and the railroads that has existed for decades. FRA should make its decisions on where to spend its research dollars solely on the merits of improving the safety and efficiency of the railroad industry.

and purpose, and therefore its funding priorities, are not well understood and his- torically have been minimalized in planning and budgeting. MARAD, including its subordinate Service Academy (the U.S. Merchant Marine Academy) should be transferred to the Department of Defense (if the Coast Guard is located there because DHS has been eliminated) or to the Department of Home- land Security. In this way, the two agencies charged with oversight and regulation of the Maritime sector—MARAD and the United States Coast Guard—would be aligned under the same department where operational efficiencies could be real- ized more easily.

Serious consideration should be given to repealing or substantially reforming the Jones Act,16 which would require legislation. The economic costs of the Jones Act, which is notionally in place to promote a robust Merchant Marine, vastly exceed its effect on the supply of domestic ships. For instance, no liquified natural gas (LNG) can be shipped from Alaska to the lower 48 states because there are no U.S.-flagged ships that carry LNG. If there are genuine concerns about U.S. fleet capacity in the absence of the Jones Act, it would be possible to do so through an expansion of the Defense Reserve Fleet.

Another DHS agency, the Federal Emergency Management Agency (FEMA), is a frequent user of MARAD Ready Reserve Force shipping during disaster assistance missions. Transferring MARAD to DHS would make coordination and requisition of those vessels a smoother and more rapid process. DHS has responsibility for reviewing and approving Jones Act waivers. This process first requires a market survey of available shipping tonnage that is completed by MARAD. The processing of Jones Act waiver requests would be streamlined if both agencies were in the same department.

Finally, DHS as a department is experienced in administering and budgeting for the operation of an existing federal service academy, the U.S. Coast Guard Academy, which is similar to the U.S. Merchant Marine Academy in size. There would be increased efficiencies and better alignment of the missions of these two institutions if they were under one single department that has equity in the industries served by these academies.

CONCLUSION

Americans need more abundant and affordable transportation. They need more affordable and safer cars as well as physical aspects of transportation such as roads, bridges, airports, ports, and rail lines. The Department of Transportation should be evaluating which aspects of transportation are contributing to the economic competitiveness of the United States and the well-being of Americans—and that therefore should continue to be funded. All too often, DOT’s mission is described as reducing the number of trips, using less fuel, and raising the costs of travel to Americans through increased use of — 638 —Department of Transportation renewables. These goals are not compatible with what should be DOT’s purpose: to make travel easier and less expensive. That is what the American people want, and that is what DOT should provide.