Oversight Hearing on Delays in Funding Mass Transit

Prepared Testimony of Ms. Nuria Fernandez
Acting Administrator
Federal Transit Administration

10:00 a.m., Tuesday, April 25, 2000

Mr. Chairman and members of the Committee, I appreciate the opportunity to be here today to testify about the transit labor protection requirements of the federal transit program, found in 49 U.S.C. 5333(b), commonly called section 13(c).

I would like to stress that the Clinton Administration strongly supports the principle of labor protections where federal assistance is provided. The FTA strongly supports the integration of 13(c) protections and rights into our grant agreements and will continue to work cooperatively with the Department of Labor (DOL) to ensure that these rights are integrated in a timely fashion.

Section 13(c) started at the same time that the Federal government began financing local mass transit systems. Because private mass transportation providers were going out of business and being taken over by local governmental authorities, who were in turn financed by the Federal government, mass transit employees faced a loss of jobs, reduced pay and benefits, and the loss of collective bargaining. The legislative history of the Urban mass Transportation Act of 1964 shows that Congress was acutely aware of these concerns and sought to protect employees from these adverse effects.

The history of mass transit since 1964 clearly demonstrates the success of Federal financial assistance to local mass transit systems and the extent to which 13(c) labor protections have contributed to this success. In other words, it is important to compare where the transit industry was in the early 1960's, when the Urban Mass Transportation Act of 1964 was enacted, and where the transit industry is today.

In the four short years between 1956 and 1960, transit ridership declined 22 percent. In the ten years from 1954 to 1964, 196 transit companies went out of business. In the fifteen years between 1945 to 1960, 92,000 transit employees lost their jobs. Without the 13(c) labor protections, transit employees transferred from private to public sector employment would, in too many cases, have lost their bargaining rights in the transition from private to public ownership and operation of mass transit. Congress has affirmed its commitment to 13(c) in every single reauthorization of the federal transit program since 1964; that is seven times -- in 1968, 1974, 1978, 1982, 1987, 1991, and 1998.

This Administration believes that the need to maintain a level of protection for transit workers in exchange for the substantial Federal investment in state and local transit infrastructure remains sound public policy. Transit industry collective bargaining and the fruits thereof continue to provide, as they did in 1964 and long before that, the foundation for solid labor-management relations in the majority of the public and private sectors of the transit industry.

Many studies have shown that the level of transit ridership is directly affected by the quality of service provided. Poor unreliable service results in a reduction in ridership, and ultimately support for transit. The statutory protections of 13(c) help ensure that a stable, experienced labor workforce is maintained, thereby creating reliable quality mass transit service to the riding public. The training requirements of section 13(c) assure that skilled and experienced workers stay in the industry as technology changes.

Today, because of the Federal financial commitment to mass transportation and the stability provided by 13(c), mass transit ridership has increased 3 percent a year since 1993, transit use is over 43 billion passenger miles in calendar year 1999, the highest level since 1964, and 330,000 employees work in the transit industry, an increase of 180,000 since 1964. Our successes are also demonstrated in the rural program. In 1998, our rural program served 147 million annual passengers, up about 80 percent since 1993.

The policies of the Federal government have supported this stable labor-management relationship by requiring that the bargaining of the protective arrangements occur at the local level, and that these arrangements be certified by DOL before the Federal Transit Administration (FTA) can release grant funds. FTA does not participate in the 13(c) certification process, except to provide a complete application ready for referral. FTA provides the enforcement method for compliance by incorporating the DOL certification letter and related protective arrangements into its assistance agreement for the project. While FTA is not a part of the certification process, FTA has always worked with DOL to ensure that mass transit workers labor rights are protected and that the provision of Federal financial assistance to transit systems occurs as efficiently and quickly as possible. Further, this Administration believes that cooperation between FTA and DOL has successfully made the 13(c) certification process more routine and timely. Any new issues regarding the certification process can be resolved through the continued cooperation between the FTA and DOL. Such issues historically arise in the context of new programs involving nontraditional grantees.

FTA and DOL's commitment to improving the certification process can be seen in the improvements made in processing 13(c) certifications during the 1990's. Prior to 1995 approximately 85% of the grant applications routinely received the required DOL certification within 90 days after their submission to DOL. In 1995, FTA and DOL, with the participation of transit authoritIes and labor unions, further streamlined this process and issued updated guidelines. Since issuance of the 1995 guidelines, approximately 97% of the grant applications received an interim or final certification within 60 days.

Our cooperative approach can be seen in the streamlining of the certification process for FTA's rural program through the development of the special warranty. Under the Special 13(c) Warranty, the State or other public body agrees to the terms and conditions of the warranty and certifies to DOL that the designated recipients have accepted the terms and conditions of the warranty arrangement.

Section 13(c) has been a success for the transit industry, for transit employers, and for the public. Further, this Administration believes that the enactment of 13(c) has provided important management-labor stability for nearly forty years. During this time, the transit industry changed dramatically, responding to unprecedented changes in American society, requiring in many instances the imposition of appropriate fiscal restraint and the added imposition of additional regulatory requirements. In spite of these challenges, the transit industry has avoided, for the most part, the labor relations problems of the past. This is in large part due to the labor protections under 13(c) that have created an orderly process to ensure that the rights of employees are addressed through the collective bargaining or arbitration processes as the institutional change occurs.

I would like to thank you again, Mr. Chairman, for the opportunity to testify today, and I look forward to continuing to work with you and your Committee. I am pleased to answer any questions you may have.

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