Oversight Hearing on Delays in Funding Mass Transit

Prepared Testimony of Mr. Roger Snoble
President and Executive Director
Dallas Area Rapid Transit

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

Mr. Chairman, my name is Roger Snoble and I am the President/Executive Director of Dallas Area Rapid Transit. I am here today at your request to discuss DART's experience with 49 U.S.C. Section 5333(b), commonly known as "13(c)."

To address the transportation needs of the Dallas area, the citizens of our community on August 13, 1983, confirmed the creation of the regional transportation authority - Dallas Area Rapid Transit. The community voted to create DART, supported by a one percent sales tax.

DART has never sought operating assistance nor has it agreed to an operating assistance 13(c) arrangement. DART has continuously complied with its 13(c) capital arrangement and has limited itself to seeking only "capital assistance." Therefore, DART has never used federal funds to pay for DART employees' wages and benefits.

When the Federal Transit Administration subsequently presented its proposal to Congress to eliminate operating assistance and to make preventive maintenance permanently eligible for "capital assistance," DART considered the possibility of applying for a Capitalized Preventive Maintenance Grant. As part of its consideration, DART reviewed the previous history of the Department of Labor's treatment of such activities. In the past, the Department of Labor has not imposed a 13(c) operating assistance arrangement on activities formerly considered operating expenses, after these were reclassified as capital expenses. The activities that were previously considered operating activities for which the DOL did not require an operating arrangement include the cost of associated maintenance items in 1983. These items were broadened to include the capital cost of contracting in 1986; capital leasing in 1987, the cost of vehicle overhaul and the maintenance costs of a lease in 1996. Following the expansion of the definition of capital projects by Congress to include preventive maintenance, DART applied for a Capitalized Preventive Maintenance Grant, believing that the grant would be certified under DART's existing 13(c) capital arrangement.

However, contrary to the Department of Labor's prior practice of not requiring newly eligible capital costs to be certified under an operating arrangement, DOL imposed an operating assistance 13(c) arrangement on February 2, 1999. Moreover, that arrangement included a "sole provider clause" which restricts DART's ability to contract out.

The "sole provider clause" that was included in the operating arrangement certified by the DOL provides that DART shall be the sole provider of mass transportation services to the project and such services shall be provided exclusively by employees of DART covered by this agreement and any applicable collective bargaining agreement.

The sole provider clause prohibits DART from contracting out services for preventive maintenance and other new activities. This prohibition is in direct contradiction to Section 452.056(e) of the Texas Transportation Code and to the industry's best business practices. The Texas law requires DART to "at least once every five years" evaluate each distinct transportation service the authority provides that generates revenue, including light rail, bus, van, taxicab and other public transportation services, such as commuter rail, and determine whether the authority should solicit competitive sealed bids from other entities to provide these transportation services. If as a result of this evaluation, DART would determine that it would be more economically efficient to contract for new transportation services, the sole provider clause would prohibit DART from doing so.

It should be noted that this section of the Texas Transportation Code applies to only DART and the Fort Worth Transit Authority, better known as the "T." The "T" does not have a sole provider clause in its 13(c) arrangement and contracts out 100 percent of its transportation activities to a private provider. As a result, the sole provider clause only affects DART's ability to comply with Section 452.056(e). DART, as the keeper of public monies, has the fiduciary obligation to run the transit authority as economically efficiently as possible. The imposition of the sole provider clause by the DOL would prevent DART from exercising every possible opportunity to maximize efficiencies.

In an effort to reach an amicable resolution to the problem created by the DOL's imposition of an operating assistance arrangement that included a "sole provider clause," DART and the Amalgamated Transit Union (ATU) met and conferred from February 1999 through January 2000 in order to reach a resolution to the problem. It was DART's understanding that DOL would approve a resolution reached between ATU and DART. In December of 1999, DART and ATU reached a resolution that would eliminate the "sole provider clause" from the 13(c) operating assistance arrangement. However, in January when the parties met to confirm the agreement, ATU insisted on the inclusion of a new issue not related to 13(c). This was a new requirement that DART simply could not agree to.

As a result, DART determined that it could not in good conscience accept the 13(c) operating arrangement. Therefore, on March 7, 2000, DART notified the Federal Transit Administration that DART would not accept Preventive Maintenance funding and that DART would revise its grant application to exclusively fund capital projects. By letter dated March 10, 2000, DART notified the DOL of its decision.

When Congress approved TEA-21, grantees were allowed for the first time to use FTA Section 5307 to fund capital preventive maintenance. DART intended to use its Section 5307 allocations for capital preventive maintenance because it allowed DART to draw-down funds more quickly. This was a simple business decision that would have resulted in significantly improved cashflows for the agency. DART had planned to receive $75.3 million of capital maintenance in FY2000 for its 1998, 1999 and 2000 grant applications and then utilize its entire Section 5307 allocation for future for capital preventive maintenance on an annual basis. This is why the financial impact of the DOL's decision was greater than the FY98 application of $21.9 million. The cumulative five year impact is a negative $61 million of cashflow which directly impacts DART's ability to meet the growing mobility needs of the region.

As initially passed by Congress, the intent of Section 13(c) was to ensure the preservation of existing rights and the collective bargaining process to the extent that it existed for transit employees. DART fully supports the Congressional intent of Section 13(c). However, since its enactment in 1964, the intent of Congress has been overshadowed by the certification and 13(c) claims dispute process utilized by the Department of Labor.

In fact, no other federal funding is subjected to another agency's control as with FTA. Employee protections in the transportation area are enforced by transportation agencies with direct transportation responsibilities and not by DOL. The certification process utilized by the DOL requires that the grant application be approved by all labor organizations that have referral status for that particular transit authority and 13(c) grant. If objections are filed by the labor organization, the DOL expects that any resolution be the product of negotiations between the parties. This certification process and expectation has resulted in the labor organizations' ability not only to delay the certification process, but in many instances to actually prevent the certification of a grant. As a result, transit authorities must either agree with the terms proposed by the labor organization or oppose the objections and contend with the delay of certification or denial of certification.

In the case of DART, we currently have a grant that has been placed in "incomplete status" due to the fact that a new labor organization that represents only forty-five (45) DART hourly employees has requested referral status. It should be noted that this labor organization represents the same classification of employees as does the ATU. If DOL grants referral status to both the ATU and the Rail Employees Association (REA), DART will be placed in the untenable position of having to contend with two separate labor organizations over the terms and conditions of the 13(c) arrangement for the same classification of employees. In other words, one mechanic may be governed by an REA 13(c) arrangement and a second mechanic, in the same position, working next to the first mechanic would be governed by a different 13(c) arrangement for ATU represented employees.

Furthermore, even in those instances where DART has reached a resolution with the labor organization, the DOL has allowed 13(c) claims to be presented on the same issue by members of the same union despite the resolution reached by DART and the ATU. Recently, DART reached a resolution in reference to 13(c) claims filed in reference to DART's Light Rail Implementation Arrangement with the ATU Local. Two members of the ATU Local who were dissatisfied with the resolution reached with the ATU Local filed 13(c) claims with the DOL. Despite the fact that ATU Local had represented to DART that it was authorized to reach the agreement on behalf of all of its members and in particular these two individuals, DOL allowed the 13(c) claims.

It should be noted that although ATU Local at first agreed to provide a written affidavit for DART confirming that the ATU Local was authorized to act on behalf of these two individuals, the ATU Local later refused to provide the affidavit per the instructions of the ATU International.

When enacted, 13(c) served its purpose of ensuring the preservation of existing rights and the collective bargaining process of transit employees. It seems that 13(c) has served its purpose and is no longer required to protect transit employees. In the past many more federal agencies worked under statutes that required labor certification processes. Over time, most of these statutes were allowed to expire on their own terms, and consequently the certification process under those statutes expired. The labor certification processes like the one under Section 13(c) are no longer in existence and have been abandoned. If Congress wishes to continue the labor certification, the DOT is certainly capable of preserving these employees' rights. In fact, the DOT has an excellent record for auditing and enforcing many other related protections including civil rights and labor protections.

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