[Senate Hearing 105-320]
[From the U.S. Government Publishing Office]
S. Hrg. 105-320
DEPARTMENTS OF COMMERCE, JUSTICE, AND STATE, THE JUDICIARY, AND RELATED
AGENCIES APPROPRIATIONS FOR FISCAL YEAR 1998
=======================================================================
HEARINGS
before a
SUBCOMMITTEE OF THE
COMMITTEE ON APPROPRIATIONS UNITED STATES SENATE
ONE HUNDRED FIFTH CONGRESS
FIRST SESSION
on
H.R. 2267/S. 1022
AN ACT MAKING APPROPRIATIONS FOR THE DEPARTMENTS OF COMMERCE, JUSTICE,
AND STATE, THE JUDICIARY, AND RELATED AGENCIES FOR THE FISCAL YEAR
ENDING SEPTEMBER 30, 1998, AND FOR OTHER PURPOSES
__________
Department of Commerce
Department of Justice
Department of State
Federal Communications Commission
Nondepartmental witnesses
Securities and Exchange Commission
Small Business Administration
The judiciary
United Nations
__________
Printed for the use of the Committee on Appropriations
Available via the World Wide Web: http://www.access.gpo.gov/congress/senate
U.S. GOVERNMENT PRINTING OFFICE
39-831 cc WASHINGTON : 1998
___________________________________________________________________________
For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC
20402
ISBN 0-16-056085-3
COMMITTEE ON APPROPRIATIONS
TED STEVENS, Alaska, Chairman
THAD COCHRAN, Mississippi ROBERT C. BYRD, West Virginia
ARLEN SPECTER, Pennsylvania DANIEL K. INOUYE, Hawaii
PETE V. DOMENICI, New Mexico ERNEST F. HOLLINGS, South Carolina
CHRISTOPHER S. BOND, Missouri PATRICK J. LEAHY, Vermont
SLADE GORTON, Washington DALE BUMPERS, Arkansas
MITCH McCONNELL, Kentucky FRANK R. LAUTENBERG, New Jersey
CONRAD BURNS, Montana TOM HARKIN, Iowa
RICHARD C. SHELBY, Alabama BARBARA A. MIKULSKI, Maryland
JUDD GREGG, New Hampshire HARRY REID, Nevada
ROBERT F. BENNETT, Utah HERB KOHL, Wisconsin
BEN NIGHTHORSE CAMPBELL, Colorado PATTY MURRAY, Washington
LARRY CRAIG, Idaho BYRON DORGAN, North Dakota
LAUCH FAIRCLOTH, North Carolina BARBARA BOXER, California
KAY BAILEY HUTCHISON, Texas
Steven J. Cortese, Staff Director
Lisa Sutherland, Deputy Staff Director
James H. English, Minority Staff Director
------
Subcommittee on Commerce, Justice, and State, the Judiciary, and
Related Agencies
JUDD GREGG, New Hampshire, Chairman
TED STEVENS, Alaska ERNEST F. HOLLINGS, South Carolina
PETE V. DOMENICI, New Mexico DANIEL K. INOUYE, Hawaii
MITCH McCONNELL, Kentucky DALE BUMPERS, Arkansas
KAY BAILEY HUTCHISON, Texas FRANK R. LAUTENBERG, New Jersey
BEN NIGHTHORSE CAMPBELL, Colorado BARBARA A. MIKULSKI, Maryland
ROBERT C. BYRD, West Virginia
(ex officio)
Subcommittee Staff
Jim Morhard
Kevin Linskey
Paddy Link
Dana Quam
Scott Gudes (Minority)
Emelie East
C O N T E N T S
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Thursday, March 6, 1997
Page
Department of State: Secretary of State.......................... 1
Tuesday, March 11, 1997
Small Business Administration.................................... 57
Wednesday, March 12, 1997
Department of Justice: Office of the Attorney General............ 91
Thursday, March 13, 1997
Department of Commerce: Secretary of Commerce.................... 151
Wednesday, March 19, 1997
Securities and Exchange Commission............................... 211
Thursday, March 20, 1997
United Nations................................................... 229
Thursday, April 10, 1997
Department of Justice:
Federal Bureau of Investigation.............................. 247
Immigration and Naturalization Service....................... 247
Drug Enforcement Administration.............................. 247
Wednesday, April 16, 1997
Federal Communications Commission................................ 347
Thursday, April 17, 1997
The judiciary:
Supreme Court of the United States........................... 383
U.S. courts.................................................. 389
Thursday, April 24, 1997
Department of Commerce: National Oceanic and Atmospheric
Administra- tion............................................... 417
Nondepartmental witnesses........................................ 465
DEPARTMENTS OF COMMERCE, JUSTICE, AND STATE, THE JUDICIARY, AND RELATED
AGENCIES APPROPRIATIONS FOR FISCAL YEAR 1998
----------
THURSDAY, MARCH 6, 1997
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 2:04 p.m., in room S-146, the
Capitol, Hon. Judd Gregg (chairman) presiding.
Present: Senators Gregg, Domenici, Campbell, Hollings,
Bumpers, Lautenberg, and Mikulski.
DEPARTMENT OF STATE
Secretary of State
STATEMENT OF HON. MADELEINE K. ALBRIGHT, SECRETARY OF
STATE
opening remarks
Senator Gregg. We'll call this hearing to order, and we
obviously want to thank the Secretary for joining us. This is
her first appearance before the committee as Secretary.
Of course, we had the pleasure of having a number of
chances to meet with the Secretary when she was Ambassador, and
it was always a privilege and a very worthwhile event for us.
I am going to withhold my opening statement, and I would
hope that we could shorten our opening statements so that we
can get on with the questions.
There are a couple of members who have expressed an
interest in making opening statements, but I will not make
mine.
Senator Hollings. I agree with the distinguished gentleman.
We'll just withhold them and file them for the record, and hear
the Secretary.
Senator Gregg. The Senator from New Mexico asked for the
opportunity to make a quick statement.
Senator Domenici. Excuse me, Madam Secretary. I wanted to
share with all of you a request. I have pretty good evidence
that a number of cases are being filed in the State district
courts regarding an immigration issue that I think is rather
deplorable.
And I was going to ask the chairman if he might have the
staff investigate this and bring it to our meeting when we have
the INS up here. Could I lay that before you in a minute here?
Senator Gregg. Absolutely.
Senator Domenici. Let me just tell you, we adopted a
statute in 1990 to make it possible that an alien that's in
America who became disabled or extremely sick and needed
guardianship could go to court and have a court determine them
to be in need of a guardian, and thus in need of foster care.
That would then permit that person, that alien, to get a
green card and become a permanent resident. There is now
evidence that the lawyers and families have found that this
will apply to an 18-, 19-, or even 20-year-old student who is
here going to school.
Before they have to go home, they file a petition saying
that this alien is in need of a guardian and foster care.
Believe it or not, district courts in America are determining
that to be a fact, ex parte, with no advocacy. The courts are
determining that by order that these aliens are entitled to a
permanent green card.
I believe we're either in the middle of a burgeoning fraud,
or we're catching it in its early stages. Nonetheless, to top
it all off, we have a situation where a lawyer filed a petition
for one that supposedly was entitled to be a ward, and thus
have a guardian appointed, and thus be entitled to foster care,
and thus get a green card permanently.
It was filed 8 days before the person arrived in America,
then they arrived, were determined to be subject to this, and
then they got a green card. All of this occurred 9 days before
the person became 21 years of age, which would have
disqualified them from the opportunity to do this.
So I would clearly think this is something very serious,
and I would ask that we look into it, and ask that the
immigration people tell us about it, and do a little
investigating before they come, so they might suggest to us how
we might fix this.
Senator Gregg. We'll do exactly that, Senator. I think you
have obviously raised a very legitimate concern which is in the
jurisdiction of this committee: one which we will pursue. The
Immigration and Naturalization Service [INS], as you know, is
becoming the bane of our existence. There have been a number of
problems.
Senator Domenici. I thank you very much.
Senator Campbell. Do you wish to ask unanimous consent for
opening statements?
Senator Gregg. I would appreciate it.
Senator Campbell. And then have the Secretary's comments,
and go to questions?
Senator Gregg. That's my plan, unless somebody feels moved
to have to make an opening statement, I would appreciate it if
we could just submit them for the record.
Senator Campbell. I'd just like to welcome here, by the
way, Mr. Chairman, a former resident of Denver.
Senator Mikulski. Mr. Chairman, I, too, would like to place
my opening statement into the record, and welcome with
enthusiasm our Secretary of State, and look forward to working
with you to make sure our State Department is as modern as our
economy.
Senator Lautenberg. I, too, Mr. Chairman, would ask that my
statement that commends the Secretary for her wonderful work,
for the forward position she's put forth for our country, for
the skills she brings to the job. I would have said all of this
in my statement, which I would like to include in the record as
if read.
Senator Gregg. I appreciate that.
[The statement follows:]
Prepared Statement of Senator Frank R. Lautenberg
Madame Secretary, I am pleased to have the opportunity to
join my colleagues in welcoming you to this subcommittee and to
congratulate you publicly on your new post. I am sure we will
be able to work together to maintain American leadership and
diplomatic readiness as you have so correctly suggested should
be our goals.
I agree with those goals completely, and am glad that the
budget you have presented supports them by restoring some of
the cuts of recent years.
I am glad, for example, that the State Department does not
now anticipate any additional post closings or the need to
reduce further the number of personnel. Without sufficient
people and posts, the work of the Department cannot be done.
While it is my firm belief that all of the work of the
State Department helps the citizens of this country, I note
also that much of the Department's work directly helps U.S.
citizens and businesses abroad--issuing passports and visas,
assisting U.S. citizens in distress overseas, helping U.S.
businesses deal with a foreign culture.
This, along with traditional diplomacy, is critical work
that must be supported with adequate resources.
Secretary Albright's opening statement
Senator Gregg. Before we go to questions, what I would like
to do is hear from the Secretary.
Secretary Albright. Thank you, very much, Mr. Chairman. I'm
very glad to be with you and members of the subcommittee.
As you have said, this is really the first time I am here
in my new capacity. I think we were able to develop a really
good relationship in our previous dealings, and now we have a
chance to broaden the dialog, and I am really looking forward
to it.
Our ability to work together successfully matters because
this subcommittee really does provide many of the resources by
which American interests are protected, and American leadership
is sustained. This matters because in our era we are deeply
affected by events overseas.
I have my testimony here, my statement, divided into two
parts, basically where I can give you an overview of the types
of issues that we are dealing with, and then get more
specifically into the resource question and how they link up.
Our workers and business people compete in a global
marketplace. Our citizens travel, our students are measured
against those from around the world, our borders are vulnerable
to illegal immigrants, drugs, pollution, and disease.
And our children will do better and be safer in a world
where nations are working together to set high standards,
contain conflict, and enforce the rule of law. It was with
these considerations in mind that I left Washington last month
for my first trip overseas as Secretary of State. I think that
the message that I was giving there is important to be heard
here also.
In Europe I discussed a variety of issues with our key
allies, including the North Atlantic Treaty Organization's
[NATO] plan to invite a number of Europe's new democracies to
begin talks about joining the alliance. Today, 4 months prior
to the summit in Madrid, our alliance is united.
NATO will continue its process of internal adaptation. We
will accept new members, and keep open the door to future
membership. We will coordinate with all of Europe's
democracies. We will develop an enhanced relationship with the
Ukraine, and we will strive to forge a long-term strategic
partnership with Russia. In this way we will ensure NATO's
continued role as a mighty instrument for peace, stability, and
freedom throughout the continent.
In Moscow, I emphasized to the Russian leaders that just as
they have created a new Russia, we have created a new NATO. The
new NATO is not arrayed against any country. It is a force for
democracy and for integration.
Russia's own security will be enhanced in a Europe without
walls, with a transformed NATO as its partner. During my talks
with President Yeltsin and Russian Foreign Minister Primakov, I
was able to outline the concrete possibilities of such a
partnership, and I very much welcome President Yeltsin's
subsequent statement that he will seek to make progress during
the summit with President Clinton in Helsinki later this month.
In Europe, the central question we face is whether we have
learned the right lessons from history. The same is true in
Asia, where much depends on whether choices are based on past
suspicion or current hope.
The message I conveyed during my trip is that America wants
to build a secure and peaceful future for Asia and the Pacific.
I reaffirmed our strong security relationships with our key
allies, Japan and the Republic of Korea, and I emphasized the
importance of proceeding with the agreed framework that has
frozen and will ultimately dismantle North Korea's nuclear
weapons program.
I discussed the President's proposal for our party peace
talks concerning the future of the Korean Peninsula. A briefing
on this subject in which both Koreas participated was held
yesterday in New York. I also discussed our decision to
contribute emergency food relief to the starving people of
North Korea.
During my meetings with the Chinese leaders, we reviewed a
broad range of issues, including nonproliferation, human
rights, trade, Taiwan, and the future of Hong Kong. My visit,
and China's willingness to receive me, despite the death of
Deng Xiaoping, reflects a mutual determination to maintain our
strategic dialog.
Our goal is to identify and build on areas of cooperation,
while seeking through candid discussion to narrow differences.
By so doing, we hope to develop more extensive areas of common
ground, and thereby serve the interests of both countries and
the world.
Although our interests demand that we direct our attention
frequently to Europe and Asia, we cannot and are not neglecting
our responsibilities elsewhere. For example, we're working with
regional leaders and the United Nations to find a political
solution to ease the ongoing humanitarian crisis in Zaire.
In the wake of the President's decision to certify Mexico's
cooperation in the drug war, I am working with the Attorney
General and Director McCaffrey to encourage further progress in
that war, both short term and long term. And I recognize that
there are those who disagree with the President's decision, but
I believe it to be the right one.
President Zedillo is fighting back against the corruption
that has undermined the antinarcotics effort in his country.
Our focus now must not be on unproductive efforts to allocate
blame, but on strategies to overcome problems. In this effort,
we will be pleased to consult with Congress, and we welcome
congressional support.
Finally, with regard to the Arab-Israeli peace process, we
are working closely with the Government of Israel, the
Palestinians, and others in the region to sustain the progress
generated by the Hebron Agreement.
The recent visits of Prime Minister Netanyahu and Chairman
Arafat, and the upcoming visits of President Mubarak and King
Hussein reflect the vital role that America plays in this
effort. And in that role, we will continue to back those who
believe in peace, and continue to oppose vigorously those who
seek to disrupt peace through violence or terror.
Mr. Chairman, the United States has important economic,
security, political, and humanitarian interests on every
continent, but if we are to have the resources required to
protect those interests, we will need your help in maintaining
our diplomatic readiness. Accordingly, I urge your strong
support for the President's request for funding for fiscal year
1998, beginning with State Department operations, where we are
requesting roughly a 4-percent increase from this year's level.
As members of this subcommittee know, although our workload
in priority areas has increased, and overseas inflation has
eroded our buying power, funding for our Embassies and
consulates has been flat. We have done our best to manage this
squeeze by streamlining operations, cutting jobs, postponing
repairs, and closing overseas posts.
We have also recognized that if we are going to work
smaller, we have got to work smarter. To this end, we have
reduced dramatically the time required for an American to
obtain a passport.
We have developed an improved model for overseas staffing.
We are redesigning our worldwide logistics operations to
provide materials and services faster, better, and cheaper.
We're proposing a plan for the State Department to retain
the fees we generate, and we have put in place a system to
promote equitable sharing among Federal agencies of overseas
costs.
But sound management requires investment and modernization
as well as efficiency. The small increase requested by the
President this year will help us keep pace with inflation,
modernize our technology, integrate environmental concerns, and
make a small downpayment on repairs to our dilapidated
facilities in China. Even so, we will not have the resources we
need to improve many other substandard facilities.
Mr. Chairman, as I have told State Department employees,
helping to design and implement American foreign policy is not
just another career choice. It's a service to America, as
important and often as risky as service within our Armed
Forces. It requires a commitment to American interests and
ideals, and it needs to be done with excellence and spine.
Let us not forget that we depend on our diplomats to
negotiate the arms control agreements that keep us safe from
the spread of nuclear weapons. We ask them to help open new
markets, and assure fair treatment for American businesses.
We rely on them to build relationships that enable us to
protect our citizens from the scourge of drugs, the plague of
crime, and the threat of terror. We expect them to see behind
the claims of dictators and report the truths about human
rights.
We count on them to assist Americans who are injured, or
otherwise need help overseas, and we require them to provide
support to the other Federal agencies, from Defense to the FBI,
that also promote American interests around the world.
There is no more important part of my message to you today
than that the people who do America's work abroad need and
deserve the support of Congress--the representatives of our
people here at home.
And I also ask your support for the President's request for
our participation in international organizations. In my
previous capacity, Mr. Chairman, we had an opportunity last
year to discuss the CIO account, which I hope you agree serves
a wide range of American interests, and I will not take time to
enumerate those now.
The real policy question we face is not whether the United
Nations and its agencies work for us--they do--but whether we
can make them work better. And that is why we have repeatedly
stressed the need for reform.
On this subject, Mr. Chairman, I hope you will agree we've
come a long way. We are far from satisfied, but I think that
it's fair to say that there has been more United Nations'
reform in the last 4 years than in the previous 40.
During this period, the United Nation's new inspector
general has shown growing independence in exposing inefficiency
and waste. The United Nations has lived within a no-growth
budget, and we believe it will continue to do so.
U.N. staffing has declined. New peacekeeping operations are
far less frequent and more successful. An informal moratorium
on U.N. global conferences is being observed, and our reform
mantra of consolidation, accountability, prioritization, and
fiscal discipline is having an impact throughout the U.N.
system.
Now, this progress did not come easy. Our support for
reform does not go down well with those whose priorities differ
from our own. Moreover, our policy of paying assessments late,
coupled with our arrears, has alienated both supporters and
opponents of reform.
Last year, we proposed a 5-year plan for paying arrears,
with the understanding that the payments would be tied to
specific reforms. I think in retrospect that that proposal was
flawed. It didn't provide much leverage with U.N. members. And
we did not come out a winner with Congress.
The $50 million we received in arrears last year for U.N.
peacekeeping, while welcome, was more than offset by an $85.6
million shortfall in appropriations for the ``Contributions to
international organizations'' account. Our goal is to get out
of the hole, not dig it deeper still.
That is why the President has proposed a plan this year
that would fully clear our payable arrears, while maximizing
prospects for achieving our other U.N. priorities.
If this request is approved, we would have far greater
leverage in negotiating the budgets of the international
organizations to which we belong. And we would leave a far
better chance of negotiating reductions in our share of these
budgets and making further progress on reform.
This is a win/win/win proposition. By paying our arrears,
we would get America out of debt. By reducing future
assessments, we would keep America out of debt. By providing
incentives for reform, we would enable these organizations to
do more with less.
In the days ahead, I would like to work with you and your
colleagues to implement the President's plan. Our continued
leadership, within the international organizations, depends
upon it, our principles require it, our interests demand it,
and our budget allows it.
Mr. Chairman, our request this year also includes funds to
meet our current assessments to international organizations,
and our anticipated requirements for U.N. peacekeeping.
As we discussed before, I appreciate your desire to be
consulted about prospective peacekeeping operations. We need
your understanding and support so that operations will be
effective, and so that we can pay our assessments.
In that spirit, let me mention one possibility. Although
progress has been made in Bosnia, we are faced now with the
challenge of implementing the recent decision putting the city
of Brcko under international supervision for 1 year. Police
monitoring will be a key element, and we will be talking with
you further about the likely expansion of the U.N. civilian
police mission in Bosnia to handle this task.
Mr. Chairman, I am optimistic, based on my earlier meetings
with you, and the conversations I've had with many Senators,
that we have a tremendous opportunity to work together. We may
have differences on timing and tactics on some issues, but I
see a widespread agreement on our central goals. We agree on
the need to build a Europe, whole and free, and an Asia Pacific
community. We agree on the need to create an ever expanding
global economy. And we agree on the need to fight back hard
against threats to our security and seize the opportunities for
peace.
And we agree, most of all, on the need for America to
remain true to its principles, defending freedom, promoting
human dignity, and keeping commitments.
prepared statement
And so I am looking forward very much, Mr. Chairman, and
members of the subcommittee, in working with you, not only to
defend the principles of America now, but to lay the
foundations for the next American century.
I would be delighted to answer questions.
[The statement follows:]
Prepared Statement of Madeleine K. Albright
Mr. Chairman and members of the Subcommittee, it is a pleasure to
appear before you for the first time in my new capacity. As Ambassador
to the United Nations, I benefited greatly from our constructive
dialogue in the past. I look forward now to continuing our relationship
with the same candor and commitment--and to working with you on an even
broader array of challenges facing our nation and the world.
In his State of the Union address last month, the President said
that ``to prepare America for the 21st Century, we must master the
forces of change and keep American leadership strong and sure for an
uncharted time.''
Thanks to the President's personal engagement, the hard work of
Secretary Christopher, and the bipartisan support of Members of
Congress, we undertake this challenge with the wind at our backs.
Today, our nation is respected and at peace. Our alliances are
vigorous. Our economy is robust.
And the ideals enshrined in the American Constitution more than 200
years ago still inspire those who have won, and those who seek, a place
in the constantly-expanding domain of freedom.
All this is no accident. And its continuation is by no means
inevitable. The preservation of peace, the growth of prosperity and the
spread of democracy must be sustained as they were created--by American
leadership.
That imposes a responsibility upon all of us, for the accounts
under the jurisdiction of this subcommittee provide many of the
resources by which American interests are protected and American
leadership is maintained.
This matters because, in our era, we are all deeply affected by
events overseas. Our workers and businesspeople compete in a global
marketplace. Our citizens travel. Our students are measured against
those from around the world. Our borders are vulnerable to illegal
immigrants, drugs, pollution and disease. And our children will do
better and be safer in a world where nations are working together to
set high standards, contain conflict and enforce the rule of law.
It was with these considerations in mind, Mr. Chairman, that I
embarked last month on my first overseas trip as Secretary of State.
In Europe, my discussions focused on preparations for the summit
that President Clinton and the leaders of NATO will attend this July in
Madrid. That summit will mark another milestone in the post-Cold War
transformation of NATO by inviting a number of Europe's new democracies
to begin talks about joining our alliance.
Our goal is to help NATO do now for Europe's east what NATO did
fifty years ago for Europe's west: to integrate new democracies,
eliminate old hatreds, provide confidence in economic recovery, and
deter conflict.
As my visits to Rome, Bonn, Paris, London and NATO Headquarters in
Brussels gave evidence, the alliance is united. NATO will continue its
process of internal adaptation. We will accept new members, and keep
open the door to future membership. We will operate in partnership with
all of Europe's democracies. We will develop an enhanced relationship
with Ukraine. We will strive to forge a long-term strategic partnership
with Russia. And we will coordinate with other regional institutions,
including a strengthened OSCE, the European Union, the Council of
Europe and the Western European Union.
In this way, we will ensure NATO's continued role as a mighty
instrument for peace, stability and freedom throughout Europe.
Such an outcome would serve the interests of every country--
including Russia. In Moscow, I emphasized to Russian leaders that, just
as they have created a new Russia, we have created a new NATO. The new
NATO is not arrayed against any country; it is a force for democracy,
and for integration. Russia's own security will be enhanced in a Europe
without walls, with a transformed NATO as its partner.
During my talks with President Yeltsin and Russian Foreign Minister
Primakov, I was able to outline the concrete possibilities of such a
partnership. I very much welcome President Yeltsin's subsequent
statement that he will seek to make progress during his summit meetings
with President Clinton in Helsinki later this month.
The issue of NATO adaptation reminds us of the broader interests we
share not only with our traditional allies in the west, but with a
democratic Russia, Ukraine, the other New Independent States, the
Baltics and the new democracies of Central Europe. The continued
strengthening of democratic institutions and values throughout this
region is vital to our future and must be a defining characteristic of
our age.
We should never forget that European divisions drew our people into
two world wars and one Cold War this century. We have an obligation to
ourselves and to our children to do all we can to sustain progress
towards security cooperation, economic integration, political reform
and victory over the forces of terrorism, corruption and crime.
In Europe, the central question we face is whether we have learned
the right lessons from history. To secure the future, old adversaries
must become partners and old grievances must be settled peacefully.
The same is true in Asia, where much depends on whether choices are
based on past suspicion or current hope.
The message I conveyed during my trip is that America will do its
part to help those focused on building a secure and peaceful future for
Asia and the Pacific.
Accordingly, I reaffirmed our strong security relationships with
our key allies--Japan and the Republic of Korea.
In both Tokyo and Seoul, I emphasized the importance of proceeding
with the Agreed Framework that has frozen--and will ultimately
dismantle--North Korea's nuclear weapons program. I announced
scheduling of the joint briefing held yesterday on the proposal for
Four Party peace talks concerning the future of the Korean Peninsula.
And I discussed our decision to join the Republic of Korea in
contributing emergency food relief for the starving people of North
Korea; a policy that reflects our values and our belief that food
should not be used as a political weapon.
Economic issues were also on the agenda in Japan and Korea. In both
cases, my focus was on the implementation of agreements designed to
assure fair access for American goods and services to local markets.
During my meetings with Chinese leaders, we agreed that expert
level discussions would be held later this month between our countries
on a range of nonproliferation issues. I raised America's strong
concerns about Chinese practices on internationally-recognized human
rights, including the right to free expression of political and
religious beliefs. I noted the progress that has been made on bilateral
trade issues, including textiles and the enforcement of intellectual
property rights, and pressed for greater market access for American
goods.
We also had an important discussion of Hong Kong, where the United
States has substantial interests. I made it clear we expect China to
ensure a smooth transition under the 1984 Joint Declaration with the
United Kingdom and to assure Hong Kong's high degree of autonomy and
way of life.
Finally, we discussed Taiwan, where American policies have not
changed.
My visit, and China's willingness to receive me despite the death
several days earlier of Deng Xiaoping, reflects a mutual determination
to maintain our strategic dialogue. This dialogue is designed to
identify and build on areas of cooperation, while seeking through
candid discussion to narrow differences. By so doing, we hope to
develop more extensive areas of common ground, thereby serving the
interests of both our countries and the world.
Although I was only in Asia for a few days, I was impressed by the
depth of the commitment to strong and stable relations with the United
States. This is a region characterized by dynamic economic expansion.
But it is also a region threatened by potential turbulence. American
engagement is an essential source of stability and, as such, is
welcomed on all sides.
Although our interests demand that we direct our attention
frequently to Europe and Asia, we cannot--and are not--neglecting our
friends elsewhere.
In regard to the Arab-Israeli peace process, we are working closely
with the Government of Israel, the Palestinians and others in the
region to sustain the progress generated by the Hebron Agreement. The
Israeli-Palestinian negotiating process is critical to the structure of
peace we hope to build in the region, and we must keep it moving
forward. We are encouraging the parties to take steps to build the
confidence and trust so vital to sustaining this process.
The recent visits of Prime Minister Netanyahu and Chairman Arafat,
and the upcoming visits of President Mubarak and King Hussein, reflect
the vital role that America plays in this effort. In that role, we will
continue to back those who believe in peace, and continue to oppose
vigorously those who seek to disrupt peace through violence or terror.
Closer to home, we are proud to be among the community of
democracies that has come to exist in our own hemisphere.
Last week's visit of Chilean President Eduardo Frei was a reminder
of the economic and political dynamism of our southern neighbors.
The 1994 Summit of the Americas provides a valuable framework for
progress towards durable democratic institutions, ensuring the rule of
law and promoting higher standards of living through free trade and
economic integration. The Administration will continue working with all
of our democratic partners to implement this framework, and to build
strong relationships based on shared interests and mutual respect.
One example is our effort, together with Argentina and Brazil, to
encourage a peaceful resolution of the border dispute between Peru and
Ecuador.
Another is our wide-ranging relationship with Mexico, with whom we
share a 2,000 mile long border and a need to respond cooperatively to
challenges that include trade, the environment, immigration, corruption
and--most particularly--the war against illegal drugs.
Last week, President Clinton certified Mexico's cooperation in that
war, but with firm expectations of further progress. Along with
Attorney General Reno and Director McCaffrey, I will be monitoring
developments continuously. I recognize that there are those who
disagree with the President's decision, but it was the right one.
Corruption is deeply-rooted in Mexico and has undermined the anti-
narcotics effort. But President Zedillo is aware of this and is
fighting back. Our focus now must be not on unproductive efforts to
allocate blame, but on strategies to overcome problems. In this effort,
we will be pleased to consult with Congress, and we welcome
Congressional support.
Mr. Chairman, Africa, too, is a continent of importance to the
United States. Throughout the region, there are examples of nations
taking the right steps to enlarge private enterprise, invest in
education, expand opportunities for women and solidify democracy.
Despite daunting problems, the overall economic outlook in Africa
is improving. And progress has been made in resolving ethnic and civil
strife. The U.N. peacekeeping mission in Mozambique succeeded, and the
mission in Angola remains on the right track. Fighting has subsided in
Liberia. In Zaire, we are deeply engaged, with regional leaders and the
U.N., in efforts to find a political solution to the current conflict
and thereby prevent further humanitarian disaster.
In South Asia, we have a strong interest in encouraging cordial and
peaceful relations between India and Pakistan, two long time friends of
the United States. This is the fiftieth anniversary year of
independence for both countries, and we would like to do what we can in
cooperation with both to reduce tensions, curb the regional arms race
and prevent nuclear proliferation.
The United States has important economic, security, political and
humanitarian interests on every continent. We need to stay engaged. And
if we are to have the resources required to do that, we will need the
help of this Subcommittee.
Over the past few weeks, as I visited U.S. missions abroad, I could
see first hand the connections that exist between the resources we
provide here in Washington, and what our diplomats are able to do for
America overseas.
For example, Embassy Moscow is charged with reporting on the
complex evolution of a nation whose democratic development is critical
to our future. Embassy Seoul has played a vital role in de-fusing
tensions on the Korean Peninsula, while also processing more visa
requests than any other mission. Embassy Tokyo manages one of our
warmest relationships, but also helps to level the economic playing
field for American companies. Our diplomatic team in Brussels is on the
front lines of the construction of a new Europe.
And our mission in Beijing, cramped and handicapped by grossly
substandard facilities, is striving to defend our interests, report on
developments, and carry out a range of vital diplomatic functions in a
nation of 1.2 billion people.
Mr. Chairman, I said in my confirmation hearing that America
requires not only a first-class military, which we have, but also
first-class diplomacy--which is threatened by the steady erosion of our
international affairs accounts.
The goals I have outlined today of a more stable world, in which
America's interests are protected, cannot be achieved without diplomacy
that is flexible in responding to crises, firm in pursuing our
strategic priorities, and vigilant in protecting our security. If we
want our actions to be felt globally, we must have a global presence,
global reach, and global expertise.
Accordingly, I am here to ask your support for the President's
requests for funding for fiscal year 1998 for the accounts that are
under your jurisdiction, beginning with State Department Operations.
tools to maintain our diplomatic readiness
Here, our overall request is $2.175 billion, roughly a four percent
increase from the 1997 level.
As Members of this Subcommittee know, funds have been very tight in
recent years. Although our workload in priority areas, and in the
processing of passports and visas has increased, funding for our
embassies and consulates has been flat during the past five years--and
our buying power has been eroded by years of overseas inflation and
exchange rate fluctuations.
We have done our best to manage this squeeze by streamlining
operations, cutting almost 2,500 positions, postponing needed repairs
and closing more than 30 overseas posts.
We have also recognized that, if we are going to work smaller, we
have got to work smarter.
To this end, we have reduced dramatically the time required for an
American to obtain a passport.
We have developed an overseas staffing model that relates personnel
requirements to workload and our foreign policy priorities.
We have made travel advisories and other consular information
available over the Internet.
We are redesigning our worldwide logistics operations to provide
materials and services faster, better and cheaper.
We have significantly enhanced our information management
capabilities.
We will actively pursue our part in a government-wide proposal for
the retention of fees.
And we have put in place a system to provide incentives for more
efficient operations and promote equitable sharing among federal
agencies of overseas costs.
But sound management requires investment and modernization, as well
as efficiency.
The small increase requested by the President this year will help
us keep pace with inflation, modernize our information technology,
integrate environmental concerns into the mainstream of our foreign
policy and make a small downpayment on repairs to our dilapidated
facilities in China.
Even so, we will not have the resources we need to improve other
substandard facilities. The General Accounting Office has identified
more than $260 million in deferred maintenance.
Mr. Chairman, as I have told State Department employees, helping to
design and implement American foreign policy is not just another career
choice. It is a service to America as important and often as risky as
service within our armed forces. It requires a commitment to American
interests and ideals. And it needs to be done with excellence and
spine.
Let us not forget that we depend on our diplomats to negotiate and
verify the agreements that keep us safe from the spread of nuclear
weapons.
We rely on them to maintain day-to-day support for the peacemakers
over the bombthrowers in strategic areas of the world.
We turn to them to build relationships with other nations that will
enable us to protect our citizens from the scourge of drugs, the plague
of crime and the threat of terror.
We ask them to help open new markets and assure fair treatment for
American goods and services in a fiercely competitive global
marketplace, thereby creating good new jobs for our people here at
home.
We expect them to look behind the claims of dictators and despots
and to report the truth about abuses of civil liberties and violations
of human rights.
We count on them to help Americans who are hurt, or fall seriously
ill, or who are otherwise in need of a friendly voice in faraway lands.
And we require them to provide support to other federal agencies,
from Defense to Agriculture to Commerce to the FBI, that are also
involved in promoting American interests around the world.
So there is no more important a part of my message to you today
than that the people who do America's work abroad need and deserve the
support of Congress--the representatives of our people here at home.
tools for leadership through international organizations
I also ask your support for the President's request for
Contributions to International Organizations, an account that also
serves a wide range of American interests.
For example, the U.N. Security Council is helping to ensure that
Saddam Hussein never again threatens Iraq's neighbors whether
conventionally or through weapons of mass destruction.
U.N. peacekeeping has helped end wars and build democracy in
countries as diverse as Namibia, El Salvador, Cambodia and Mozambique.
U.N. mediation brought a halt to the decades-old civil war in
Guatemala.
The U.N. War Crimes Tribunals are striving to hold accountable the
perpetrators of ethnic cleansing and mass rape.
The International Atomic Energy Agency helps to ensure that nuclear
weapons do not fall into the wrong hands.
The World Health Organization helps to protect Americans from the
spread of infectious disease.
The Food and Agriculture Organization sets quality and safety
standards that are essential to protect American consumers and that
serve the interests of our multi-billion dollar food industry.
The International Labor Organization promotes respect for human
rights in the workplace, and minimizes unfair international competition
from firms and countries that do not observe core labor standards.
Other U.N.-related agencies help to keep air travel safe,
facilitate international communications, and provide early warning of
hurricanes. In our daily lives, we take these services for granted. As
public officials, we cannot.
The question for us is not whether the U.N. and its many agencies
work for us, but whether we can make them work better. That is why we
have repeatedly stressed, here on Capitol Hill, at the State Department
and the White House, the importance of reform.
Mr. Chairman, on this subject, we have come a long way. We are far
from satisfied, but I think it is fair to say that there has been more
reform at the U.N. during the past four years than in the previous
forty.
In 1993, the U.N. had no Inspector General and no cap on a steadily
increasing budget paying for a gradually increasing staff. U.N.
peacekeeping operations were expanding rapidly without adequate
discipline or financial controls. A series of expensive global mega-
conferences had been scheduled. And both leadership and membership
within many international organizations had become complacent.
Since then, much has changed. Despite limited resources, the
Inspector General has demonstrated independence and determination in
exposing inefficiency and waste. The U.N. has lived within a no-growth
budget, and we believe it will continue to do so. U.N. staffing has
declined significantly. New peacekeeping operations are far less
frequent, better planned and more successful. An informal moratorium on
U.N. global conferences is being observed. And our reform mantra of
consolidation, accountability, prioritization and fiscal discipline has
been echoed by a number of member states, including the G-7/P-8 and the
European Union, supported by a promising new Secretary General and is
having an impact throughout the U.N. system.
This progress did not come easy. Our position on the U.N. budget
for the past year, for example, has been to support more money for the
Inspector General and more for priority peace initiatives in Central
America, while calling for dramatic reductions elsewhere. This did not
go down well with those whose priorities differ from our own. Moreover,
our policy of paying our U.N. assessments late, coupled with the
accumulation of substantial arrears, has alienated both supporters and
opponents of reform.
Last year, we proposed a five year plan for paying arrears, with
the understanding that the payments would be tied to specific reforms.
I think in retrospect that proposal was flawed. It did not provide much
leverage with U.N. members. And we did not do very well with Congress.
The $50 million we received in arrears for U.N. peacekeeping, while
welcome, was more than offset by an $85.6 million shortfall in
appropriations for fiscal year 1997 assessments in the overall CIO
account. Clearly, if we are going to make progress, rather than lose
ground, we need a different approach.
The President's proposal for arrears payments in this year's
request is for $100 million in fiscal year 1998 funds, and a $921
million advance appropriation--that would fully clear our payable
arrears--and would be made available in fiscal year 1999.
If this request is approved, we would have far greater leverage in
negotiating the budgets of the international organizations to which we
belong. And we would have a far better chance of success than we do now
in negotiating reductions in our share of these budgets and in gaining
approval for proposals on reform.
The result would be to reduce the future costs to the United States
of participating in these organizations. By paying our arrears, we
would get America out of debt. By reducing future assessments, we would
keep America out of debt. By providing incentives for reform, we would
enable these organizations to do more with less. This is a ``win-win-
win'' proposition. The organizations would operate more efficiently, on
a sounder fiscal footing. American leadership would be maintained. And
long term costs to our taxpayers would go down.
In the days ahead, I want to work with this subcommittee and others
in Congress to find a way to implement the President's plan. Our
continued leadership within other international organizations depends
upon it. Our principles require it. Our interests demand it. And our
budget allows it.
The alternative is a climate in which our influence goes down as
our arrears grow even higher, and our debts are used as an excuse to
delay reform. Timing is important, because 1997 is the year when
budgets for the next biennium are approved, and when the U.N. scale of
assessments may be revised. If we squander the opportunity now, we will
live with that mistake for at least two more years.
One additional point. Negotiating a reduction in our share of U.N.
costs is not a simple matter. We make the argument, which I believe is
valid, that the U.N. would be better off if it were not as dependent on
the United States for funding. We can make the case that the overall
contribution that America makes to international security and peace far
exceeds that of any other nation, and should be taken into account.
Nevertheless, it is also true that Europeans currently pay a larger
amount per capita to the U.N. than we do. If contributions to the U.N.
were based solely on percentage share of world income, our share of
U.N. costs would go up, not down. I believe we can win this argument,
nevertheless, if we have the leverage that arrears repayment would
provide. Without that leverage, quite frankly, we do not have a chance.
Our request this year also includes $969 million for our scheduled
payments to international organizations. Our request for contributions
for international peacekeeping activities, at $240 million, includes
full funding for U.S. assessed contributions to critical U.N.
operations along the Iraq-Kuwaiti border, on the Golan Heights, and in
Angola, to name just a few.
Because the United States has unique capabilities and unmatched
power, it is natural that others turn to us in time of emergency. We
have an unlimited number of opportunities to act. But we do not have
unlimited resources, nor unlimited responsibilities. If we are to
protect our own interests and maintain our credibility, we have to
weigh our commitments carefully, and be selective and disciplined in
what we agree to do.
Recognizing this, we have good reason to strengthen other
instruments for responding to conflicts, particularly the United
Nations.
We know from history and our own experience that small wars can
grow into big ones; that unrest provides targets of opportunity for
aggressors, criminals and terrorists; and that unresolved conflicts can
spark the migration of millions, draining the world's economic and
humanitarian resources. U.N. peacekeeping is not the answer in all
cases, but well-designed U.N. operations allow us to share the risks
and costs of peacekeeping with others. They make it less likely that
American military forces will face danger overseas. And they afford a
valuable alternative when other options are either unacceptable, more
expensive or less likely to succeed.
As we have discussed before, I appreciate your desire to be
consulted about prospective peacekeeping operations. In fact, we
incorporated Congressional language on advance notification of new or
expanded peacekeeping missions in our fiscal year 1998 budget request.
We need your understanding and support so that operations will be
effective and so that we can pay our assessments. In that spirit, let
me mention a couple of situations where new developments are possible.
Although progress has been made in Bosnia, we now face a critical
need to implement the recent decision putting the strategic city of
Brcko under international supervision for one year. Police monitoring
will be a key element, and we expect to be talking with you soon about
a proposed expansion of the U.N. civilian police mission in Bosnia to
handle that task.
On the other hand, the situation in Africa has become less clear.
An early mission to Sierra Leone now seems less likely. We have and
will continue to consult closely with you on this.
usia and acda
Let me also say a few words about the USIA and ACDA budgets covered
by your subcommittee.
As you know, USIA has undergone rigorous downsizing--cutting staff
by 29 percent and its budget by 33 percent in constant dollars over the
last four years. The consolidation of the Voice of America and Radio
Free Europe/Radio Liberty has produced a 25 percent drop in its budget
requirements since 1994.
USIA's programs continue to play a critical role in our diplomacy--
whether beaming news to China and Cuba, providing frequencies for
threatened independent radio stations in Serbia, or sending American
students, teachers and professionals on exchange programs. After four
years of cuts, we are requesting a small increase, to $1.078 billion,
covering improvements in broadcasting, exchange programs, and
technology. This will allow USIA to be a streamlined but strong partner
in our public diplomacy.
Let me also mention here the National Endowment for Democracy,
which receives funding from USIA for its important role in supporting
democracy and free elections around the world.
The Arms Control and Disarmament Agency has also faced four years
of declining budgets. But its monitoring and implementation
responsibilities have increased, in no small part due to its own
success in helping us to gain extension of the Nuclear Nonproliferation
Treaty and negotiating the Comprehensive Test Ban Treaty and the
Chemical Weapons Convention.
We can scarcely afford not to follow up on our successes with
vigilance, even as we pursue U.S. interests such as a ban on
antipersonnel land mines and a fissile materials cut-off agreement.
ACDA has requested $46.2 million for its operations. This is an
increase of $558,000--less than half the rate of inflation--to make
sure that our objectives are met.
conclusion
Mr. Chairman, in the coming months and years, the President and I
will be working closely with you and the members of this Subcommittee.
Fortunately, the foundations of a bipartisan foreign policy are already
strong.
I think it is fair to say that we agree on the need to build a
Europe that is whole and free, and an Asia-Pacific community based on
shared interests and a common commitment to peace.
We agree on the need to engage with Russia and China at a time of
uncertain transition in both these great nations.
We agree on the need to create an ever-expanding global economy in
which American genius and productivity receive their due.
We agree on the need to fight back hard against terrorism, illegal
drugs and the spread of nuclear weapons--and to seize opportunities for
peace.
We agree that freedom is a parent to peace and prosperity and that
our leadership is essential to preserve and extend it.
And if we agree on a principled and purposeful American role in the
world, then surely, we must agree on the need to provide the resources
required to sustain it.
Like military readiness, Mr. Chairman, our diplomatic readiness
depends upon having the right people in the right places with the right
support.
That is why we need the funds to maintain diplomatic representation
in almost all the nations of the world.
That is why we need funds to train our diplomatic personnel.
That is why we need up-to-date communications equipment and
information technology.
That is why we need to maintain facilities in which our staff can
live and work safely and productively.
And that is why we need to maintain our influence in institutions
such as the United Nations--by meeting our commitments and paying what
we owe.
Mr. Chairman, members of the subcommittee, as we near the end of
this century, we share a great responsibility: to maintain America's
influence, power and prestige around the world. And by so doing, to lay
the foundation for the next American century.
Towards that end, I pledge my own best efforts, and solicit your
wise counsel and support.
Thank you very much.
certification of Mexico as cooperating in Drug enforcement
Senator Gregg. Thank you, Madam Secretary, and I appreciate
that concise statement which covered a broad range of issues. I
know a lot of people have questions, so I think in order to
move the process along, we will limit the first round of
questions to 7 minutes. The present order is myself, Senator
Hollings, Senator Campbell--this is the order of arrival--
Senator Domenici, Senator Mikulski, Senator Lautenberg, and
Senator Bumpers.
You have outlined a variety of areas. Let me first say, as
a premise, that this committee has traditionally been a strong
supporter of the State Department, its goals and its purposes,
and that I expect us to continue to be a strong supporter.
We are very interested in making sure the State Department
personnel and their families have the support that they deserve
for doing the job which is very important to the United States,
both in the area of technical support and in the area of
security. That is something that we, as a committee, will
address, and we will address aggressively.
There are, obviously, a lot of public policy issues, and
you will be getting into a variety of them. But let me start
with one that I am concerned about, which is more a topical
issue of the time, and that is this issue--and I sent you a
letter on it--relative to Mexico.
Mexico is delivering to the United States 70 percent of the
drugs that come into our country. We have seen Mexico's drug
czar be compromised, the potential compromise of a number of
our Drug Enforcement Agency [DEA] agents, and their informants.
We know that there are two families in Mexico who are
basically operating most of the major drug cartels in the
United States, and who have replaced much of what was coming
out of Colombia. And we know that, unfortunately, there is
significant corruption within the police who are responsible
for policing drugs along the border. I know from discussions
with Senator Domenici that many of our border ranchers are
living in fear of the threat that individuals coming across the
border from Mexico, who are not being apprehended and who are
threatening not only the assets of these ranches but actual
lives of people living on these ranches.
In this context, my question to you is, how do you expect
certification to assist the process? We went through this once
before, I believe, and clearly things have gone downhill. Why
do we expect now that certification is going to improve the
situation, and what would have been the effects of not
certifying, in your opinion?
Secretary Albright. Mr. Chairman, thank you very much for
asking that question, because I think it is one that is on
everybody's minds at the moment. First of all, let me just
quickly say that things have not gone downhill. I think, in
fact, despite all the problems, that there has been a lot of
evidence that cooperation is at unprecedented levels. That is
not to say that this has been an easy decision for my
recommendation to the President, or for the President to make
his decision to certify.
But there is no doubt in our minds that President Zedillo
understands that the drug issue, and the relationship that it
creates between us and Mexico, poses major problems. The drug
issue to Mexico itself is viewed as a major national security
problem for them, as it is for us. And they have, in fact, done
quite a lot in the last few years in order to improve the
situation. There have been increased drug seizures, for
instance, of heroin, by 78 percent, marijuana, by 30 percent,
and arrests have been up more than 20 percent.
They have eradicated record levels of illegal drug crops.
They have doubled the discoveries of clandestine laboratories.
They have improved on their extraditions. They have improved
cooperation in domestic enforcement against money laundering.
They have enacted laws authorizing asset forfeiture, and
against money laundering. They have restricted precursor
chemicals. They have done a great deal.
But they also understand the magnitude of what they still
have to do. In conversations with President Zedillo, or with
the foreign minister, they know that they have a huge problem
on their hands, and President Zedillo is revamping their entire
legal system and their police system. And so they are working
the problem, and understand how serious it is. They do,
obviously, point to our demand issue, also, which is something
that we all know that we have to work on.
President Clinton believes, as do I, that had we not
certified, we would have undermined this unprecedented level of
cooperation. It is not a clean record here. We know that. And
the President has asked the Attorney General, Director
McCaffrey, and me to continue monitoring developments, and
reporting to him.
And we believe the level of cooperation is much better
because we are working with them, rather than having kind of a
blame placing activity.
We also have to remember the following thing, that we have
a 2,000-mile border with Mexico. We have important relations
that are not drug related. We have questions related to
immigration. We have issues of trade of importance to business
people. In sum, we have a whole set of issues.
So we hope you all understand that this was a difficult
decision for the administration, but one that we believe to be
right. It's important to have this increased cooperation with
Mexico.
Senator Gregg. I can appreciate that, looking at it from
your side of the table. But looking at it from our side of the
table, when we hear people like Tom Constantine, head of DEA,
say that his agents do not have anybody in Mexico that they can
trust to do business with, it leads one to conclude that the
problems are so acute that certification should have been in
serious doubt.
I appreciate the comprehensiveness of your response.
Senator Hollings?
Senator Hollings. Immediately on that, let me say
something, because I had the pleasure of meeting with the
Secretary, and I asked who was going to succeed Pat Kennedy who
had moved in temporarily for Dick Moose, the Under Secretary
for Management. I know that Pat is the Assistant Secretary
permanently for administration. I thought he'd go back to that
post.
Somebody interpreted my comment as something against Pat
Kennedy. I'm 100 percent for Pat Kennedy. Rich Greene, your
State Department chief financial officer--we worked with him
for years. He's outstanding. But I still want to know who's
going to replace old Moose, because we got a lot of good things
done.
But I did talk with the Secretary and, with respect to
Mexico, I indicated to her just exactly what the facts were. I
wasn't going to join in the Feinstein resolution, because
there's an old adage in the artillery, no matter how well the
gun is aimed, if the recoil is going to kill the gun crew, you
don't fire it.
I said, wait a minute, before I go on this resolution, what
is my solution to the thing? I didn't come this afternoon and
say I've got a particular solution, but I've certainly got a
different approach.
I've been listening again for the past 72 hours, since I
had the chance to confer with you, Madam Secretary. And I
qualify as a witness. This has been--Mexico--a case study
operation, for me, for numerous years now.
For example, right to the heart of it, your answer--I can
just get a copy of Warren Christopher's answer--almost the
same. I don't say that in a critical fashion, but Secretary
after Secretary have come and said so.
In the NAFTA operation, it was quite apparent that, as Pat
Moynihan said, how can you have free trade when we can't have a
free election. And they didn't have any labor rights, they
didn't have a free market, they did not have a revered
judiciary. Their law enforcement was under serious question.
Assassinations were going on down there at the particular time.
And we looked at Europe, and they had used the Common
Market approach, and I wrote an article to the effect that we
ought to try it. Later we questioned the $12 billion, and I
said it's time we ought to have it as a Marshall plan, where we
had steps of improvement, of freedom, of free markets, clean up
the judiciary and otherwise, government.
Now I come to this certification tool, and it looked to me
at first blush, that's the sort of inappropriate tool at an
inappropriate time, and now I believe otherwise. I believe
you're going to have to cause a crisis down there, for the
simple reason that what Chairman Gregg has expressed concern
about, the truth of it is that it's not improvement.
We've gone downhill since 1993, in the last 3 years.
Mexico's got far less apprehensions or arrests with respect to
drugs. There's not a single--you talk about extradition--not a
single extradition with respect to drugs. We know now that in
Los Angeles, the entire drug thing is supported by one drug
cartel, a boss down there in Mexico.
And the gangs coming up into Mexico, and that movement is
beginning to get on the increase here in the United States,
whereby the price of drugs is going down, of course. It's $200.
But it's $2,000 in Oklahoma City, and these gang movements,
supported by drugs and the serious crime in the country, all
being drug related.
I'm beginning to feel very--I haven't decided yet, but I'm
about--and that's why I want to be candid with you--that the
only thing that we can do is cause a crisis. I listened to your
testimony, and you say cut off any chance--no, undermine the
level of cooperation.
And General McCaffrey just a little while ago said cut off
any chance to work with our friends in Mexico. Incidentally,
that's not a secure briefing. I didn't attend that. I've
learned not to go to these secret briefings, because it's
leaked immediately and then I'm questioned about the leaks. So
I don't have to get questioned about them in Washington.
But we have the same thing, the same thing, and I believe
you folks have got plenty of things to do, and unwantonly you
come on, the Attorney General comes on, and another--Secretary
of the Treasury, and everything else--trying to bolster Mexico.
As they say, the economic situation, you've let the drug
thing take over. And in a line when General McCaffrey says we
would cut off any chance to work with our friends--well, we've
got the wrong friends. We've got the wrong friends.
Here's exactly what the Dallas News says. Intelligence on
corruption--this is this morning's--especially by drug
traffickers has always been there, said Phil Jordan, who headed
DEA's Dallas office from 1984 to 1994.
But, quote, ``we were under instructions not to say
anything negative about Mexico. It was a no-no, since NAFTA was
a hot political football.''
And what we are really doing is doing our best--I don't
doubt your sincerity--but you've been up in New York. And I can
tell you here and now, everybody comes and sincerely believes,
and a quick look at it, and what have you to keep the economic
thing together, we've let the drug thing just gobble us up.
And the only way I know to get the right friends down there
is to get rid of that PRI, and I hope maybe now that we can
vote for certification, the wrong tool, that it will cause a
crisis, and maybe the right friends will begin to emanate.
Secretary Albright. Senator, if I might, I think that if
there were a crisis there, it would harm us deeply.
Senator Hollings. Temporarily. But this is continued harm
that we've been suffering here.
Secretary Albright. I think, honestly, that if one looks at
this in terms of one's own neighborhood, which is what this is,
if you have somebody living in a house next door to you that
has very serious problems, and you help create a fire in that
house, it creates problems in your own backyard.
And I think that we have to make very clear our message,
which we have, and keep pursuing this. This is a very serious
problem. Nobody is saying it's not serious. And I think that
the issue here is that it is not the only issue we have with
the Mexicans. They are right there, by us, with many, many
problems that we need to deal with.
Senator Hollings. But I'm saying they have already caused a
fire in our own backyard. And, in fact, they say one of our
mayors--our mayors--on the border is under the cartel pay, and
otherwise.
So we could get into it, but there you go.
Secretary Albright. It's a tough decision.
Senator Hollings. I'm almost like Bob Dole: Been there,
done that on this one. Even though I have misgivings about it,
whether it's the right thing to do, Mr. Chairman. Thank you.
Senator Gregg. I appreciate that. Senator Campbell.
International crime
Senator Campbell. Thank you, Mr. Chairman. As long as we're
focusing a little on international crime, I guess that's one of
the few downsides of countries turning to democracy. The crime
rate often seems to go up after they become democratic nations.
And certainly we've seen that in Russia.
I wanted to ask a couple of specific questions, but I did
want to say that some of this international crime certainly
touches in our own home States. I note of interest in my notes,
one of the most notorious Russian mobsters has a Colorado
driver's license, and an address right outside of Denver,
according to FBI and Interpol.
I know that some of these international criminals have
tentacles clear across the United States. One George Hugo Reyes
Torres, the leader of the largest drug trafficking organization
in Ecuador, apparently has smuggled tons of cocaine just into
our State alone.
And so we've been dealing with a number of broader issues,
and I know I have limited time, but I would like to ask you one
specific question, and that is it was my understanding that
Mexico has denied our agents the ability to carry arms in
Mexico when they're down there. Is that true? And if so, what
are we doing to try to make sure that those agents are
protected?
Secretary Albright. Well, this, Senator, is one of the
issues that we are dealing with to try to get them to allow our
agents to act have that kind of protection.
But if I might return to something that you said about
international crime, we clearly are facing a new set of
threats. There is no question about that. They are created--I
don't know if I would agree with you, that they are created by
democracy, because totalitarianism creates a set of different
threats.
But I think the issue here----
Senator Campbell. Different system of justice.
Secretary Albright. Well, it is. But the issue that I think
we need to focus on is that we need different systems of
international cooperation in order to be able to deal with what
are now these transnational threats, that we never had before.
And that is why, I think, we need to have different kinds
of relationships with countries, international organizations,
ways of using our diplomacy to deal with what is a whole new
set of issues. And international crime is clearly one of them,
and a very high priority for this administration.
Senator Campbell. There now is an interdepartment working
group, isn't there, that the State Department is involved with,
with the DEA and a number of other groups?
Secretary Albright. Yes.
Senator Campbell. Where you are supposed to try to
coordinate some activities?
Secretary Albright. We are trying to do all of that, and
then also with other countries. But it's a new situation. We
face new kinds of problems.
Russian disquiet with the enlargement of NATO
Senator Campbell. Let me change topics, since I have
limited time, Mr. Chairman, and move away from crime a little
bit. For the last 4 or 5 years, several times, I have gone on a
trip with other Senators and Congressmen to the North Atlantic
Assembly, which is a parliamentary organization affiliated with
NATO. And I noted with interest that the Russians have had a
delegation there during the last few years as observers. And
they are clearly very interested in increased trade and
economic help from the West and so on.
But when you talk about any kind of mutual security, they
seem to get very, very wary. And I was interested in your
statement about your recent trip to Russia. But yesterday, as I
understood President Yeltsin's comments that were relayed on
the news, he seems to be absolutely opposed to any eastward
expansion of NATO.
Would you comment on that?
Secretary Albright. Yes; this is obviously the issue that
we are going to be dealing with in the next months and onward.
The Russians are not happy with the enlargement of NATO. That
is true. They understand, however, that we are going forward
with it.
They will make negative comments about it. They did to me,
and President Yeltsin did in his state of the federation
message.
But what is of overriding importance to them is that they
have a good relationship with the United States. We had that
discussion. President Yeltsin is looking forward to his meeting
with President Clinton in Helsinki. There have been very
important meetings of Vice President Gore with Prime Minister
Chernomyrdin, and a whole set of issues which would indicate
that the importance of United States-Russian relations
overrides all that.
To help deal with their disquiet about the enlargement of
NATO we are working the Russians and NATO on a NATO-Russian
charter, which would allow the Russians to do some of the
things that you were talking about in the North Atlantic
Assembly. The charter would allow them to have a voice, but not
a veto, over actions within Europe itself, so that they feel a
part of an economic and political system.
I think the issue here is that we need to see a new Russia,
and they need to see a new NATO. But I am not going to tell you
that they think an enlargement of NATO is terrific for them.
But they are seeking other relationships with NATO and with us
that would minimize their disquiet with the enlargement of
NATO, and that is what we're working on with them.
Senator Campbell. Thank you. I see my time is already
running out, but I just wanted to commend you on your efforts,
since it is a huge task, and I wish you well.
Secretary Albright. Thank you.
Senator Gregg. Thank you, Senator. Senator Domenici.
evidence to support certification of Mexico
Senator Domenici. Mr. Chairman, Madam Secretary, even
though I opposed certification, I totally disagree with Senator
Hollings. I don't believe now is the time to create a major
crisis with Mexico, as that pertains to trying to maintain the
stability of President Zedillo.
I think we ought to do just the opposite, and try to
maintain that. So I want you to carry back to the
administration that if we can get some evidence that Mexico is
going to do something--something as simple as extraditing some
of the felons that are already indicted--that those of us who
are not in favor of certification might very well support the
President, if we can get some action that takes place.
Now, I say this fully aware that Mexico has a terrible
problem, that already they may have such a pervasive negative
effect on their society from this illegal drug money that they
may not be able to fix things.
But I don't think we ought to be party to saying that we
want to bring down Zedillo, or cause that kind of radical
change to occur in Mexico, because nothing will get fixed, and
America will have a bigger mess on its border than it has
today.
U.N. arrearages
Now, having said that, let me suggest a couple of things.
I'm changing the subject to the United Nations and Bosnia. We
have spoken about this. I think when so much is made of America
being in arrears in its U.N. fees--and we are--that perhaps
those in the administration who are saying let's pay up ought
to remind everyone in the world that we're doing far more than
our share of the kind of work that the United Nations ought to
be doing.
I am reminded that we had a briefing on how much we are
spending in Bosnia--and that's not a U.N. effort, but let me
make my point. It is estimated by the Secretary of Defense that
on defense matters only, by the end of this year we will have
spent $6.5 billion in Bosnia, and that we will probably, on the
civilian side, spend $1.1 billion.
Now, I only make that point because those in the United
Nations that complain so bitterly about us failing to make our
dues current, we ought to remind them who would take care of
this Bosnia problem, which is more a U.N. problem than just an
American problem. The ratio of money there is overly on the
side of America, because we have most of the troops, most of
the equipment, most of the advanced technology there.
So I just raise that point with you.
State Department budget request
My last observation has to do with your budget. Frankly,
there are some who would have thought that with a new
Secretary, and the way things were, that you would ask for
bigger increases than you asked for--although I would remind
everyone that overall, all the functions of foreign affairs,
the request is for a 7.6-percent increase.
Now, much of that is a big increase for the U.N. arrearage,
and some things like aid to Russia, which maybe people will
support, a brandnew initiative for about $300 million or so.
Some of us want to help you improve the State Department
and its functionaries overseas, and the things it does. The
only thing I raise is that it may be hard for any function of
Government to get a 7.6-percent increase in a discretionary
account.
I stop there, and perhaps you could comment on what I have
said. It was a pleasure meeting with you yesterday.
Senator Gregg. So said by the chairman of the Budget
Committee.
Mexican progress
Secretary Albright. Thank you very much, Chairman Domenici.
I think we did have a real good meeting yesterday, and went
over a lot of these issues. But let me just say, on the Mexican
issue, exactly the kinds of points that you're raising are the
kinds that the President has asked the Attorney General and
Director McCaffrey and me to keep reviewing, as to what their
arrest and extradition record is going to be, how they're
dealing with the corruption, the money laundering.
Those are the kinds of issues that we are going to be
focusing on.
U.N. arrearages
On the question of the money, let me say that these are
arguments that I have made in the United Nations when I was
there. The thing that I am often reminded of is that other
countries also do contribute in ways beyond their U.N. dues,
and help take care of world responsibilities where they are
active.
One of the reasons why we would like to have a forward
appropriation is because there is going to be a renegotiation
of our assessment rate at the United Nations.
We believe that we are paying too much, and I think that
one of the difficulties--and I think you, as politicians,
understand this even better than I--is that it is hard to
negotiate if you don't have leverage.
And in New York, every time I'd go into negotiations I'd
say I want this and this and this as reform measures, and they
would say fine, but you have created an artificial financial
crisis here, and where is your money.
And even our best friends, the British, came up with a
sound bite they've waited 200 years to say, which is
``representation without taxation.''
So the issue here is that it's important for us to have the
bona fides and up front negotiating leverage in order to lower
our assessment, because I agree with you.
State Department budget request
On the issue of our budget, let me say that for us what has
been so difficult is that there has been a decline in the State
Department budget, and a decline in our purchasing power,
because the budget has been flat or decreasing. We are trying
to reverse that trend. Your help will be very important to us.
We are also trying very hard to do our share for a balanced
budget. And, finally, we have put into place a lot of
management changes, whereby we think we can do more with the
money.
So we are very grateful--and I'm grateful to be among
friends here who are saying ask for more.
Senator Domenici. I'm not sure we said that. [Laughter.]
Secretary Albright. You did, at the beginning.
Senator Domenici. Some might have expected you to----
Secretary Albright. Some might have expected. Slight
liberty here.
But the friends part is true. I think the issue here is we
are going to try very hard to get the resources we need, and a
4-percent increase for us would be very important.
Senator Gregg. I think we are going to want to get to this
forward funding. I know the chairman of the Budget Committee,
like myself, has serious concerns about how that sort of
perverts the budget process, to move that out from underneath,
essentially, the budget and the caps and create a debt that has
to be paid later. But we will get into that. Senator
Lautenberg?
Senator Lautenberg. Thank you, Mr. Chairman.
Senator Gregg. Another on the Budget Committee here.
Senator Lautenberg. Mind you, I'm the ranking member. I
want to give you more. [Laughter.]
Croatian cooperation with War Crimes Tribunal
But anyway, it's good to see you here, and to be able to
get a few matters straightened out. One of the things that's
concerned me is the way war criminals escape prosecution in the
Bosnia-Croatia-Serbia area.
It was our understanding that these indicted war criminals
would be turned over to the International War Crimes Tribunal,
but they have not been. Nonetheless, last year the State
Department gave permission, or an instruction, to the Executive
Director of the World Bank to approve a loan to Croatia, based
on its assessment that they were cooperating and not harboring
persons indicted by the ICTY.
As part of the negotiations with the Croatians at that
time, a man named Timor Blasic, an indicted Croatian war
criminal was arrested, and transferred over to the tribunal.
Croatia has now received a request from the ICTY for documents
that are essential to the trial of this individual.
Do you believe that these documents will be turned over to
the ICTY based on the performance to date, and do you believe
the Croatians will cooperate by ensuring the apprehension of
the remaining indicted war criminals who have been widely
sighted all over the place in the region?
Secretary Albright. Well, first of all, I thank you very
much for your support of the War Crimes Tribunal. We have had
those discussions, and I do think that it is a very important
effort in terms of ultimate reconciliation in the whole region.
And so it's an effort that I think is well worth pursuing,
and while it's not perfect, it is making a difference.
Let me just say on the Croatian-specific issue of these
documents, it is our understanding that the tribunal is
currently in negotiations with the Government of Croatia on
this subject.
We are going to support the tribunal fully in its request,
and we will do whatever we can to press the Croatians on it.
I can tell you that in conversations I have had with the
Croatian Foreign Minister, and other people within their
government, that they understand that we expect them to live up
to their obligations.
And they are very much aware of what it means for them if
they don't cooperate. So we will continue to press them, and
we'll help support the War Crimes Tribunal in its efforts.
foreign assistance for cooperation with War Crimes Tribunal
Senator Lautenberg. Yes; I believe that if we are going to
leave that place in less than 18 months, we want to ensure as
best we can that the killing stops, that the dishonesty stops,
that these fiefdoms are brought into the system.
And I don't think that we can make the case while these
indicted war criminals wander around kind of thumbing their
nose at the rest of the world.
I also believe that foreign assistance, provided
bilaterally, and through the World Bank, can be used as
leverage to secure greater cooperation from the parties to the
Dayton agreement in arresting and transferring the indicted war
criminals.
At the London conference, December 1996, the international
community reaffirmed that the provision of economic
reconstruction assistance is closely linked to cooperation with
the ICTY.
What was our position on the conclusion reached by the
London conference?
Secretary Albright. Our conclusion?
Senator Lautenberg. Yes; our position on the decisions that
they made.
Secretary Albright. Let me say that as an administration we
have, and I especially have, felt very strongly that
cooperation with the War Crimes Tribunal by those nations is
key to ultimately having, first of all, a relationship with us,
cooperation on bilateral assistance, and, ultimately, the
ability, for instance, in the case of Serbia, to rejoin the
international community and get international assistance. All
of this has depended upon their cooperation with the War Crimes
Tribunal.
So I think that it is absolutely essential as a part of
Dayton that there be cooperation. So we have supported this
kind of conditionality, if you want to put it that way.
U.S. support of War Crimes Tribunal
Senator Lautenberg. I would urge you to keep the pressure
on there, and not permit borrowing or encourage loans if we're
not getting what we want and if parties are not living up to
their commitments.
You've been a strong supporter of the International
Criminal Tribunal. I know that. But we have a problem: over 1
year after the Dayton agreement was signed, only 7 out of 74
indicated war criminals are in custody.
These people are seen by journalists and the community at
large, and nothing is being done. So what can we do, would you
say, Madam Secretary?
Secretary Albright. Senator, what we are doing on this is,
first of all we are working with the War Crimes Tribunal
itself, and providing assistance to it in kind, and are major
supporters of it. But we are also now looking at ways to give
greater credibility to the War Crimes Tribunal in their
attempts to get their hands on these various people.
So I can just assure you that it is a very high priority
for us. And we are looking for a variety of options as to how
to give them greater credibility.
I am very proud that sometimes I am called the mother of
the War Crimes Tribunal, and I really do believe that the only
way to actually get reconciliation ultimately is through
justice, and that is why the War Crimes Tribunal is so key.
State Department position on importation of U.S. military weapons that
are considered relics
Senator Lautenberg. Mr. Chairman, I want to ask one other
thing here, and that relates to the State Department's role
under the Arms Export Control Act, regulating the importation
into the country of U.S. military weapons, that are considered
curios or relics.
We're talking about hundreds of thousands, perhaps millions
of guns, that we furnished to governments during World War II,
including M-1 carbines, one of which I carried in that theater.
The Department of State's policy since the late 1980's has been
to advice the BATF to keep these weapons out of the hands of
commercial gun dealers in the United States.
And frankly I believe the State Department is doing the
right thing. But last year, the Senate version of the CJS--this
subcommittee's--appropriations bill included a provision that
would have forced the State Department to approve the
importation of these weapons.
Now, I strongly opposed that provision, along with the
White House, the State Department, and the Treasury Department.
In the end, it was dropped from the bill. Does the State
Department still oppose the importation of these weapons?
Secretary Albright. Well, I know that this is an issue that
has had a lot of attention up here in the last years, and the
State Department is charged, as you have pointed out, in
dealing with the subject. We take this responsibility very
seriously, and we are talking about a large volume of weapons
which could, in fact, be converted to automatic weapons, and
which may be attractive to criminals.
There may be some ideas again coming out of the
subcommittee, and we would need to look at all of them in light
of our responsibilities.
But we understand the problem. We understand the division
of views on it, and we take our responsibility on this
seriously.
Senator Lautenberg. Your opinion is very important, and if
you could make certain that after you've reviewed the matter
you would let us know. Thanks very much.
Senator Gregg. Senator Bumpers.
benefits to the United States of certification of Mexico
Senator Bumpers. Madam Secretary, I know that
decertification would increase the already considerable
hostility of Mexico toward the United States. What do we get
out of it?
Secretary Albright. If we decertify I think that our
problem would be that there would be much increased hostility
from Mexico to the United States. I think all of us who know
history know that the relationship of Mexico and the United
States has been troubled over the years, and that it is
possible to very quickly get people on both sides of the border
excited about the sins of the other.
We have managed, I think, in the last years to have the
best possible relations with Mexico, where we are able to
resolve trade disputes, where we are dealing in an appropriate
way with questions of immigration, where we deal with questions
about environmental legislation.
And we have developed a civilized and very good
relationship with them. They understand that they have a major
national security problem on their hands. They are not denying
the problem. And President Zedillo is also not denying the
problem.
He is working to revamp his whole system. I think that we
basically are denying him the ability to work through the
problem if we create a backlash.
And that is, again, Senator, why I said this is not an easy
decision, but we have to see what the alternative is, and the
breakdown in civility and relationships that it would bring.
sincerity of President Zedillo to cooperate in Drug enforcement
Senator Bumpers. We have no reason to believe through our
intelligence sources, or just because of your own conversations
with Zedillo, that he is not sincere in his efforts to
cooperate with us, do we?
Secretary Albright. On the contrary. He has taken some very
tough steps. There has been a lot of criticism, and justifiably
so, of the fact that Mr. Guttierez, their drug czar, was
somebody that became complicit. But the bottom line is that
Zedillo got rid of him, and he is seeking to find the best
people. He knows he's got a major problem, and he is basically
seeking our support in allowing him to take these very
difficult steps.
budget for the United Nations
Senator Bumpers. On a separate subject, Madam Secretary, as
I understand it, you have a supplemental request for $1 billion
to pay arrearages to the United Nations. And then that leaves
you with a request for an $133 million increase. Is that
correct?
Secretary Albright. Well, our budget request for the United
Nations is divided into two parts. First, we have our attempt
to pay back the arrears, and second, we are asking for a budget
request for the United Nations of $363 million.
Senator Bumpers. Budget request for what?
Secretary Albright. The United Nations.
Senator Bumpers. For how much?
Secretary Albright. Well, it's in several parts. We have a
budget request for the U.N. regular budget of $320 million.
Senator Bumpers. Then $1 billion for arrears?
Secretary Albright. Yes.
percent increase of State Department budget
Senator Bumpers. Now, how much does the State Department
increase amount to?
Secretary Albright. Four percent.
U.S. treatment of Ambassadors and foreign service officers
Senator Bumpers. Madam Secretary, I used to be one of the
members of the peanut gallery when it came to the State
Department, and particularly the Foreign Service. But I have
done 180 degrees on that in the last several years.
I can tell you that our facilities in China are
disgraceful. Our Ambassadors and staff have a very penurious
existence. I was talking to an Ambassador last week, and his
wife, who came home, and I said, did you get your expenses
paid. She said, no; I'm only permitted one trip home a year. I
just happened to find a cheap ticket, so I could come home with
my husband.
I consider that outrageous. Now, we don't allow our spouses
to travel at Government expense, but to say to the wife of an
Ambassador, you only get one expense paid trip home a year is
ludicrous. There ought to be at least two or three trips home.
The Ambassadors are at the beck and call of the State
Department, at your beck and call. You ask Ambassadors to come
home for consultation all the time. And sometimes they are here
for 10 or 12 days, but their spouses can't come.
Last summer there were about six Senators in Mongolia. The
Ambassador's wife spent--we went over to the Ambassador's house
twice. There aren't too many four-star restaurants in
Ulaanbaatar.
And we went over to the Ambassador's residence twice, and
his wife spent most of the evening in the kitchen, because they
didn't have any help. They couldn't afford any help.
And every place you go you find that kind of situation, and
I think it's terrible to treat people who are true public
servants, who are serving, sometimes at some sacrifice to
themselves, to make them live like paupers. I don't think it's
a good reflection on the United States, but above all, it's
demoralizing to the Foreign Service Corps.
Thank you, Mr. Chairman.
coordination of efforts to fight Terrorism
Senator Gregg. Thank you. I would second that statement. I
think the way we will proceed is to go to some more questions
and see if we can't wind through all this.
The first issue is one that I have. It's an issue that I
have been raising, but I am still not comfortable with the
answers that I have been getting. It goes to the issue of
terrorism, and the management of it at the highest levels
within the administration.
We have four different agencies that are primarily
responsible. We have the State Department; we have the Justice
Department, specifically, the Federal Bureau of Investigation
[FBI]; we have the Central Intelligence Agency [CIA]; and we
have the Defense Department.
While talking with the Chairman of the Joint Chiefs
yesterday at another hearing in another subcommittee, I asked
him the question, do you think there is adequate coordination
between the four departments, and he felt that there was
adequate coordination between Defense and CIA, but he did not
feel that there was adequate coordination between State,
Defense, and the FBI; and Defense and FBI and CIA and vice
versa.
The problem is that it does not appear to me, even though
there are structures in place to do this, that there is a sense
of urgency coming from the top to get all the parties in a
room--and by parties, I mean the senior people, yourself, the
Chairman of the Joint Chiefs, the Director of CIA, the Attorney
General, and the Director of the FBI at least once or twice a
month, and analyze how your different agencies are cooperating
in anticipating threats.
I'm not talking about responding to an event. I think we've
got structures for that. I am talking about anticipating where
the threat comes from, and how we should coordinate the effort.
I would like to get your thoughts on whether you feel we
are doing enough in this area of coordinating the core
agencies, and whether or not we are doing enough in the area of
anticipating threat, and communicating that to people who have
responsibility for responding.
Secretary Albright. Mr. Chairman, let me say that we are
all very appreciative of the interest that you have taken in
this area, because we all feel a great sense of responsibility
ourselves, obviously, for the lives of people that are abroad.
And I appreciate very much what Senator Bumpers was saying
about how difficult life is for many diplomats. Everybody
thinks it's so glamorous, but it is not so. And being exposed
to terrorism is one part of why it's a lot less enjoyable, I
think, being an Ambassador these days than in previous times.
I appreciate what you are saying, and I think that it is my
belief that there is good coordination. But I am new on this
job, and I am going to take a closer look at it in terms of a
regular coordinating mechanism on it.
I am going to maintain the Office of Coordinator for
Counterterrorism that we have in the Department. I think you're
right, there probably needs to be a closer, structured way for
the agencies to work together.
We do talk all the time. There is no question about that.
It is very high on our minds. We talk about it in a variety of
meetings where agency heads get together. But I think perhaps
given the nature and the immediacy of many of these threats, we
should take a closer look at it.
But I assure you that I see it as my highest
responsibility, to make sure that American citizens abroad are
not unduly exposed to terrorist threats. It is the biggest
problem that we have, and we will work with you on that.
Senator Gregg. Well, I would take it one step farther. I
personally believe that the single biggest threat to Americans
in the United States, in the continental United States, and
including our two States that are not within our continental
borders, that the biggest threat in the next 10 to 15 years to
our security is not a war. It's an act of terrorism involving a
chemical, biological, or nuclear weapon.
And I just don't feel that we are doing enough to
coordinate the effort to anticipate. Theoretically, and
legally, the National Security Council has the obligation to do
this. But it doesn't have the clout to do it. It really needs
to be done by having, in my opinion, you and the Secretary and
the Attorney General and the Chairman of the Joint Chiefs, and
the Director of CIA sit in a room at least regularly enough
until you get the systems in place to actually have it work.
Because I don't think it's working right now. And I would
appreciate it if you took a hard look at that.
I do think, if I were to analyze it from my exposure to
this, and I've tried to take an in-depth look at it, that
probably the State Department is the weakest link in the
exercise right now, especially in the field.
And the amount of communication that occurs within the
different agencies is not at the level it needs to be. It's
there, and I know everybody is sincere about it. I don't doubt
that for a minute, and I know everybody puts it on their agenda
and they talk about it. I just don't think we're getting it.
Secretary Albright. I understand that. Let me also say that
you have pointed to a very important problem, which is the
chemical weapons, and that is one of the prime reasons that we
need to have your advice and consent on the chemical weapons
convention.
Senator Gregg. That's another subject.
Secretary Albright. But I do think that it points to the
fact that we do see there is a threat. There is no question.
And I think that you have pointed out very serious problems. We
are working on them, and I take it as a very serious point,
obviously, in terms of my own responsibility, and I will be
talking with you and with my colleagues.
Senator Gregg. I want to get into a couple of other issues,
but let me turn to Senator Hollings first.
Senator Hollings' comments on certification of Mexico
Senator Hollings. Right to the point again, Madam
Secretary, and we know the certification, we have had
certification from the very same people. We were certified, for
example, on NAFTA, that it was going to create 200,000 jobs,
and instead the United States lost 300,000 jobs.
It was certified that it was going to bring about a
wonderful increase in the balance of trade for the United
States. It has gone from the plus of five to a minus $16
billion.
We said it was going to solve the immigration problem. On
the contrary, it has exacerbated it. It was said that if we
didn't vote for it, that Asia folks were going to move in.
They've moved in, and now they're dumping right into the open
market here, at predatory prices.
We said that this is the one chance for the average Mexican
to really improve his particular lot, and now on January 17,
and I quote Lawrence Summers, who is more or less the daddy
rabbit of the whole movement at that particular time, he says
the average Mexican is far worse off today than what he was
prior to NAFTA.
So when the same crowd comes with the certification, and we
hear--and the deepest respect to you, because I know if they
had put me on as Secretary of State I'd have gotten the same
thing, the boilerplate that they give out--here it is.
Four years ago, the best of the best, a quote on this very
topic from Secretary Warren Christopher: ``President Salinas
has tripled Mexico's antidrug budget, tackled the related
problem of corruption, taken on the drug barons, many of
Mexico's most notorious drug traffickers are now behind bars.
This is breakthrough to progress''--on and on and on.
Now, I am fully aware of the demand, and some would get off
into that, and that's a good point to be made, as it were, if
not for U.S. demand this drug country wouldn't be being
financed. We're the ones financing it. And I'm trying to work
on that phase of it.
But I did not say to bring down Zedillo, as the Senator
from New Mexico, Senator Domenici, inferred that I said. On the
contrary, I said let's not certify, but rather decertify, and
it could well help President Zedillo get on the top of things
there.
You know, as you said, we've had a history of talking about
the sins of each other over the many, many years. If Zedillo
really had some authority to do all these things we're asking
him to do, our decertification would strengthen--he'd say that
gringo from the north--because I've heard this.
I was down there one time with President de la Madrid, and
man, it was hugs and kisses and we were working together fine
and what have you. And we went all the way down to the car, and
I forgot a jacket. Went all the way back up, and he was then
briefing the Mexican press--and telling the press ``I told
those gringos from the north to bug off. We told them we're not
going to submit''--we never had any of that conversation at
all.
So they used us. I know a little bit about Mexican
politics. So if you have this saying we're not going to take it
anymore, because it's really now getting into the gang warfare,
and it's getting into not just California and the west coast,
but the inner cities all over this country, we've got to come
and get a grip of ourselves, and not shill for the financial
boys up at Wall Street, and the success of NAFTA by covering up
the total failure of this so-called relation in drugs.
As General McCaffrey said, he said, well, this would just
cut off any chance to work with our friends. I'm absolutely
convinced we've got the wrong friends, and they ought to know
that we think they're the wrong friends.
Now, if they're so weak that we are propping them up just
on this one little decertification, they ought to get out.
Because nothing's going to happen, in spite of all the
promises.
On the other hand, we may get something done, because I can
tell you here and now we are on the wrong track. It is the same
act, same scene.
funding request for China
Going to China, Madam Secretary, you only asked for $3
million. And Jim Sasser has got in this little book, ``China
2000'', has a need for $95 million in the short term. The truth
is that our facilities are an embarrassment.
I was in China last year. The United States is using the
old Pakistani facilities that we got back in the seventies. And
Ambassador Sasser outlined a need there for some $95 million,
if I remember correctly. And your fiscal year 1998 budget asks
for only $3 million. That's a drop in the bucket. You can't
start to do anything.
It's not just the wife having to do the cooking, because I
know Miriam, and she does good cooking; $89 to 95 million. You
can see his little chart there.
Secretary Albright. I've seen it. I've been there. Yes.
Senator Hollings. You've been there. Well, then I know you
sympathize with me. Let's you and I both get on OMB and the
White House.
Senator Gregg. On that point----
Senator Hollings. Yes, sir.
Senator Gregg. Am I incorrect in understanding that you're
using some of the money which you plan to generate from selling
these properties, and the priority of the first of that money
is China?
Secretary Albright. Yes; that is correct. Part of the issue
here is that we hope to be able to finance a large part out of
asset sales in other parts of the world. But because one can't
always gear exactly the right time to sell, we have to make
sure that we're selling at a good price in other places.
And China, we plan to fund the major portion of this out of
other asset management sales. But I agree with you. It is
pretty miserable.
retention of Fees proposal
Senator Hollings. With respect, I would get back to the old
accounting. We got into that asset sales thing, and that crisis
selling, downtown Buenos Aires and a lot of good valuable
properties, because we can make a heck of a lot of money and
satisfy budget problems in the short run, but it is very, very
damaging to the Department of State and the United States of
America in the long run.
Specifically these fees, there, $140 million in visa fees.
Now collected and retained by the Department. But under this
budget they would go on budget, and instead of going to the
State Department, we would have to increase your budget just to
keep you in place.
So that's the kind of--this is OMB shenanigans, on China,
on selling property, on visa fees. If you let those number
crunchers take you all, that's why--well, let's go right to the
point.
The President's budget proposes a $1 billion increase in
foreign aid, and they give you $60 million, to the Department
of State. AID gets an almost 9-percent increase, and you get a
mere 2 percent, which does not keep up with inflation.
Secretary Albright. You are asking something very difficult
of me, Senator. The fact is that for American foreign policy
purposes, we need a full budget, which requires aid as well as
the people to dispense it.
We are trying very hard to maximize the money that we can
get. We have this proposal, actually, that most fees be
returned to the State Department. We hope that now 25 percent
of our budget will, in fact, come from this new fee proposal.
Because it links the resources to the people that actually
do the job. So we are trying very hard to live within a
balanced budget, and to try to maximize what we have.
And it's not easy, but we have to prioritize and do what we
can. I am very admiring of our diplomatic service, who have
made a career choice that is a very difficult one, and I want
to do everything I can to support them.
So I appreciate your support of them also.
consolidation of the State Department
Senator Hollings. Well, as I said a little bit earlier, Pat
Kennedy and Richard Greene have worked hard in developing that
international cooperative administrative system and charging
these other departments.
Why not embellish that even further by adding
telecommunications and facilities? We ought to be charging
agencies for that, too.
Because I am the admirer of you and the Department, and
what I want to do is get every dime we can over here, because
they have foreign aid getting a $1 billion increase, and you're
supposed to be in charge of foreign policy. We've got the tail
wagging the dog.
What about Senator Helms' proposition to bring AID and all
of that disparate group under the Secretary? Because once when
I traveled to Africa, they said they think the Ambassador down
there is in charge, but we're in charge up here with AID.
I see that, as a lay Senator, going around. That's no way
to get a good, strong Secretary going like yourself.
Secretary Albright. You're trying to----
Senator Hollings. Well, I learned this like you, from
Muskie. [Laughter.]
Secretary Albright. Now, let me say that obviously there is
a question as to how to reorganize and reinvent, and, as I said
when I testified at my confirmation hearings, I have an open
mind.
We are now looking at a variety of ways to see how we could
make everything more efficient for pursuing American interests.
I will be back to all of you on that. But I think it is
important to streamline and organize ourselves for the kinds of
issues and threats, problems that we're now dealing with. And
we must prepared for the 21st century as other Senators have
said.
So I appreciate very much what you are saying.
Senator Hollings. Thank you, ma'am. And I hope you can help
persuade some over in the White House, because it was going
good. We had Democrats on the Foreign Relations Committee that
were going and moving along with Chairman Helms on this
initiative, and then the White House came around, and failed it
before it could get started.
But it is a good move to get you better coordinated and
working. Mr. Chairman, you have been very indulgent of me, and
I have some other questions, and I have them just for the
record.
Thank you very, very much.
Senator Gregg. Let me follow up. First, I want to endorse
Senator Hollings' view of going forward with reorganization.
Vice President Gore had it right the first time, and we should
bring the Arms Control and Disarmament Agency [ACDA] and AID
under your control. There is no reason we should have these
agencies outside of the control of the Secretary of State. It
is clear you should have operational control over what is
essentially foreign policy. When you come back with your
reorganization plan, we hope you will make this committee happy
along with Foreign Affairs.
Senator Hollings. You're a strong Secretary. You can get it
done.
retention of Fees proposal
Senator Gregg. That's right. On the fee issue, I see this
as a potential major problem for your Department. What OMB has
done is play games with these fees. I am not sure how Senator
Domenici is going to handle this, but knowing Senator Domenici,
he is not going to tolerate it. As a result, you may end up
with a $455 million hole in your budget because of what OMB has
done here.
Now, theoretically this can be avoided, and subsequently
can be avoided, if we get the proper allocation. But this is a
big problem. I think OMB has set you up, along with a number of
other groups. I do not expect you to say they have--but they
have.
Secretary Albright. Well, on the subject, let me just say
that we recognize the fact that this is a complex proposal. It
is Governmentwide. And it is something that OMB is dedicated
to, and will be pushing very hard for. I think that we see no
reason that this proposal will fail. As I said, it's too big to
fail.
Senator Gregg. The reason it will fail is because it's an
accounting mechanism to raise the discretionary caps by $3
billion across the Government. We're not going to do that.
Secretary Albright. But actually, Mr. Chairman, we need to
talk more about it. We see it as kind of a good Government
approach, which is to link the resources to the people that
actually do the work. What this means, for instance, in our
case, is that when more people want visas and passports, which
require more people to do it, there will be a direct resource
link with the fact that Americans are traveling abroad much
more, and that they need more assistance. The fee proposal
creates a link between those who take in the fees and those who
actually do the work.
Senator Gregg. I would agree with that, if it hadn't been
used for the purposes of basically arbitrarily raising the
discretionary caps. And that is the goal. It wasn't good
Government. If they wanted to do good Government, they wouldn't
have ended up with a cap. But that's another issue. I just
think you have got to be sensitive. Hopefully, we'll get the
allocation in this, so we will not have to deal with that
problem.
advance appropriation for Arrearages
In another area, just like this, that creates all sorts of
budgetary issues for us is the $921 million advance
appropriation. That's essentially an attempt to get us out of
this budget window, which means it will be outside of
aggravating this year's deficit projection. It becomes a
problem for us, even if we were to agree to it. There's great
resistance to doing it, because we'd have next year on our
plate. So we are working on this, and our intention is to reach
an agreement that everybody is comfortable with.
I think we've got to come up with a way to fund the $921
million outside of the advanced appropriation. I have looked
through your budget and it does not appear to me that we have
an extra $921 million sitting anywhere. We are going to have to
look for some places to find some money. That's the way I see
it in order to do this. And I was thinking the Advanced
Technology Program might do about one-third of this, right?
There are other departments we could look at.
The National Endowment for Democracy would be a nice way.
But this is something that we're going to have to work on. It
is a real problem, where we get the money. As I have said,
we're going to come up with some system that I think will
address your problems, but finding the money is going to be a
big issue.
Secretary Albright. I appreciate very much your desire to
want to work with us. I think that the issue here is to try to
figure out a mechanism that will allow us to let the people in
New York know that we are going to push for the reform, and
that the money is there, if they reform.
This is the mechanism that we have thought of. I think we
are very appreciative of the fact that we are working in
various groups to try to resolve this, because I think we now
all understand the necessity of getting a United Nations that
functions better for all of us, and makes it easier for people
that are negotiating for the United States to have something in
their back pocket that provides the leverage that you need for
this kind of negotiation.
Senator Gregg. I guess my caveat to you is you need to have
your people who are thinking along these terms, think about
where to find this money if we go into advance funding. It's
obviously subject to some sort of fencing agreement, but there
has to be the money.
Capital investment fund
I notice you have $40 million in your budget for an
increase in funding for technology. You call it capital
improvement or something like that, but I think it's mostly
technology, rising from $27 million to $60 something million.
Is that for your communications systems primarily?
Secretary Albright. Yes; it's an attempt to modernize
ourselves in terms of trying to get better communications,
generally technology improvements. It's part of our whole
management effort.
Senator Gregg. Now, is there another bill that's going to
come to us next year on this? Is this the last payment on
upgrading communications systems?
Secretary Albright. This is an ongoing improvement. We will
get to you what is coming on. But we are trying to do it
systematically.
We are also going to try, as Senator Hollings was getting
at, to cooperate on our technology systems together. It is
appalling that we have a diplomatic service every place in the
world, but we do not have adequate modern ways of
communicating. For example, we have to update our e-mail
systems and generally----
Senator Gregg. I don't argue the need--I think the need is
important. I don't even argue that amount. I am going to try,
with Senator Hollings, to fund the whole amount.
I am wondering about what the out-year plan is.
Secretary Albright. We have provided our overall
information plans.
Senator Gregg. How much technology are you planning to buy?
Whether you are going to buy it in some sort of orderly
fashion? We've had some problems with other agencies who have
bought technology that did not work. We don't want to go
through that with you. So do we have somebody looking at how
this is being purchased? Or is it being done in house? There
are big problems where it's being done in house with another
agency. They probably should have gone over to the Defense
Department to use some of their expertise in how to buy this
stuff. I would be interested in knowing about your plans.
Secretary Albright. Let me have some of my experts talk to
you.
Senator Gregg. OK.
importance of State's economic officers
Senator Hollings. Of course, the Secretary did say NED.
Years ago I thought it was killed, but then you got the
printing presses in Indiana, over into Europe, and it helped
create free elections.
But on a very important subject that you run into on the
House side, that Chairman Gregg and I see it, with respect to
the State Department economic counselors, and the Commerce
Foreign Commercial Service attaches, both are needed in my
judgment.
What happens is the Foreign Commercial Service is of a
character, the chamber of commerce is there, meeting, greeting,
out trying to get information for exports and getting visiting
business folks there to help them get contracts.
The economic counselor does an outstanding job in
counseling with respect to these trade agreements, the far more
sophisticated and otherwise. But the House has tried to get rid
of the economic counselors under our budget.
And I want to keep that economic service going, because
there is a very strong move of the multinationals to get rid of
them, because they interfere with this give it all away and
everything else like that.
It shows itself in the Multinational Times, the New York
Times. The membership for China here, the concluding sentence
says, congressional interference serves no good purpose.
Here under article I, section XVII of the Constitution, not
the Executive, not the Supreme Court, but the Congress shall
regulate foreign commerce. And yet they got the arrogance to
say that we interfere.
Senator Gregg. New York attitude.
Senator Hollings. Yeah, that's exactly right. So that
attitude is against your economic counselors, and they do an
outstanding job in helping us with trade matters, and getting
these agreements.
Thank you, very, very much, Mr. Chairman.
Secretary Albright. I think, Senator Hollings, in my most
recent travels around, I can see more and more the importance
within our Embassies of economic activities, whether they be
the analytical ones that are necessary, or those that are out
really helping American business.
So I also know a lot about the commerce clause. So I do not
see this as interference.
Senator Gregg. Well, we appreciate your time. I do want to
reinforce that this $900 million is not going to fall out of
the sky, as is proposed by the present budget. And we're going
to have to find some way to get it.
Additional committee questions
But I certainly do appreciate your taking your time to come
today.
Secretary Albright. Thank you very much, Mr. Chairman. I
appreciate it.
[The following questions were not asked at the hearing, but
were submitted to the Department for response subsequent to the
hearing:]
Questions Submitted by Senator Pete V. Domenici
state department reorganization
Question. My question to you Madam Secretary is, do you agree with
my assessment of the need for reorganization and consolidation of the
U.S. foreign policy apparatus?
Answer. Given the many changes and the new challenges we face after
the Cold War and as we approach the Twenty-first Century, I agree that
we need to reinvent the foreign affairs agencies and that this will
require some integration of agencies into the State Department, as it
will also require significant changes within our Department itself. I
also agree that such efforts can free up some resources for
reinvestment into the infrastructure and other shortfalls faced by the
State Department. But I would caution against any belief that
organization changes can provide major savings.
Question. As you know, the authorizers are ready to start on a
bill. What schedule do you plan to follow with respect to submitting a
reorganization plan to Congress?
Answer. On April 18, the President released the attached fact sheet
setting forth his plan for reintegrating and reinventing the foreign
affairs agencies. The Administration proposes to submit a plan for
implementing these changes within 120 days from May 1. The
Administration's plan will call for integrating ACDA into the State
Department within a year from when the above mentioned plan is
completed, to integrate USIA into the State Department within two
years, and to integrate some specified USAID function into the State
Department. As part of this plan, we will also undertake major
reinvention efforts within the State Department. Since broad
legislative authorities will be needed the Administration has also
submitted the following legislative provisions to the authorizing
committees which we wish to see enacted as soon as possible.
______
[White House Press Release Fact Sheet]
The White House,
Office of the Press Secretary,
April 18, 1997.
Reinventing State, ACDA, USIA and AID
the era of big government is over.--bill clinton
President Clinton's plan brings an end to bureaucracies originally
designed for the Cold War, streamlines the Executive Branch's policy-
making process, and enhances our nation's ability to meet the growing
foreign policy challenges of the 21st century. It puts matters of
international arms control, sustainable development, and public
diplomacy where they belong, at the heart of our foreign policy within
a reinvented Department of State. It incorporates key lessons from the
private sector.
The Plan:
The State Department will undertake a new round of internal
reinvention to incorporate new organizations and to manage new
responsibilities. This reinvention will make the new State Department
more effective and efficient and better able to defend American
interests and promote American values abroad.
The Arms Control and Disarmament Agency will be fully integrated
with State within one year by merging both agencies' related arms
control and nonproliferation functions. The ACDA Director will be
double-hatted as the Under Secretary of State for Arms Control and
International Security Affairs, and then the two positions will be
merged as Under Secretary/Senior Advisor to the President and Secretary
of State, which will be able to communicate with the President through
the Secretary of State. ACDA's unique advocacy role will be preserved
and the policy process supporting those efforts will be strengthened
through additional interagency responsibilities. Along with ACDA's
technical and policy expertise, its verification, compliance, and legal
functions will be preserved.
The United States Information Agency and the State Department will
be integrated over a two year period. During that process, the Director
of USIA will be double-hatted as the new Under Secretary of State for
Public Diplomacy. This process will likely begin with an integration of
related functions, such as legislative and public affairs; after that,
the integration process will turn toward USIA's overseas press
expertise and State's press offices. The distinctiveness and editorial
integrity of Voice of America and the broadcast agencies will be
respected. A new bureau will be created within the State Department to
handle cultural and exchange issues.
The Agency for International Development will remain a distinct
agency, but will share certain administrative functions with State and
will report to and be under the direct authority and foreign policy
guidance of the Secretary of State. Within two years, AID will
integrate its press office and certain administrative functions. The
International Development Cooperation Agency, created in 1979, will be
abolished. The Secretary of State and AID administrator will recommend
what further steps might be taken to eliminate duplication.
The President's plan was the result of a long and deliberative
process under the leadership of Vice President Gore. This
reorganization plan enjoys the support of the Secretary of State and
the heads of ACDA, AID and USIA. In developing this plan, the Vice
President worked from three guiding principles:
The programs of ACDA, USIA, and AID must be preserved. Sustainable
development, nonproliferation, and public diplomacy are now more
central than ever to American foreign policy; our institutional
arrangements should reflect that. Moreover, there is no better time
than the present to launch this process, at the outset of a new term, a
new Congress, and with a new Secretary of State.
Complexities must be fully acknowledged. Reinvention and
integration should take into account the central and continuing
importance of reform of all of the agencies including the State
Department, the relative complexity of the smaller agencies and
anticipated level of difficulty in merging and integrating them, and
the need to preserve the unique skills and capabilities inherent in
each of the agencies. Any reorganization plan should be designed around
our greatest strength--the abilities and expertise of the dedicated
public servants who work in those agencies.
The Executive and Legislative Branches must cooperate on foreign
affairs. The need for reorganization in the foreign policy agencies is
also recognized by key members of Congress. Their views and expertise
on these matters should inform our process. Our ability to work
together with the Congress on this endeavor should encourage our
bipartisan approach toward foreign policy matters.
After much deliberation, the plan the Vice President devised
strikes a sound balance between the need for greater policy coherence
and effectiveness with the necessity of preserving the special missions
and skills of the three smaller agencies.
______
amendment regarding reinvention of the foreign affairs agencies
(a)(1) Strike Title II of Division A and renumber the subsequent
titles and sections accordingly.
(2) Strike the following sections, for the purpose of conforming
Division B to this amendment, and renumber the remaining provisions
accordingly: 1301, 1303, 1304, 1305, 1306, 1321, and 1707.
(b) Insert the following new title at the end of Division B:
TITLE XVIII--REINVENTION OF THE FOREIGN AFFAIRS AGENCIES
SEC. 1801. SHORT TITLE.
This Title may be cited as the ``Foreign Affairs Agencies
Reinvention Act of 1997.''
SEC. 1802. REINVENTION OF THE FOREIGN AFFAIRS AGENCIES.
The Congress of the United States makes the following findings:
(1) With the end of the Cold War, the international
challenges facing the United States have changed, but the
fundamental national interests of the United States have not.
The security, economic and humanitarian interests of the United
States require continued American engagement in international
affairs. The leading role of the United States in world affairs
will be as important in the twenty-first century as it has been
in the twentieth.
(2) In this context, the United States has an historic
opportunity to continue the reinvention of the agencies
primarily responsible for implementing the nation's foreign
policies.
(3) The continuing reinvention of the foreign affairs
agencies, the Department of State, the Arms Control and
Disarmament Agency, the United States Information Agency, the
International Development Cooperation Agency and the United
States Agency for International Development, must ensure that
these agencies can effectively confront the new and pressing
challenges of the post-Cold War world.
(4) The reinvention of the foreign affairs agencies
recognizes the fact that arms control and nonproliferation,
sustainable development, and public diplomacy are now more
central than ever to the success of U.S. foreign policy. Any
integration of these agencies should preserve the unique skills
and capabilities of each of the agencies in a reinvented
Department of State.
(5) A streamlined, reorganized and more flexible foreign
affairs structure under the strengthened leadership of the
Secretary of State can more effectively promote the
international interests of the United States and enhance the
United States' ability to meet the growing foreign policy
challenges during the next century.
SEC. 1803. PURPOSES.
The purposes of this title are--
(1) to provide for the reinvention of the Department of State
to enable it better to incorporate additional functions and
agencies, manage new responsibilities, and make the Department
more effective and efficient and better able to defend American
interests and promote American values abroad;
(2) to integrate certain agencies and certain functions of
other agencies of the United States into the reinvented
Department of State; and
(3) to strengthen--
(A) the coordination of United States foreign policy;
and
(B) the leading role of the Secretary of State in the
formulation and articulation of United States foreign
Policy.
SEC. 1804. DEFINITIONS.
For the purpose of this title--
(1) ``agency'' means the Department of State, the Arms
Control and Disarmament Agency, the United States Information
Agency, the International Development Cooperation Agency, and
the Agency for International Development;
(2) ``reorganization'' means integration, transfer,
consolidation, coordination, authorization, or abolition,
referred to in section 1805 of this title; and
(3) ``officer'' is not limited by section 2104 of Title 5 of
the United States Code.
SEC. 1805. REORGANIZATION PLAN FOR REINVENTING THE FOREIGN AFFAIRS
AGENCIES.
(a) No later than 120 days after the enactment of this Act, the
President shall submit to the Congress a reorganization plan for the
foreign affairs agencies specifying the reorganization of the
Department of State, the Arms Control and Disarmament Agency, the
United States Information Agency, the International Development
Cooperation Agency, and the Agency for International Development. Such
plan may provide for--
(1) the transfer of the whole or a part of an agency, or of
the whole or a part of the functions thereof, to the
jurisdiction and control of the Department of State;
(2) the abolition of all or a part of the functions of an
agency, except that no enforcement function or statutory
program shall be abolished by the plan;
(3) the consolidation or coordination of the whole or a part
of an agency, or of the whole or a part of the functions
thereof, with the whole or a part of another agency or the
functions thereof;
(4) the consolidation or coordination of a part of an agency
or the functions thereof with another part of the same agency
or the functions thereof;
(5) the authorization of an officer to delegate any of the
officer's functions; or
(6) the abolition of the whole or a part of an agency which
agency or part does not have, or on the taking effect of the
plan will not have, any functions.
(b) Such plan shall provide that--
(1) with respect to the Department of State, the Department
shall undertake a new round of internal reinvention to
incorporate new organizations and to manage new
responsibilities;
(2) with respect to the Arms Control and Disarmament Agency--
(A) within one year of the effective date of the
reorganization plan for the foreign affairs agencies,
the Arms Control and Disarmament Agency shall be fully
integrated with the Department of State by merging both
agencies' related arms control and nonproliferation
functions;
(B) the positions of the Director of the Arms Control
and Disarmament Agency and the Under Secretary of State
for Arms Control and International Security Affairs
shall be merged as the Under Secretary/Senior Advisor
to the President and the Secretary of State, which will
be able to communicate with the President through the
Secretary of State;
(C) the Arms Control and Disarmament Agency's unique
advocacy role shall be preserved and the policy process
supporting those efforts will be strengthened through
additional interagency responsibilities; and
(D) along with the Arms Control and Disarmament
Agency's technical and policy expertise, its
verification, compliance, and legal functions shall be
preserved;
(3) with respect to the United States Information Agency--
(A) within two years from the effective date of the
reorganization plan for the foreign affairs agencies,
the United States Information Agency and the Department
of State shall be integrated;
(B) a new Under Secretary for Public Diplomacy shall
be established; and
(C) the distinctiveness and editorial integrity of
the broadcast entities shall be respected; and
(4) with respect to the United States Agency for
International Development--
(A) the Agency shall remain a distinct agency, but
shall share certain administrative functions with the
Department of State and report to and be under the
direct authority and foreign policy guidance of the
Secretary of State;
(B) within two years from the effective date of the
reorganization plan for the foreign affairs agencies,
its press office and certain administrative functions
shall be integrated with the Department of State; and
(C) the International Development Cooperation Agency
shall be abolished.
(c) The President shall have the reorganization plan for the
foreign affairs agencies delivered to both Houses on the same day and
to each House while it is in session. If either House is out of session
at the end of the 120 days after the enactment of this Act, the plan
shall be submitted on the first day thereafter when both Houses are in
session. The President's message shall include an implementation
section which shall (1) describe in detail (A) the actions necessary or
planned to complete the reorganization, (B) the anticipated nature and
substance of any orders, directives, and other administrative and
operational actions which are expected to be required for completing or
implementing the reorganization, and (C) any preliminary actions which
have been taken in the implementation process, and (2) contain a
projected timetable for completion of the implementation process. The
President shall also submit such further background or other
information as the Congress may require for its consideration of the
plan.
(d) Any time during the period of 60 calendar days after the date
on which the plan is transmitted to it, but before any joint resolution
described in section 1809 has been ordered reported in either House,
the President may make amendments or modifications to the plan,
consistent with sections 1805-1807 of this title, which modifications
or revisions shall thereafter be treated as a part of the
reorganization plan originally transmitted and shall not affect in any
way the time limits otherwise provided for in this title.
SEC. 1806. ADDITIONAL CONTENTS OF REORGANIZATION PLAN.
A reorganization plan for the foreign affairs agencies transmitted
by the President under section 1805 of this title--
(1) may provide for the appointment and pay of one or more
officers of any agency, including appointment of additional
Under Secretaries and Assistant Secretaries (not to exceed the
number, respectively, of officers authorized at Executive
Levels III and IV of the transferring agencies), if the
President finds, and in his message transmitting the plan
declares, that by reason of a reorganization made by the plan
the provisions are necessary;
(2) shall provide for the transfer or other disposition of
the records, property, and personnel affected by a
reorganization;
(3) shall provide for the transfer of such unexpended
balances of appropriations, and of other funds, available for
use in connection with a function or agency affected by a
reorganization, as the President considers necessary by reason
of the reorganization for use in connection with the functions
affected by the reorganization, or for the use of the agency
which shall have the functions after the reorganization plan is
effective;
(4) shall provide for terminating the affairs of an agency
abolished;
(5) may provide that provisions of law applicable to a
transferring agency remain applicable only to transferred
functions of that agency; and
(6) shall designate which provisions of law requiring the
establishment of specified positions are no longer effective.
If the reorganization plan for the foreign affairs agencies transmitted
by the President contains provisions required by paragraph (3) of this
section, such plan shall provide for the transfer of unexpended
balances only if such balances are used for the purposes for which the
appropriation was originally made or for the purpose of reorganization.
SEC. 1807. LIMITATION ON POWERS.
The reorganization plan for the foreign affairs agencies submitted
under this title may not provide for, and a reorganization under this
title may not have the effect of--
(1) creating a new executive department or renaming an
existing executive department, or abolishing or transferring an
executive department or all the functions thereof;
(2) authorizing an agency to exercise a function which is not
expressly authorized by law at the time the plan is transmitted
to Congress; or
(3) creating a new agency which is not a component or part of
an existing agency.
SEC. 1808. REFERRAL OF PLAN AND JURISDICTION OVER RESOLUTIONS.
The reorganization plan for the foreign affairs agencies submitted
pursuant to this title and any joint resolution with respect to such
plan shall be referred to the Committee on Foreign Relations of the
Senate and the Committee on International Relations of the House (and
all joint resolutions with respect to the such plan shall be referred
to the same committee) by the President of the Senate or the Speaker of
the House of Representatives, as the case may be.
SEC. 1809. EFFECTIVE DATE, DISAPPROVAL AND PUBLICATION OF
REORGANIZATION PLAN FOR THE FOREIGN AFFAIRS
AGENCIES.
(a) Except as provided under subsection (c) of this section, a
reorganization plan shall be effective upon such date as the President
shall determine to be appropriate and announce by notice published in
the Federal Register, which date may be not earlier than 120 calendar
days after the President has submitted the reorganization plan for the
foreign affairs agencies, and such plan shall become effective then
only if the Congress does not enact prior to that date a joint
resolution disapproving the plan.
(b)(1) Any joint resolution disapproving the reorganization plan
for the foreign affairs agencies shall be considered in the Senate in
accordance with the provisions of section 601(b) of the International
Security Assistance and Arms Export Control Act of 1976.
(2) For the purpose of expediting the consideration and enactment
of any joint resolution disapproving the reorganization plan for the
foreign affairs agencies, a motion to proceed to the consideration of
any such resolution after it has been reported by the appropriate
committee shall be treated as highly privileged in the House of
Representatives.
(c) Under provisions contained in a reorganization plan for the
foreign affairs agencies, any provision thereof may be effective at a
time later than the date on which the plan otherwise is effective.
(d) A reorganization plan for the foreign affairs agencies which is
effective shall be printed (1) in the Statutes at Large in the same
volume as the public laws and (2) in the Federal Register.
SEC. 1810. EFFECT ON OTHER LAWS, PENDING LEGAL PROCEEDINGS, AND
UNEXPENDED APPROPRIATIONS.
(a) A statute enacted, and a regulation or other action made,
prescribed, issued, granted, or performed in respect of or by an agency
or function affected by a reorganization under this chapter, before the
effective date of the reorganization, has, except to the extent
rescinded, modified, superseded, or made inapplicable by or under
authority of law or by the abolition of a function, or otherwise by
operation of the reorganization plan for the foreign affairs agencies
under this title, the same effect as if the reorganization had not been
made. However, if the statute, regulation, or other action has vested
the functions in the agency from which it is removed under the
reorganization plan, the function, to the extent which it is to be
exercised after the plan becomes effective, shall be deemed as vested
in the agency under which the function is placed by the plan.
(b) For the purpose of subsection (a) of this section, ``regulation
or other action'' means a regulation, rule, order, policy,
determination, directive, authorization, permit, privilege,
requirement, designation, or other action.
(c) A suit, action, or other proceeding lawfully commenced by or
against the head of an agency or other officer of the United States, in
his official capacity or in relation to the discharge of his official
duties, does not abate by reason of the taking effect of a
reorganization plan under this title. On motion or supplemental
petition filed at any time within twelve months after the
reorganization plan takes effect, showing a necessity for a survival of
the suit, action, or other proceeding to obtain a settlement of the
questions involved, the court may allow the suit, action, or other
proceeding to be maintained by or against the successor of the head or
officer under the reorganization effected by the plan or, if there is
no successor, against such agency or officer as the President
designates.
united nations
Question. If I may call on your expertise to help Congress
prioritize the various reforms that still need to be implemented, Madam
Secretary, could you give us a brief overview of the fundamental
reforms you see that could contribute the most to a more efficiently
run United Nations.
Answer. The Administration has proposed that the U.N. achieve
specific reform measures in the areas of budget, personnel, oversight,
management, and peacekeeping. These include:
--Reduced U.S. assessment rates, budget cuts and budget freezes in
the U.N. system to reduce U.S. total obligations.
--A cap of 25 percent on U.S. peacekeeping assessments.
--Creation of a ``contested arrears'' account for U.N. charges which
the U.S. disputes.
--A code of conduct for U.N. employees.
--Further U.N. staff reductions.
--Strengthening the Office of Internal Oversight Services and other
oversight mechanisms, particularly in the major U.N.
specialized agencies.
--Improving U.N. effectiveness by restructuring and prioritizing,
especially in the economic and social areas.
--Further improving management of peacekeeping operations by:
--Implementing a uniform, transparent, less costly Contingent-Owned
Equipment reimbursement standard.
--Negotiating more contingency contracts to support and expedite
deployment of peacekeeping operations.
--Improving recruitment and training of civilian police.
On March 17, the Secretary General announced ten specific U.N.
reform measures for immediate implementation, including a reduction of
$123 million in the regular budget for 1998-99, a merger of three
departments in the U.N. Secretariat, and a code of conduct. We strongly
support these efforts, and look forward to a second phase of reform
proposals by mid-year.
______
Questions Submitted by Senator Kay Bailey Hutchison
Question. Would it not make more sense to downsize some of our
missions in more luxurious European locations so that we can establish
a small and effective presence in some of the world's emerging markets?
Are you willing to work with the Committee to respond to the concerns
of providing diplomatic support for American citizens working and
living in Equatorial Guinea and other emerging markets?
Answer. Our Embassy in Malabo was closed in October 1995 due to
budgetary constraints. Since that time we have had to close a number of
other small posts, such as the Embassy in Victoria, Seychelles and the
Consulate General in Bordeaux, France, as well as downsize the State
Department's component at many other, larger posts, including those in
Europe. The reason for these very difficult steps is simply the lack of
sufficient overall funding for our operations.
With regard to Equatorial Guinea, Ambassador Charles Twining in
Yaounde is also accredited to the Government of Equatorial Guinea, and
he has made numerous visits to Malabo and to the Rio Muni on the
continent since arriving at post fifteen months ago. He has direct
access to President Obiang and key government ministers. In addition,
the chief of Embassy Yaounde's consular section has been designated as
``Malabo watcher''. He is fluent in Spanish and has also visited Malabo
and Rio Muni many times to meet with American citizens, both oil
company employees and missionaries. He organized the warden systems in
both areas of Equatorial Guinea. The commercial officer has also
visited our oil companies in Malabo. In all, the Ambassador and his
staff have made over twenty-five visits to Equatorial Guinea since the
closure.
The Department is concerned with meeting fully the needs of our
American citizens in Equatorial Guinea and with supporting our
expanding commercial interests there. We have been considering
alternatives to the present level of representation.
I want very much to work with the Committee to assure appropriate
diplomatic and consular representation to meet the needs of our people.
I must tell you frankly, however, that only adequate funding will
enable us to have as expansive a presence in all regions of the world
as we might like.
latin american arms sales policy
Question. We have a policy [for] 20 years dating to the Carter
Administration of blocking the export of advanced arms sales to Latin
America. There has been a fundamental change in the regimes of the
region and I don't think our current policy adequately reflects that
change. Since 1976, when the policy was implemented, democratically
elected governments have driven out dictatorships throughout Latin
America with the exception of Cuba. The policy of restricting the sale
of advanced arms to Latin America has had the effect of blocking only
American firms from the market place. In the past 20 years France alone
has sold 200 fighter aircraft to seven Latin American countries. In the
past 12 months, Peru bought 12 Mig 29's, Ecuador bought [a] small
number of Israeli KFIRS with potential for additional sales and Chile
bought 20 Mirages.
These countries will modernize regardless of American policies. The
actions this administration takes in the next few months will determine
American defense industry's role in Latin America for the next 25 years
and there will be a spillover which will impact commercial industries
as well. I am afraid that continuing this policy of restricting certain
arms sales is anachronistic and patronizing. There are very good
strategic reasons why it is in America's interest to ensure American
defense industry is represented. I am interested in your views on this
situation and if it is your intention to promote American interests by
quickly mov[ing] to rescind this policy [which] prohibits the sale of
advanced arms to Latin America?
Answer. The USG has decided to authorize the issuance of marketing
licenses to companies which wish to compete in Chile's selection of
fighter aircraft, while making clear to both the GOC and to the
companies involved that the licenses are for marketing information only
and do not constitute approval for an actual sale. A decision whether
to permit such a sale has not been made. This decision to issue
marketing licenses was made so as not to disadvantage U.S. companies in
the competition. These licenses allow these companies to provide the
Government of Chile with technical data on advanced fighter aircraft.
As you know, the Administration is reviewing U.S. conventional arms
transfers toward Latin America in the context of the significant
political, economic, and military changes that have been occurring in
the past ten years. This review is ongoing. The welcome expansion and
strengthening of democracy and democratic institutions in recent years
makes it prudent for us to undertake this policy review at this time.
Our policy worldwide is to consider pending arms transfers on a
case-by-case basis. Our long-standing policy in Latin America is, and
will continue to be, to address potential transfers in the context of
restraint.
Our enduring goals for the countries of Latin America are to
enhance democracy including civilian control of the military, to foster
regional stability, transparency and confidence building, and to ensure
that the weapons modernization decisions of these countries address
legitimate defense needs within their existing economic resources.
nato enlargement
Question. I realize that prospective new members have worked among
themselves to satisfy long-standing borderland ethnic disputes, but I
am concerned that NATO has no process by which such disputes could be
managed once these countries enter the alliance. Our experience with
some current members of NATO should make us particularly cautious that
we not repeat circumstances we were forced to accept during the Cold
War but which we need not accept now. Will you insist that NATO develop
and establish a dispute resolution mechanism as a principal condition
of NATO entry for new members?
Answer. No, we do not believe that a formal dispute resolution
mechanism would be appropriate within NATO. While common membership in
NATO has contributed to resolving longstanding differences among
Allies, the U.S. has consistently opposed efforts to inject such
disputes into NATO fora and we have cautioned certain Allies against
using NATO institutions to further bilateral aims. Considering such
disputes in NATO could impede consensus decision-making and could
poison the atmosphere during discussions of Alliance policy. At the
same time, the goal of NATO membership has moved some of those states
who have indicated an interest in NATO membership to negotiate and
resolve bilateral differences.
While all NATO Allies share a common interest to preserve Alliance
cohesion and effectiveness, we believe it is incumbent upon all NATO
Allies to work creatively to resolve differences between them.
Question. The Administration estimates the cost of expansion at $35
billion over the next 12 years, including a $2.5 billion U.S. share.
The Congressional Budget Office estimates that the U.S. share of the
costs during a similar time will be between $4.8 billion and $18.9
billion. How do you explain this discrepancy?
Answer. The Administration's study and the CBO study were based on
different assumptions. The Administration's cost estimates were based
on certain assumptions about the projected European security
environment, the military implications and associated costs of NATO
adaptation, and the countries which will be invited to join the
Alliance. The Administration used a capabilities-based analysis to
ascertain the costs of developing the kinds of military capabilities
that the Alliance, both new members and current ones, would need in the
context of the current European security environment.
The Administration's study projects a security environment in
Europe over the period 1997-2009 similar to what exists today. In
particular the study notes that realistic threat estimates show that a
direct conventional threat to new members is unlikely for the
foreseeable future and would take many years to develop, if at all. If
the security environment were to change significantly for the worse,
the costs would certainly rise. We do not anticipate that happening.
The CBO study assumed a much more difficult threat environment,
requiring significantly different force levels and postures.
Question. All previous expansions (Greece, Turkey, Germany, and
Spain) have required Senate advise and consent. At what point in this
process will the Senate be asked for its advice and consent of the
expansion?
Answer. The accession negotiations for those countries invited to
begin them at the July 1997 NATO Summit in Madrid should be concluded
by the NATO Ministerial meeting in December. The result of those
negotiations will be one or more instruments of accession signed by all
NATO Allies, which, as in the case of previous new members, will be
submitted to the Senate for advice and consent to ratification. We
would therefore anticipate beginning the ratification process with the
Senate in early 1998. After all Allies have ratified the instrument,
the new members will themselves sign and ratify the amended Washington
Treaty. During this process the Administration will continue to consult
closely with the Congress.
Question. Our objective is to strengthen economic freedom and
security in Europe. We might be able to advance that cause by using the
EU as a de facto European component of NATO that would properly link
these two organizations in a way that they have not been linked before.
We know that at least one EU member, Turkey, is so concerned about
being left out of the EU that it may oppose NATO expansion. Clearly,
our goal of continued American leadership and strong European allies
would not be advanced if that were to happen. Why wouldn't we use EU
membership as a guide to NATO expansion?
Answer. The EU and NATO fulfill complementary purposes. The EU
ensures its members' political and economic integration, while NATO
supports its members, defense and security integration. But one is not
a substitute for the other nor can a prospective candidate for
membership in one necessarily also meet the membership criteria in the
other. NATO views its own enlargement process as mutually supportive of
and parallel to the EU's enlargement.
Both NATO and the European Union are embarked upon significant
processes of internal and external adaptation aimed at meeting the
challenges of the post Cold War era. Both institutions have unique
contributions to make in developing a new security structure in Europe.
Joining the economies of central Europe to the EU single market is
a massive undertaking. The EU will require its new members to meet
numerous complex criteria that have nothing to do with NATO membership.
Membership in the Alliance should neither be held up nor accelerated by
the progress countries make in this process.
Nor do we believe that EU enlargement alone can solve the security
challenges facing Europe and particularly central and eastern Europe.
While the EU decides how and when to expand, NATO membership will
remain crucial to U.S. interests. NATO is the linchpin of European
security and the principal mechanism for American involvement in
Europe.
The United States strongly supports the European Union's
enlargement process and the objective of integrating new members as
quickly as possible. We have also made clear that we do not believe
linking NATO enlargement to any Ally's concerns about its relations
with Europe or the EU would further our shared goals.
______
Questions Submitted by Senator Ben Nighthorse Campbell
international drug trafficking/hidta
Question. The State Department's Bureau of International Narcotics
and Law Enforcement is charged to break foreign and domestic drug
sources of supply, destroy illicit drug crops at their source, pursue
drug kingpins, and interdict drugs.
Illegal drug trafficking continues to be a serious problem for the
United States. In my home state of Colorado, which the Drug Enforcement
Administration has identified as a key cross-country transit point,
there has been a significant increase in shipments of marijuana, crack,
cocaine, heroin and methamphetamines. One drug kingpin alone is
reported to be responsible for smuggling tons of cocaine into Colorado.
To help address this problem, the DEA and the Office of National
Drug Control Policy are establishing a High Intensity Drug Trafficking
Area, referred to as a HIDTA, in the Rocky Mountain region.
To what extent does the State Department's Bureau of International
Narcotics and Law Enforcement work with DEA?
What additional steps can the State Department and its Bureau of
International Narcotics and Law Enforcement take to support DEA in its
operation of the Rocky Mountain HIDTA?
Will you provide me your assurance today to expand the State
Department's role in working with DEA to support the Rocky Mountain
HIDTA.
Answer. The State Department's Bureau of International Narcotics
and Law Enforcement Affairs (INL) works in close and continuing
coordination with DEA at all levels, in Washington and outside the
United States. State/INL and DEA are both members of the Inter-Agency
Working Group on International Narcotics chaired by the Office of
National Drug Control Policy. Both agencies develop policies, programs
and budgets in mutual consultation and in coordination with ONDCP, in
the policy framework defined by the National Drug Control Strategy.
Officers of State/INL and DEA headquarters in Washington work together
in a wide variety of other standing and ad hoc interagency groups and
committees.
DEA is fully engaged in all preparations by State/INL to represent
the United States in global, regional, or bilateral diplomatic
contacts, international conferences or negotiations. A DEA agent is
assigned by DEA Headquarters to work as liaison officer to INL at the
Department of State. In foreign countries, under the authority of the
chief of mission, Narcotics Affairs Sections responsible for
International Narcotics Control assistance to the foreign government,
and DEA Country Offices engaged in cooperative drug enforcement
operations with foreign government authorities, consult and cooperate
closely. In each mission, the NAS and the DEA Country Office coordinate
in preparing the narcotics control annex that is an integral element of
the chief of mission's annual mission program plan in every major drug
source or transit country.
The most effective support that the Department of State and INL can
provide to DEA's operation of the Rocky Mountain HIDTA is to carry out
as effectively as possible the assistance programs in foreign countries
whose purpose is to reduce the production of illicit drugs abroad and
their smuggling to the United States. As a matter of equal importance,
the INL program serves to improve the effectiveness of foreign drug law
enforcement agencies and institutions with which DEA cooperates
operationally abroad. We are committed to the importance of these
programs, and will continue to dedicate our efforts to implementing
them effectively.
The Department of State will do its utmost to work with DEA in
activities that will support the Rocky Mountain HIDTA. These will
include implementation of INL assistance programs abroad, and
diplomatic advocacy of our national drug control goals with foreign
countries. Activities of DEA offices abroad will be similarly supported
by the chiefs of mission, State Department and other USG agencies that
are also parts of those missions.
impact of international crime on the united states
Question. The United States has seen within its borders serious
levels of Russian Organized Crime, Asian gang activity, international
drug trafficking, and money laundering.
The Bureau of International Narcotics and Law Enforcement plays a
lead role at the State Department in this area.
What programs currently are operated by the Bureau and other State
Department agencies to fight crime which has a direct impact on the
United States?
What are some of the successes of the Bureau in fighting crime
which has a direct impact on the United States?
Does the State Department have plans to expand the Bureau's law
enforcement activities in the coming year? If so, in what ways?
Answer. All of the INL Bureau's programs to combat narcotics
trafficking and international crime are designed to fight crime which
has a direct impact on the citizens and national security interests of
the United States. INL also has responsibility for the development and
implementation of $16.2 million in Freedom Support and SEED Act
criminal justice programs. INL works directly with federal, state and
local law enforcement and justice agencies to set priorities and carry
out training programs abroad. U.S. programs abroad have led directly to
the arrests of major Latin American drug traffickers, Asian organized
crime figures involved in alien smuggling to the United States, arrests
of Russian organized crime figures involved in various financial crimes
against American citizens, and seizures of counterfeit U.S. currency
abroad.
The Department's Bureau of Diplomatic Security (DS) has fully
trained law enforcement agents in many U.S. embassies abroad, and works
closely with our domestic passport agencies to investigate the whole
range of passport and visa offenses. DS agents have doubled their
number of passport and visa fraud related arrests from 256 to 567 last
year, a number of which involved terrorists, narco-traffickers, and
fugitive felons.
We will continue, and expand where possible, the outstanding
bilateral initiatives by federal law enforcement agencies to forge new
cooperative relations with law enforcement officials from Russia to
Thailand to South Africa to Brazil. Programs stressing the need for
rigorous internal controls, offices of professional development, and
inspector generals are an important element of our approach. We will
expand our programs with foreign law enforcement and bank regulatory
agencies to address money laundering and related financial crimes.
Programs with strong ATF, FBI and Customs support are underway in Latin
America to address the problem of trafficking in small arms and stolen
cars. Other commitments to cooperate on the problem of vehicle theft
and the return of stolen property have been reached with Poland and
through the United Nations with other nations of the NIS and Central
Europe.
We are engaging U.S. state and local law enforcement in cooperation
with partner universities to expand our programs to train Central
European, Russian and Independent States' law enforcement officials in
community-oriented policing. These programs in Florida, South Carolina,
Kentucky and Vermont will continue to promote the fundamental changes
in how law enforcement officials maintain law and order, prevent and
investigate criminal activity, including transnational crimes, in a
democracy and market economy.
denmark/biker gangs
Question. Recent news reports portray a deadly and startling war
between armed biker gangs across Scandinavia, especially in Copenhagen,
Denmark. A violent turf war between the Banditos and Hells Angels biker
gangs has been raging since the summer of 1993, when the Bandidos moved
into the area. What is especially disturbing is their choice of fire
power--rocket-launched grenades and automatic weapons.
The Danish Government has called on the United States for help.
In addition to any support provided by the FBI, what additional
steps can the State Department take to assist Denmark and the other
Scandinavian countries with this serious biker gang war?
Is there a mechanism in the Department of State by which experts--
both law enforcement and community leaders--in the United States could
be made available through a Technical Assistance program to assist
Denmark's police departments and communities?
Answer. Embassy reporting on this issue has helped focus attention
on the problem. The existence of these gangs, among other organized
crime concerns, was an important consideration for the Department as it
worked with the FBI to develop its five-year overseas expansion plan,
which includes the recommendation to assign a legal attache to Embassy
Copenhagen in fiscal year 1998. Treasury's Bureau of Alcohol, Tobacco
and Firearms has also worked extensively with Scandinavian authorities
on these gangs and the illegal weapons they use. The Department's
Bureau of International Narcotics and Law Enforcement Matters (INL)
which works closely with U.S. law enforcement agencies in coordinating
the fight against international organized crime, has also sponsored,
through the U.N. Crime Division, two major conferences in Europe on
stolen vehicles, including motorcycles, and continues to work closely
with the National Insurance Crime Bureau (NICB), the FBI, U.S. Customs,
and foreign police authorities worldwide to combat the international
trade in stolen vehicles.
Through cooperative efforts with our Embassies in the region, USIA,
the Department's INL Bureau, and NGO's such as Sister Cities
International, U.S. expertise can and is being made available to the
Government of Denmark and other concerned governments in the region.
Law enforcement attaches at the embassies and TDY personnel work the
problem at the cop-to-cop level, and international visitor and guest
speaker programs developed by the Embassy, the Department, and USIA can
provide political and academic exchanges. INL will continue to work
with law enforcement agencies on coordinated efforts to combat
trafficking in stolen vehicles and illegal firearms. Additionally,
Denmark has seven ``Sister City'' relationships in the United States
that could be more effectively used to exchange law enforcement and
broader community expertise in addressing the problem of gang activity.
These local and state level cooperative efforts have also proven to be
excellent mechanisms for the exchange of expertise and experience.
assisting other countries fight crime
Question. Many countries around the world are experiencing rising
crime rates, increasing violence, and a breakdown in law enforcement.
The seriousness of this issue was addressed by AID Administrator
Brian Atwood in his testimony on February 27 before the Foreign
Operations Subcommittee. Mr. Atwood stated: ``The reality is that most
nations in conflict simply lacked the institutional capacity to avoid
escalating violence.''
The United States has a wealth of expertise in ``what works'' to
fight crime, drugs, and gangs. Experts who have first hand experience
in these areas--from law enforcement and community based
organizations--could be invaluable resources to other countries
experiencing these problems if some technical assistance were
available. This assistance could be provided on a reimbursable basis,
where appropriate.
The State Department's Bureau for International Narcotics and Law
Enforcement operates a Training and Technical Assistance Program which
helps governments in Central Europe and the New Independent States with
organized crime, financial crime and drug trafficking.
Does the Bureau plan to expand the scope of its Training and
Technical Assistance Program to assist other countries?
What are some of the Bureau's anticrime successes?
Does the State Department operate any other assistance programs
which would directly assist communities and local law enforcement in
other countries to fight gangs, drugs, and crime?
When a country such as Denmark requests help from the United States
to combat gang violence, what are your thoughts on providing technical
assistance to developed countries?
Would you advocate an expansion of programs operated by the State
Department which would assist other countries fight gang violence,
crime, and drugs?
Answer. The State Department's Bureau for International Narcotics
and Law Enforcement Affairs (INL) has traditionally had a training and
technical assistance program to combat narcotics trafficking and
production in Latin America, Asia, the Caribbean, and Africa. This
assistance has been delivered bilaterally and through international
organizations. In addition, the Department has expanded the scope of
its training and technical assistance programs to meet emerging threats
in Central Europe and the Newly Independent States.
In Africa, INL is providing a two-week condensed International Law
Enforcement Academy (ILEA) seminar on organized crime, financial fraud
and drug trafficking to both French and English speaking countries. We
are also funding anti-narcotics training by the U.S. Customs service
and DEA for a number countries in this region.
In the Caribbean, in addition to its drug efforts, INL along with
U.S. federal, state and local law enforcement agencies will provide
training on combatting gang violence, and witness and judicial
protection.
In Asia, INL is working with U.S. federal law enforcement agencies
and providing training in the areas of forensic science, hostage
negotiations, and financial crimes. We are also funding anti-narcotics
training by the U.S. Coast Guard, U.S. Customs Service and DEA in the
region, in addition to funding a heroin reduction program through the
United Nations Drug Control Program (UNDCP).
In Latin America, INL is providing training to combat firearms and
drug trafficking, organized crime, and financial fraud.
One of INL's anti-crime successes was the prosecution and
conviction of a major Russian organized crime figure in New York City,
which was a direct result of having the Russian police work side-by-
side with U.S. federal law enforcement during the investigation of the
case. The Russian police were able to provide invaluable insight into
the suspects and their criminal enterprises.
The INL Training and Technical Assistance Program is the only
assistance program operated by the State Department that directly
assists foreign communities and foreign law enforcement in their
efforts to combat gangs, drugs and crime.
When a developed country, such as Denmark, requests assistance, we
provide both policy and operational guidance. This allows the
requesting country the ability to view issues in a much broader range
than just that of operational concerns. As a rule, we do not fund
training programs for developed countries, although we do permit the
inclusion of their officials in existing training programs on a
reimbursable and space available basis, where appropriate.
Within overall budgetary and program constraints, we believe there
are excellent opportunities for expanding these successful programs. We
hope to be able to provide increased assistance to other regions as
noted above. This expanded effort would help to combat and disrupt
transnational crime on a larger global scale, as noted in the
President's remarks during his address in 1995 to the United National
General Assembly.
coordination of crime programs
Question. There are a number of anti-crime programs operated by
various bureaus and agencies in the State Department, the Justice
Department and the Treasury Department.
For example:
--The State Department's Bureau of International Narcotics and Law
Enforcement targets drug production and trafficking, as well as
international crimes.
--State's Bureau of Latin American Affairs funds the International
Criminal Investigative Training Assistance Program (ICITAP)
which is operated by the Justice Department and trains police
in Central America and Bosnia.
--AID funds the Administration of Justice Program which supports
courts and prosecutors in developing countries.
--The Justice Department has an Executive Office of National Security
in the Deputy Attorney General's Office, an Office of
International Affairs in the Criminal Division, and an
international clearinghouse of justice information operated by
the Department's Office of Justice Programs.
--Other Justice Department agencies, including the FBI and DEA are
actively involved in international crimes and drug trafficking.
--And, the Treasury Department's Financial Crimes Enforcement Network
(FINCEN) works with international organizations to target money
laundering and other complex financial crimes.
How do you ensure full coordination between the State Department
and other federal agencies which also support various international
crime programs?
Is there an inter-agency working group which would ensure
coordination of international crime programs? If so, which federal
agencies are represented, at what level, and how often does the group
meet?
Answer. In an effort to improve full coordination between the State
Department and other federal agencies which also support international
crime programs, the Department's Bureau of International Narcotics and
Law Enforcement Affairs (INL) chairs a monthly inter-agency Law
Enforcement Working Group (IWG). The group jointly develops programs
and priorities for the responsible use of INL, Freedom Support Act
(FSA) and Support to East European Democracy (SEED) funds for anti-
crime training and technical assistance programs.
The law enforcement agencies of the Departments of Justice,
Treasury and State participating in these meetings include: Drug
Enforcement Administration, Federal Bureau of Investigation,
Immigration and Naturalization Service, International Criminal
Investigative Training Assistance Program, Department of Justice's
Office of Professional Development, Internal Revenue Service, Bureau of
Alcohol, Tobacco and Firearms, Customs, Secret Service, Financial
Crimes Enforcement Network, the Federal Law Enforcement Training
Center, and the Diplomatic Security Service. Representatives are
usually international training division chiefs and representatives of
operational units in each agency, as appropriate. Other participants
include: Office of Management and Budget, the Office of the Comptroller
of the Currency, the Federal Reserve, the State Department's assistance
coordinators for Central Europe and the New Independent States, and a
representative of the U.S. Intelligence Community.
The Department (INL) also prepares a cable for our embassies which
provides information from the meetings on matters of general interest.
These reports may be used to assist in decisions made by the embassy's
country team, which includes representatives of the law enforcement
community.
middle east peace process
Question. In signing the Hebron agreement with the Palestinians,
Israel's Prime Minister, Benjamin Netanyahu, has demonstrated Israel's
continuing commitment to the peace process and the willingness to take
risks for peace. Yet the toughest issues in the peace process now will
be addressed in the negotiations, making it more important than ever
that the U.S. stand by its friend and ally Israel.
What are your plans to provide assistance to those countries
directly involved in the peace process? What specific support will be
provided to Israel?
Given the helpful role that Jordan has played in advancing the
Middle East peace process, what are your plans to provide sufficient
support to Jordan?
Answer. The U.S. continues to provide substantial bilateral
assistance to those countries directly involved in the peace process.
Assistance to Israel and Egypt account for a substantial portion of
U.S. bilateral economic and military aid. In the Administration's
fiscal year 1998 budget request, we have once again requested
traditional assistance levels for Egypt and Israel. For Israel, this
includes $1.2 billion in Economic Support Funds and $1.8 billion in
Foreign Military Financing. In addition, approximately $80 million is
provided to the United Israel Appeal to support refugee relocation
assistance to Israel. Israel is the beneficiary of numerous cooperative
programs with the U.S. Department of Defense (and has earned the
designation of Major Non-NATO Ally), as well as cooperation in the
field of counterterrorism. In addition, Israel benefits from numerous
regional programs, including those in the critical areas water resource
and environmental management, that are outgrowths of the Middle East
peace process. It is the desire and expectation of the Administration
that these programs will continue.
The U.S. is committed to supporting King Hussein's difficult
political decisions on behalf of peace and his government's efforts to
maintain stability and promote Jordan's long-term economic viability.
The President's fiscal year 1998 budget request asks for an increase in
Economic Support Funds for Jordan. In addition, Jordan benefits from
military training under the International Military Education and
Training (IMET) program, a Foreign Military Financing program
(currently supporting delivery and maintenance of a squadron of F-
16's), recent designation as a Major Non-NATO ally, a program of debt
relief, demining assistance, and from several key regional programs in
the areas of water resource and environmental management associated
with the multilateral track of the Middle East peace process. In
addition, we recently signed an ``Open Skies'' air transport agreement
and reached agreement on a Bilateral Investment Treaty. We are always
looking for creative ways to support Jordan as it transitions to an
open economy and continues to support the peace process. The President
has made clear we are committed to being responsive to Jordanian
requests and we are always looking for ways to do so.
terrorism
Question. International terrorism at both home and abroad continues
to be a matter of great concern. The United States has provided
strategic and monetary assistance to her allies to help fight
terrorism. For example, Congress has appropriated $100 million for
anti-terrorism assistance to Israel.
How have these funds been allocated?
Answer. The President requested and Congress appropriated $50
million for Phase I of the counterterrorism equipment assistance
package for Israel in fiscal year 1996. These funds are being used by
mutual agreement for Israel to acquire a variety of screening systems
for use at checkpoints to inspect bags, goods, pallets and containers;
for equipment to neutralize and dispose of explosive devices; for
equipment to enhance forensic investigative capabilities of the Israeli
police; and for equipment to upgrade Israeli police surveillance and
operational capabilities.
The President requested and Congress appropriated a second tranche
of $50 million for Phase II of the counterterrorism equipment
assistance program for Israel in fiscal year 1997. We have recently
concluded intensive discussions with Israeli authorities and have
agreed that these Phase II funds will be used to fill in the remaining
gaps of screening systems for detecting explosives; for equipment to
establish a border control and personnel monitoring system; for the
purchase, testing and enhancement of surveillance and detection
equipment; and for additional equipment to enhance the investigative,
forensic science, and operational capabilities of the Israeli police
forces.
Question. Have these funds been effective in combatting terrorism?
Could a similar program be applied to other countries which face
comparable threats?
Answer. The equipment Israel is acquiring under the equipment
assistance program will substantially upgrade its counterterrorism
capabilities, especially when the entire equipment package is
completely installed and operating. Even now, with only that limited
portion of the program that has been completed, we have seen a major
improvement in Israel's ability to speed up the movement of people and
goods from Palestinian areas in Gaza to and through Israel. This in
turn enhances the economies of both Israelis and Palestinians and
reinforces the positive lessons learned from security cooperation.
However, as demonstrated by the Palestinian March 21 suicide
bombing at a Tel Aviv cafe by a terrorist from the West Bank, there is
simply no fool-proof equipment or security system that can stop
determined terrorists all of the time.
In the long term, we believe the program will play a major part in
upgrading Israeli security capabilities. Moreover, some of the
equipment can play an important role in providing the security
assurances both Israelis and Palestinians require. Although we are
still in the early stages of this effort, it may provide experience in
border control security systems that could be relevant elsewhere.
Question. In what other ways could the United States effectively
work to combat terrorism. What more should the U.S. do in the future?
Answer. There is no one certain solution to the problem of
terrorism. Basic elements of our policy include: no concessions to
terrorists; aggressive pursuit of terrorists; using the combined assets
of law enforcement, diplomacy, and intelligence; and using economic and
diplomatic sanctions against designated state sponsors, while urging
other nations to do likewise.
We also use a variety of specialized tools and measures, such as
training, counterterrorism research and development, improving
intelligence collection, analysis and sharing, and enforcement of
political and economic measures against state supporters of terrorism,
and hampering terrorists' fundraising.
Specific programs, for example, include State's Antiterrorism
Assistance (ATA) Program which has trained over 18,000 foreign
officials from 90 countries in CT techniques and aviation security. We
need to keep working on training as the threats continue to evolve. We
also need to sustain our productive interagency research and
development program to make use of modern technology to detect and
counter terrorist attacks, explosives and other lethal substances.
We also work with other governments in multilateral
counterterrorism initiatives. For example, working with friends and
allies in the Group of Eight, we are participating in negotiations in
the U.N. Sixth Committee on a new Terrorist Bombing Convention. We are
also working to develop better ways to counter terrorism against land
transportation, such as buses and trains and to investigate attacks
through improved information sharing and data bases. And, of course, we
share information and work with the Justice Department and FBI, the
lead agencies for dealing with terrorism attacks in the United States
and investigating terrorist attacks against Americans overseas.
In order for these and other specific counterterrorism efforts to
succeed, and to maintain relations with other governments that are
needed for effective cooperation, we also need sustained resources
adequate to support overall U.S. leadership and diplomacy abroad.
illegal immigration
Question. The waves of illegal immigration continue to take their
toll on the resources of inland states, such as Colorado and Utah. As
these states grapple with the problems associated with illegal
immigration, the countries of origin seem to do little to stem the
tide. It also seems that if the origin countries, such as Mexico, had
better economies, they could provide employment for their citizens and
reduce or eliminate a major reason for their leaving.
What are your plans to leverage these countries of origin to do
more in controlling illegal immigration?
Answer. While many migrants depart their country for economic
reasons, some are driven from their homelands by natural disasters,
political turmoil and wars. Whatever the reason, the United States
alone cannot stem this illegal movement of migrants across
international boundaries. In response to President Clinton's directives
to deter alien smuggling, the Department has been engaged for some time
with both sending and transit countries. We have been working with
these countries to pass laws which would criminalize alien smuggling.
Two countries in Central America, Nicaragua and Panama, have passed
laws against alien smuggling as a result of our efforts. Other
countries within the region are using a model legislative package we
have created, to introduce similar laws. We will continue to work with
these and other countries to criminalize alien smuggling.
The U.S. is actively engaged with countries throughout the
hemisphere in bilateral and multilateral discussions to address
migration and migrant trafficking. In March, Assistant Secretary
Phyllis Oakley and INS Commissioner Doris Meissner led a delegation to
the Second Regional Migration Conference held in Panama. The conference
was attended by vice ministers from every government in Central and
North America. This forum assists in coordinating migration policy,
procedures, law enforcement approaches and training opportunities.
Alien smuggling is facilitated by official corruption. Poorly
trained and paid immigration inspectors and border guards are easily
bribed to assist smuggled aliens. In an effort to instill a sense of
professionalism, the Department, in concert with the Department of
Justice, has funded training programs for these officers. The
Department has cancelled visas of officials known to be involved in
alien smuggling and made their trafficking activities known to the
public.
Information is a key element to combatting alien smuggling. The
Department has worked with cooperative transit and sending countries in
an effort to improve the flow of information regarding frequently used
alien smuggling travel routes, known smugglers and fraudulent documents
vendors.
These initiatives are not exhaustive but representative of the
Department's efforts to combat alien smuggling within source and
transit countries.
microcredit
Question. What are your thoughts on microcredit generally? What
plans does the State Department have to expand the microcredit program?
Answer. Microcredit programs can help low-income people become
economically self-reliant through market-driven, productive activities.
Credit supports entrepreneurs and encourages microenterprises and small
businesses to grow.
Women will benefit particularly from microcredit programs. In Latin
America, for example, women-owned businesses are one of the fastest
growing segments of the microenterprise sector.
Economic reform measures such as the lifting of interest rate caps
and deregulation of the banking sector are key to the success of
microcredit programs. We are urging the governments of developing
countries to move ahead on economic reform.
USAID has an active microenterprise initiative, developed in close
consultation with Congress, which provides training and technical
assistance to banks and borrowers, and capital for non-banking
institutions providing microcredit. This program provides more than
$120 million annually and has just been extended for two more years.
We are encouraging multilateral development institutions, such as
the World Bank, to expand funds and programs available to support
microenterprise and small business.
Support for microenterprises was an initiative of the 1994 Miami
Summit of the Americas. We will be reviewing the progress on this
initiative as we prepare for the next Summit of the Americas to be held
in Santiago, Chile in 1998.
bulgaria
Question. What action is the State Department taking to provide
assistance to Bulgaria? What additional steps does the Department plan
to take in the future?
Answer. Through the Support for East European Democracy (SEED)
program, we have allocated $2.5 million to provide humanitarian
assistance to Bulgaria consisting of $2.1 million in pharmaceutical
supplies and $400,000 in response to an appeal from the International
Red Cross. We have also offered Bulgaria $25 million in agricultural
credit guarantees to help them import vital foodstuffs. We presently
are exploring the possibility of providing additional food aid through
the Food for Peace program.
current position on the proposed 621 provision
Question. Last year, the Administration opposed the provision
included in the Senate version of the Commerce, Justice, and State
Appropriations Bill related to the importation of ``curios and
relics''. (Section 621) Does the State Department still have concerns
outlined in this position paper?
Answer. The Department continues to have the same concerns
regarding proposed legislation modifying Section 38 of the Arms Export
Control Act (AECA) and thus restricting the President's authority to
control the importation of defense articles and services, including
curio and relic firearms, into the United States.
--Currently, the AECA generally prohibits the return for private sale
of any U.S. origin defense items furnished under the AECA or
any foreign assistance or sales programs. Although there's an
exemption permitting consideration of imports of curio and
relics, for important policy concerns, end-use and retransfer
controls and other legal concerns, the State Department
generally advises that import-licenses be denied. The
legislation originally proposed would have precluded such
considerations and the Department believes such a review is
more appropriate than a legislative mandate to approve all such
requests.
--Furthermore, in most cases, these firearms, now designated curios
and relics, were originally provided to foreign governments by
the United States for their national defense, usually free-of-
charge. In most of these cases, the USG is allowed to receive
the net proceeds of any sales made by foreign governments of
defense articles provided on a grant basis by the U.S. An
enactment that would permit the importation of all curios and
relics would restrict the USG from requiring foreign
governments to return such proceeds and certain foreign
governments, rather than U.S. taxpayers, would reap a windfall
from such sales.
--Approval for all curios and relic importation would also require
the Department to approve the importation of curio and relics
from proscribed countries. As indicated in the September
position paper, Vietnam holds a significant quantity of U.S.
origin M-1 firearms, but is considered a proscribed country and
prohibited from exporting military items to the United States
under the International Traffic in Arms Regulation.
We continue to believe that such a measure would limit the
Department of State's ability to provide advice relating to foreign
policy and national security considerations related to such transfers.
______
Questions Submitted by Senator Ernest F. Hollings
icass reform
Question. Dick Moose, Pat Kennedy and Rich Greene have worked for
years to develop a system so that overseas administrative costs are
more fairly and accurately distributed. It is called ICASS--
International Cooperative Administrative Services.
It is not reflected in the President's budget in State, Commerce,
Justice or any other agency. Why? When are we going to receive a budget
amendment?
ICASS does not distribute telecommunications and facilities costs.
Why don't we distribute those costs too?
Answer. When the President's budget was released on February 6, we
had not yet finalized the ICASS budget estimates. This task is now
complete. I am pleased to report that on March 17, President Clinton
transmitted to Congress an fiscal year 1998 budget amendment that will
provide the legislative authority to make a one-time transfer of $113
million from the Department of State to the 23 other United States
Government agencies and departments operating abroad in order to
implement the ICASS system.
We consider ICASS a work in progress. The fiscal year 1998 ICASS
budget amendment includes such items that are now currently being fully
funded by State as building operating expenses, non-residential local
guard costs, and posts' community liaison offices. For fiscal year
1998, these were the only additions to the pool of shared
administrative expenses that the participating agencies would agree to
include in ICASS. In future years, however, the Department would like
the participating agencies to consider adding such items as non-
Diplomatic Telecommunications Service (DTS) communications expenses
(e.g., the distribution of classified and nonclassified cable traffic
at posts) and Diplomatic Security costs. DTS costs are already
distributed through a separate cost sharing program. With respect to
our overseas facilities, the Department made a conscious decision to
initially exclude long-term leased and government owned properties from
the pool of shared ICASS costs due to the magnitude of the value of
these capital investments and the complexity of managing these
facilities.
capital improvement funding
Question. Your budget includes no funding for new capital
construction. Instead it states that the Department of State will rely
on real property sales for Embassy construction and renovation. In
fiscal year 1998, it is estimated that the State Department will yield
$137 million from such sales.
Are such estimates realistic?
For which embassy projects are you proposing to use these funds?
Answer. The Security and Maintenance of U.S. Missions Fiscal Year
1998 Budget document cited two sales figures: $180 million for fiscal
year 1997 and $137 million for fiscal year 1998. Both of these are
based on the total dollar amounts to be realized if all properties
projected for possible sale in those years are in fact sold and if
sales take place at or near estimated values.
In fiscal year 1997 to date, 15 sales have been completed from
which approximately $38 million in sale proceeds will be realized. In
addition, offers have been accepted for another 19 properties, but
sales have yet to be completed. The dollar value of these latter
transactions is approximately $69 million.
The ability to realize the full $180 million in fiscal year 1997
and $137 million in fiscal year 1998 is dependent on multiple factors,
many of which are beyond the Department's control. Changes in local
real estate market conditions, delayed receipt of host government
approval for sale and/or USG tax exempt status, unexpected financial
difficulties encountered by purchasers, political upheavals and/or
catastrophic events, and unanticipated legal issues requiring
resolution, frequently intervene and disrupt sale timeliness.
The Department intends to use fiscal year 1997 proceeds of sale for
residential housing acquisition to buy down the lease hold account, and
acquire new office and other diplomatic facilities. We plan to use
proceeds from the sale of properties in Germany to help finance the new
embassy office building in Berlin; proceeds from Bangkok to finance
needed construction in Bangkok and also construction and acquisitions
in China; and the proceeds from Beirut to construct new facilities in
Luanda, Kampala, and Abidjan.
Not all of the requirements in the above posts can be financed with
proceeds of sales. A further concern is that some of these scarce funds
may have to be used for other high priority, unbudgeted needs elsewhere
(e.g., Bridgetown, Capetown, Doha, Dubai, Dushanbe, Istanbul, Kingston,
Rabat, Seoul, Tashkent, Tunis, and posts in Nigeria and Pakistan).
capital improvement funding--germany
Question. What is the situation in Germany? As I understand it, the
plan since the early 1990's is to sell property in Bonn to build a new
Embassy in Berlin. Is that plan on schedule? Will our Berlin Embassy be
``self-financing?''
Answer. We plan to relocate the American Embassy to Berlin in the
summer of 1999.
The staff will continue to utilize two existing buildings for
office space until the new embassy is built. One building is the former
chancery of the American Embassy to East Germany, and the second is
located at Clayallee, site of the former U.S. Mission to Berlin.
Renovation of these facilities (security, fire/life safety, and make
ready work) in preparation for the relocation will be completed by the
summer of 1998 and cost approximately $6 million.
Through negotiations with the German government, the Department has
acquired housing units in Berlin in exchange for housing units in Bonn.
The Department is evaluating the condition of these properties to
determine necessary renovations. Because of possible high renovation
costs, the Department is exploring alternatives, including disposal of
some current housing to finance construction and/or the acquisition of
more cost effective housing.
Because appropriations are not available, the Department will use
asset management to finance to the extent possible, the construction of
new facilities, i.e. from the proceeds of sale of various properties in
Germany, which will become excess when the Embassy relocates to Berlin.
Short term plans call for the sale of six properties. The
Department has received approximately $12.5 million from the sale of
properties in Duesseldorf and Stuttgart, and anticipates proceeds of $4
million from the sale of properties in Hamburg.
We anticipate the majority of required funds for construction of
the new chancery to come from proceeds generated from the sales of the
Berlin Radio In Allied Sector (RIAS) Site and Bonn Plittersdorf Housing
Compound. The Plittersdorf housing properties cannot be made completely
available to a purchaser until the Bonn properties are closed in the
summer of 1999.
An Architectural and Engineering firm has been selected to design
the new chancery building. As soon as sufficient funds from the sale of
assets in Germany are available, the Department will proceed with the
design. Design is expected to be completed in 15 months once the notice
to proceed is given.
new post in vietnam
Question. I've understood that for some time the Department has
planned to open a new consulate in Saigon, or Ho Chi Minh City as it is
now called. Apparently that is where the business opportunities are for
U.S. industry and it is where there is an extremely high consular
workload. It would be the third most active consular post in Asia.
Where does the Department stand on opening this post? When are we going
to see this proposal? How big a consulate do you contemplate?
Answer. I agree with your assessment. A consulate in Ho Chi Minh
City would be very important in addressing a very large consular
workload and in advancing our commercial and other interests in
southern Vietnam. It would also allow us to monitor more closely human
rights and social conditions in Vietnam. Accordingly, the Department
has conducted consultations with Congressional committee staff on its
plan to open a post in Ho Chi Minh City. The Department is now
considering whether to submit a formal reprogramming notification that,
if approved, would permit an opening of this post in the current fiscal
year.
Our most conservative estimates are that the consulate will process
roughly 16,000 to 20,000 immigrant visa applications and 75,000 non-
immigrant visa applications per year. The new post will also provide
citizen services for nearly 3,000 resident Americans and roughly 75,000
American citizen visitors per annum. The Department's plan, if approved
by the Congress, would be to assign eighteen direct-hire American
employees to Ho Chi Minh City, not including temporary positions
required for oversight of any facilities construction/renovation
projects. Among these employees would be eight consular officers.
Three other USG agencies have expressed interest in being
represented at the post: the Department of Commerce (Commercial
Service), the U.S. Information Agency and the U.S. Immigration and
Naturalization Service.
fees
Question. In the name of ``government reform'' it looks like
Franklin Raines at OMB has really screwed up the State Department's
budget.
As I understand the budget proposal, $140 million in visa fees now
collected and retained by the Department would now go ``on budget'' and
be scored by CBO. So this Subcommittee would have to add $140 million
to the State Department appropriation 4 and take up room in our
allocation 4 just to provide the funds you now have for free.
How does that provide an incentive? It seems to me that OMB may
feel good about this proposal that is theoretically sound, but in the
real world the State Department loses.
Answer. There are several good reasons for implementing the fee
proposal. It is good government to establish a closer link between the
fees charged to service users and the financing of the Government
operations that provide the service. The fee proposal will give the
Department greater flexibility to meet mandatory passport and visa
issuance workload. As workload increases, the Department's revenue will
increase to match the rising cost of providing increased services. The
fee proposal allows the Department to adequately budget for inflation
and investment in the future. The fee funded portion of the
Department's diplomatic and consular functions will be insulated from
the impact of world-wide inflation. The Department can invest in the
tools required to provide more effective service and the Department can
better ensure that our core diplomatic functions are adequately funded.
In addition to specific authorization and appropriation language,
the Administration is proposing a change to the scoring rules under the
Budget Enforcement Act (BEA) of 1990 to make this proposal work. This
scoring change will address the concerns raised concerning the impact
of this proposal on Congressional Budget Office scoring and budget
subcommittee allocations. If the Administration and Congress work
together to put these legislative pieces in place, we can make the
transition to greater application of user fees to provide more
efficient and effective Department services at less cost to the general
taxpayer.
function 150 priorities
Question. Why is the Administration so committed to putting a
priority on giving money to others rather than supporting our own men
and women? Does this reflect your priorities, or is this OMB again?
Answer. The President's fiscal year 1998 International Affairs
budget request of $19.45 billion seeks to sustain and support America's
leadership. I urge you to support full funding for this request.
American leadership is the cornerstone of efforts around the world to
advance American prosperity; ensure the emergence and maintenance of
free markets and democracy; confront the problems of environmental
degradation, runaway population growth, and endemic poverty; achieve
regional peace and stability; and help others cope with humanitarian
crises. The request reflects the fact that these objectives cannot be
achieved without strong and proactive diplomacy.
The Foreign Operations component of the President's request seeks
increased funding to support transition to democracy and free markets
in the New Independent States, including the Partnership for Freedom
trade, investment, and anti-crime initiative. The Administration is
also requesting additional funding to combat narcotics and deal with
unanticipated crises by drawing on Economic Support Funds and funds for
voluntary Peacekeeping Operations. The request also includes a down
payment on U.S. arrears to the Multilateral Development Banks. All of
these activities advance American interests.
I appreciate your continued support of sufficient funding for State
Department Operations. Maintaining America's strength requires world-
class diplomacy. Given broad, bipartisan support for reducing the
Federal deficit, this request increases funding for Department of State
operations by a modest four percent. This increase would cover
inflation and provide the funding the Department must make to modernize
information technology and reverse the deterioration of infrastructure
overseas.
duplication between state and fcs
Question. Our House Chairman, Hal Rogers, believes that State's
economic officers often duplicate the function served by our Foreign
Commercial Service Officers overseas. It has always seemed to me that
they are different types of people doing different missions. FCS
officers often have background in the private sector and hustle to help
American businesses get market access and contracts. State Economic
Officers are more traditional Foreign Service officers who negotiate
trade agreements with foreign ministries and who provide economic
reporting. What is your position on this issue Madam Secretary?
Answer. I agree with your assessment. We need both Foreign
Commercial Service Officers and State Economic Officers working
together overseas, because they have different responsibilities and
skills.
State Economic Officers seek to influence foreign government's
legal and policy environment on economic issues affecting the United
States and promote policy reforms to provide a more predictable
environment for U.S. business. Commercial officers promote exports by
helping individual U.S. firms take advantage of the existing business
environment. In major markets we need both to push governments to level
the playing field and to help U.S. companies challenge the competition.
In small markets the State Department Economic Officers do both jobs.
We know the House Subcommittee is concerned about overlap. To the
extent that there is any overlap, there is always room for improved
coordination. I will look to Stu Eizenstat, when he becomes Under
Secretary for Economic, Business and Agricultural Affairs at the State
Department, to continue the progress made by former Under Secretary
Spero at dealing with concerns raised by the House Subcommittee
regarding an effective division of labor between State and Commerce
officers overseas.
international organizations supplemental
Question. If we give the U.N. the $658 million you have requested
for peacekeeping arrearages, how do we know we won't be right back
again in another year or two?
Answer. Effective in fiscal year 1996, the Administration began
notifying Congress of its intention to vote for a new or expanded
United Nations peacekeeping operation 15 days in advance of the
Security Council vote, and providing a notice of reprogramming of
existing appropriated funds.
In addition, the critical, examinations which the Administration
undertake of existing peacekeeping operations is reflected in a
generally downsized level of peacekeeping operations at the U.N. in
recent years.
Question. Isn't most of the arrearage request for money Britain and
France say we owe them for Bosnia?
Answer. The attached table shows the operations and amounts for
which we have requested funding to pay arrearages. The UNPROFOR
operation is the largest single line item. However, we do not have
information from the U.N. as to how payments from the United States
might be spent, such as which countries could expect to receive
reimbursement for their participation in assessed peacekeeping
operations and which countries would not be reimbursed.
Fiscal year 1997 arrears to U.N. peacekeeping operations
[Dollars in thousands]
U.N. Force/Region Arrears
UNIKOM--Iraq/Kuwait........................................... $2,539
MINURSO--Sahara............................................... 30,016
UNPROFOR--Yugoslavia.......................................... 533,306
UNOSOM II--Somalia............................................ 94,004
UNAMIR--Rwanda................................................ 4,498
UNOMIL--Liberia............................................... 268
UNIFIL--Liberia............................................... 15,715
UNAVEM--Angola................................................ 22,276
UNFICYP--Cyprus............................................... 3,029
UNOMIG--Georgia............................................... 2,364
--------------------------------------------------------------
____________________________________________________
Total................................................... 708,015
==============================================================
____________________________________________________
Fiscal year 1997 funds available to pay arrears \1\........... 50,000
Outstanding after payment..................................... 658,015
\1\ Payment to be made upon required certification.
---------------------------------------------------------------------------
nato expansion
Question. In 1956, I remember when the Hungarians rebelled and the
Russians invaded. They believed Secretary Dulles and our radio
broadcasts, but we did not come to their aid.
Now you are proposing to bring Poland, the Czech Republic,
Slovakia, and Hungary into NATO.
Does this mean that you are now making a treaty commitment that the
U.S. is obligated to go to war to defend these countries? That is what
you are saying, isn't it?
Answer. Article 5 of the North Atlantic Treaty provides that, in
the event of an armed attack against a member of NATO, each other
member ``in exercise of the right of individual or collective self-
defense recognized by Article 51 of the Charter of the United Nations,
will assist the Party or Parties so attacked by taking forthwith
individually and in concert with the other Parties, such action as it
deems necessary, including the use of armed force, to restore and
maintain the security of the North Atlantic area.''
The Treaty protects our right to act in accordance with our
national interests and the provisions of our Constitution. We do,
however, consider it a commitment to come to the assistance of any NATO
member who is the victim of outside aggression. Whichever new countries
are admitted to NATO (and that decision has not yet been made) will
bear the same responsibilities and share the same rights and privileges
as the existing members.
NATO's essential purpose to safeguard the freedom and security of
its members and to work for the establishment of a just and lasting
peaceful order in Europe has not changed and will not change with the
admission of new members. NATO's principle of collective defense has
served as an effective deterrent to armed aggression against its
members for almost 50 years. Enlarging NATO will further our efforts to
strengthen stability and security in Europe.
______
Question Submitted by Senator Barbara A. Mikulski
outdated technology
Question. How can our diplomats represent our interests with rotary
phones and outdated computers?
Answer. The Department of State is engaged in a long-term effort to
modernize its information technology to successfully support the
conduct of foreign affairs. To this end, the Department has focused on
three areas in its modernization efforts:
--The application of management improvement strategies for all
information technology projects, including appropriate decision
making processes, project management methodologies, capital
planning and performance measures practices;
--A coordinated planning approach including a Strategic Plan that
lays out a five-year program that will resolve critical
problems with our obsolete technology infrastructure. In
addition, we are implementing a Tactical Plan, to be followed
over the next two years to achieve the goals set out in the
Strategic Plan. Simply put, the Strategic Plan states what must
be done and the tactical plan lays out in two-year increments,
how we will do it;
--Through targeted investments, we have directed limited IRM funding
to the Department's high priorities: replacing obsolete
equipment (desktop PC's, overseas radios and telephones);
extending electronic mail world-wide; and upgrading our
mainframe computer capabilities. We have made strides in
reducing the number of obsolete units in unclassified systems
overseas, classified systems overseas, telephones, unclassified
e-mail, and computer mainframes.
Our next step is to continue investing in information technology
upgrades and improvements. The additional $80 million we plan to invest
in fiscal year 1998 (above our base) will be used for:
--Infrastructure upgrades.--We will continue to work toward
eliminating our underlying antiquated infrastructure so that we
can provide business quality information systems and services.
Overseas, posts will have modern desktop, computer, and
communications equipment and higher speed communications
circuits. Our headquarters infrastructure will be upgraded as
well to accommodate requirements from overseas.
--Applications.--We are preparing for the Year 2000 and will continue
to develop new and replacement systems supporting major
business requirements such as border security, financial
management, personnel, public access, medical records,
logistics, electronic commerce and real property. We will also
replace our existing electronic mail systems with a better
designed and integrated system, based on industry standards.
--Training.--We will develop a training strategy and employ
innovative tools such as distance learning. Our new School of
Applied Information Technology must map training to the new
generation of equipment being installed and the replacement
business systems that will soon be in use at all department
sites worldwide.
subcommittee recess
Senator Gregg. If there is nothing further, the
subcommittee is recessed.
[Whereupon, at 3:32 p.m., Thursday, March 6, the
subcommittee was recessed, to reconvene subject to the call of
the Chair.]
DEPARTMENTS OF COMMERCE, JUSTICE, AND STATE, THE JUDICIARY, AND RELATED
AGENCIES APPROPRIATIONS FOR FISCAL YEAR 1998
----------
TUESDAY, MARCH 11, 1997
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 1:55 p.m., in room S-146, the
Capitol, Hon. Judd Gregg (chairman) presiding.
Present: Senator Gregg.
SMALL BUSINESS ADMINISTRATION
STATEMENT OF AIDA ALVAREZ, ADMINISTRATOR
ACCOMPANIED BY GREG WALTER, DEPUTY CHIEF FINANCIAL OFFICER
prepared statement
Senator Gregg. You are here and I am here, so let us get
started.
Ms. Alvarez. OK.
Senator Gregg. I expect from our notes that we may not have
a full complement anyway. Hopefully, other Senators will join
us.
This is a fairly informal exercise on this side of the
Capitol. We welcome you to the committee. It is a pleasure to
have you here. Why do you not give us your thoughts on your
budget?
Ms. Alvarez. I hope you do not mind if I have some prepared
notes here. I want to thank you for the opportunity to appear
here to discuss with you, Mr. Chairman and members of the
committee, the President's fiscal year 1998 budget request for
the U.S. Small Business Administration. After my brief remarks,
I, of course, hope to respond to questions and I request that
you enter my written statement into the record.
Senator Gregg. That will be done.
[The statement follows:]
Prepared Statement of Aida Alvarez
Mr. Chairman and Members of the Subcommittee, thank you for the
opportunity to appear before you today to discuss the President's
fiscal year 1998 Budget request for the U.S. Small Business
Administration (SBA).
It has now been a little over three weeks since I was privileged to
take the oath of office as Administrator of the SBA. I have met some
terrific people who have been doing a great job for America's small
business owners. I am excited at the prospect of leading this Agency
forward and believe we can make the SBA even more efficient, more
effective, and of broader help to America's small businesses.
As I said at my confirmation hearing on February 12, I want SBA to
be on the leading edge in financial management, a disciplined,
sophisticated institution that keeps its eye on its larger mission. I
will seek partnering opportunities that leverage our resources and will
apply business-like methods and economies. I also hope to be a strong
advocate for small business. I know that we cannot accomplish our
objectives without adequate resources and strong cooperation with the
Congress. A review of the President's budget request is an appropriate
place to begin our joint effort to chart a course for the SBA. And so I
welcome this opportunity to discuss it with you.
The President's request reflects his continued strong support for
small business and his confidence in the SBA's ability to perform its
mission. It is also consistent with his overall objective to reach a
balanced budget by the year 2002. We appreciate the President's support
and understand his insistence that we work smarter, with greater use of
new technology, and more innovative approaches to program delivery. Our
programs at the SBA are already helping millions of small business
owners. With new resources, we will be able to do even more.
President Clinton has established five priorities for the SBA which
provide the context for our long-standing programs as well as new
initiatives. Those priorities are to: Improve access to capital for
small business owners; reduce burdensome regulations and unnecessary
paperwork requirements that inhibit the growth of small businesses;
make the SBA more effective, efficient and focused on customer needs;
support small business education, counseling and training; and be a
voice for America's small businesses.
small business in the u.s. economy
As we discuss the budget request for SBA, it is important to keep
in mind how critical small business is to the U.S. economy:
--The number of small businesses is growing at a record pace, with
over 825,000 new firms created in 1996--a 55 percent increase
in the total number of new small businesses since 1982.
--Small businesses employ more than 50 percent of the American work
force and generate more than 50 percent of the gross domestic
product (GDP).
--Small businesses are our country's leading source of innovation.
Studies show that small firms innovate at twice the rate of
large firms.
--Small firms also bring more members of society into the economic
mainstream. New women-owned firms (one-third of all firms) have
grown at twice the rate of men-owned businesses for a decade.
From 1987 to 1992, businesses owned by African-Americans grew
at twice the rate of all firms, and Hispanic-owned firms grew
over three times to the rate of all firms.
--Small businesses are the key to a successful national export
strategy. Ninety-six percent of all exporting companies are
small or medium-sized with fewer than 500 employees, according
to the latest Commerce Department data.
--Small business is healthier today, with failures and bankruptcies
declining every year since 1993.
recent accomplishments
SBA has played a key role in the growth of small business over the
last four years by nearly doubling its loan volume, providing record
amounts of private capital investment, and ensuring that millions of
small business owners receive the counseling and training they need to
succeed. With an increased emphasis on building successful public-
private partnerships, the SBA is clearly a leader in the
Administration's efforts to reinvent government and ``do more with
less''. In fact, while SBA's current business portfolio is more than
$35 billion, the Agency's entire fiscal year 1998 budget is less than
the taxes paid in one year by just one company that received critical
SBA financing when it was quite small--Intel Corporation.
During fiscal year 1996, SBA achieved many successes in carrying
out the President's goals for the Agency. We increased access to
capital by guaranteeing more than $10 billion in small business loans,
licensed more new Small Business Investment Companies (SBIC's) than in
the previous 20 years combined, reduced the regulatory burden by
rewriting all of our regulations in plain English and reducing them by
more than half, streamlined Agency operations through the Liquidation
Improvement Project (LIP), and improved access to education and
counseling by funding nineteen new Women's Business Centers (formerly
known as Women's Demonstration Sites) and fifteen U.S. Export
Assistance Centers nationwide.
Over the history of the disaster loan program, SBA has helped over
1.3 million disaster victims by providing more than $24.1 billion in
disaster assistance. During 1996 alone, SBA approved nearly 38,000
disaster loans for an amount of almost $1 billion.
A more complete listing of SBA's fiscal year 1996 achievements are
listed in an Appendix attached to this statement.
fiscal year 1998 budget request
This budget request for the SBA reflects continued support by the
Administration to fund the growth in demand for SBA's principal credit
and non-credit programs during fiscal year 1998.
For fiscal year 1998, SBA requests $701.6 million in new budget
authority and total staffing of 4,634 Full Time Equivalents (FTE's),
which includes 3,047 non-disaster, non-Inspector General (IG) FTE's.
This compares to our fiscal year 1997 appropriation of $852.4 million
that funded 4,569 FTE's, including 2,985 non-disaster, non-IG FTE's.
The principal reason for the reduction in our appropriation requirement
from fiscal year 1997 is the use of unobligated balances to fund the
disaster loan program in fiscal year 1998 and lower loan program
subsidy costs.
In 1998, SBA proposes to continue to increase its reliance on its
private sector partners. Three initiatives will allow SBA to complete
its transition from physically servicing and liquidating its $36
billion loan portfolio to overseeing its private sector partners.
First, 7(a) General Business lenders will be required to service and
liquidate all loans approved after fiscal year 1997. Second, SBA will
sell its $10 billion portfolio of defaulted guarantees and direct loans
beginning in fiscal year 1998, which includes $9 billion currently
outstanding as well as $1 billion in new direct loans and newly
defaulted guarantees. Third, SBA requests $18 million to improve its
portfolio monitoring capabilities. These proposals will allow SBA to
focus its limited resources on expanding assistance to small businesses
while relying on its private sector partners for ``back-end''
activities. The budget estimates that these proposals will lead to
lower credit, administrative, and subsidy costs.
The budget proposes growth in programs to expand access to capital,
assist disadvantaged small businesses, and provide education and
training. As part of SBA's goal of stretching taxpayers' dollars, the
budget also assumes that (1) Small Business Development Companies will
charge counseling fees to substitute for a reduction in federal grants
and proposes that (2) disaster loan borrowers pay an interest rate
equal to the rate on Treasury securities of comparable maturity.
Some of the more significant aspects of our fiscal year 1998 budget
request are:
--Budget authority of $153 million to provide guaranty authority of
$8.5 billion for the 7(a) General Business Loan Guaranty
program;
--For the Section 504 Certified Development Company loan program, no
new budget authority is required to provide a program level of
$2.3 billion;
--For the Small Business Investment Company program, $20.2 million in
budget authority to provide program levels of $376 million of
debenture guarantees and $456 million for participating
securities;
--For the Microloan program, no new budget authority for loan-making
is required. $44.1 million in microloans in fiscal year 1998
will be funded through the carryover of unused budget authority
from fiscal year 1997. SBA is requesting $16.5 million for
technical assistance to microloan borrowers;
--An additional $18 million to support enhanced lender monitoring and
oversight;
--$600,000 to support increased International Trade outreach and
implementation of the new ``SBA Export Express'' lending tool;
--No new loan subsidy budget authority is requested for the Disaster
Loan program. Expected carryover from fiscal year 1997 will be
used to support $785 million in disaster lending;
--$57.5 million in federal funding for the Small Business Development
Center (SBDC) program;
--$3.5 million to provide $1.7 billion in surety bond guarantees;
--An increase in funding for the Minority Enterprise Development
(MED) program to restore 7(j) business development assistance
to previously-provided levels;
--For the Office of Advocacy, a restoration of a $1.4 million funding
level for data collection and research that is statutorily-
mandated;
--In support of women business entrepreneurs, $4 million to provide
technical and business development assistance through the
Women's Business Centers;
--To support SBA's Regulatory Ombudsman and the regional Regulatory
Fairness Boards, $500,000; and
--$10.6 million for the Office of Inspector General.
Now I would like to take you through a more detailed description of
our budget:
Credit and finance programs
The SBA expands small business access to capital by providing
credit, in partnership with thousands of financial intermediaries, for
those small businesses unable to obtain loans through the commercial
markets to start up or expand their business. Historically, small firms
have faced serious problems obtaining long-term loans in the private
credit marketplace because lenders try to avoid mismatches of long-term
assets with their mostly short-term liabilities. The SBA, however, has
helped to alleviate this problem by providing loan guarantees to
participating lenders under a variety of programs.
7(a) General Business Loan Guarantee Program.--In its Section 7(a)
general business loan guaranty program, SBA guarantees loans made by
private sector lenders to small firms for working capital, start-up
costs, expansion, and other purposes. For fiscal year 1998, SBA
proposes to increase the level of Section 7(a) loans. An appropriation
of $153 million is requested, which will support a program level of
$8.5 billion, up 9 percent from the $7.8 billion program level in
fiscal year 1997.
Reflecting an improvement of the 7(a) loan portfolio and
implementation of SBA's Liquidation Improvement Project, the baseline
(current services) 7(a) subsidy rate declines from 2.5 percent to 2.32
percent. We propose reducing this rate to 1.80 percent through the
following policy initiatives. First, we propose that all new 7(a) loans
approved in fiscal year 1998 be serviced and liquidated by the
participating lender. In the event of default, lenders will be required
to liquidate all non-real estate assets prior to purchase by the SBA,
with the real estate liquidated after purchase. Given the time value of
money and the reduced purchase of interests, this will lower SBA's
default costs--and therefore the fiscal year 1998 subsidy rate--by an
additional 26 basis points and $22.1 million. Currently, nearly 70
percent of new loans are serviced and liquidated by lenders through our
LowDoc, Preferred Lender, Certified Lender, and FA$TRAK programs. This
proposal builds on this record of success.
Second, the budget includes $18 million for portfolio monitoring
improvements. This funding will be used to recruit expertise in lender
oversight, establish financial performance goals for lenders, create a
database for tracking lender and portfolio performance, and develop a
management information system to provide timely and accurate
information to Agency management. This initiative will lend to lower
defaults and increased recoveries, lowering the 7(a) subsidy rate by an
additional 26 basis points, which saves $22.1 billion at our requested
$8.5 billion loan level.
Certified Development Company (504) Program.--The Section 504
Certified Development Company (CDC) Loan Program provides long-term,
fixed-rate financing to small businesses to acquire real estate,
machinery, and equipment for expansion of business or modernizing
facilities. Through this program, the Agency promotes economic
development and job creation by stimulating the flow of long-term
financing to small firms for projects that involve fixed assets or
expansion.
SBA requests extension of the Section 504 program fees authorized
by the Congress for fiscal year 1997. Using a 15/16 percent pass-
through fee authorized by Congress last year, coupled with improved
program performance and increased expected recoveries by SBA resulting
from the LIP, provides a zero percent subsidy rate, the same rate as in
fiscal year 1997. With no new appropriations required, SBA proposes a
program level of $2.3 billion.
Small Business Investment Company Program.--The Small Business
Investment Company (SBIC) Program is an important source of equity and
subordinated debt financing for small businesses. The program provides
SBA-backed funds to supplement private capital raised by private sector
venture capital companies. These combined funds represent an important
source of capital for growing small businesses.
For fiscal year 1998, SBA proposes to increase the level of the
SBIC Debentures and Participating Securities programs.
For the SBIC debenture guarantee program, the improvement in the
default rate has resulted in a lowering of the subsidy rate from 3.19
percent in fiscal year 1997 to 2.30 percent in fiscal year 1998. Our
request of $8.7 million will support a program level of $376.2 million,
up 25 percent from the $300 million program level in fiscal year 1997.
For SBIC Participating Securities, due to changes in the discount
rate, market premiums and other technical changes, the subsidy rate
declined from 3.29 percent in fiscal year 1997 to 2.54 percent in
fiscal year 1998. Our request of $11.6 million will support a program
level of $455.9 million, up 11 percent from the $410.3 million program
level in fiscal year 1997.
Microloan Program.--The Microloan Demonstration Program allows SBA
to evaluate the effectiveness of using third-party, experienced lenders
and technical assistance providers to make smaller loans and provide
technical support to small businesses who lack access to even very
small amounts of capital. The program's great strength is the technical
assistance that accompanies each microloan and is provided by SBA grant
funding.
For fiscal year 1998, SBA proposes to increase the level of
Microloan credit and technical assistance available to small
businesses. For direct loans, SBA proposes to use $2 million in
unobligated funds available in this program from fiscal year 1997 to
support a program level of $19.5 million, at a 10.28 percent subsidy
rate. For Microloan guarantees, SBA proposes to use $2 million in
unobligated funds available from fiscal year 1997 to support a program
level of $24.6 million, at a 8.12 percent subsidy rate.
SBA also proposes to increase the level of microloan technical
assistance grants, which are a critical component of this program's
success. Funding for these grants is requested at a level of $16.5
million, with $2.5 million proposed to be transferred from fiscal year
1997 unobligated balances in the microloan program. This is a 27
percent increase above the fiscal year 1997 level of $12.9 million.
Export Loans.--In fiscal year 1998, SBA will increase its efforts
to assist U.S. small businesses that are ``going global'' through an
expanded Export Working Capital Program and implementation of the new
``SBA Export Express'' package, which is designed to increase the
number of lenders willing to extend export working capital to small
businesses. The ``SBA Export Express'' was recently announced by
President Clinton in the fiscal year 1996 report issued by the Trade
Promotion Coordinating Committee. SBA is developing this tool to
provide lenders with an easy method to evaluate overseas market
conditions and associated risk, thus allowing them to more readily and
accurately assess the ``bankability'' of particular export
transactions, resulting in more capital provided to small businesses.
The fiscal year 1998 budget requests $600,000 to support increased
International Trade outreach and the Export Express initiative.
Disaster Loan Program.--SBA administers the only Federal government
credit program assisting businesses and homeowners who are victims of
disasters. The program is the only form of SBA assistance not limited
to small businesses. Disaster loans from the SBA help homeowners,
renters, businesses of all sizes and non-profit organizations return to
their pre-disaster condition. The SBA's disaster loans are often the
lifeline in disaster-ravaged communities, helping to spur employment
and stabilize the tax base.
Due to the availability of sufficient unobligated balances from
fiscal year 1997, no new appropriations are requested for fiscal year
1998 to support the proposed $785 million in disaster loans. This
represents the ten-year average level of program activity, excluding
the Northridge earthquake. SBA's policy proposal is to reduce the
subsidy rate from 20.02 percent in fiscal year 1997 to 11.44 percent in
fiscal year 1998 due to an increase in the interest rate charged to
loan borrowers. The interest rate for borrowers ``without credit
elsewhere'' is proposed to be increased to the Treasury cost of funds
(anticipated at 6.11 percent in fiscal year 1998). Additionally, the 8
percent interest rate cap for borrowers ``with credit available
elsewhere'' is proposed to be removed.
Federal Disaster Contingency Funding.--Emergency needs beyond the
10-year average of the disaster loan program are proposed to be funded
from a central contingency fund requested as Funds Appropriated to the
President (FAP). This account will include funds for emergency federal
disaster response efforts, including the Small Business Administration,
the Federal Emergency Management Agency (FEMA), Departments of
Agriculture and Interior firefighting, Department of Transportation
federal-aid highways emergency relief, and Corps of Engineers emergency
activities.
Surety Bond Guarantee Program.--SBA is requesting $3.5 million in
new budget authority to support $1.67 billion in guarantees for the
Surety Bond Guarantee Program. In this program which consists of a
prior approval program and a preferred surety bond program, SBA
guarantees bonds issued by surety companies on behalf of small
contractors. The SBA guarantees up to 90 percent of losses incurred on
bonds for construction, service and supply contracts of $1.25 million
or less that are performed by small business.
Education and training
During fiscal year 1998, SBA plans to increase the number of
outlets serving our small business customers across the country,
including the One Stop Capital Shops, Women's Business Centers,
Business Information Centers and Microloan intermediaries. At the same
time, SBA plans to expand the activities and improve the effectiveness
of its U.S. Export Assistance Centers. SBA will also work to coordinate
business education more closely with financial assistance to maximize
the chances of success for small business owners who obtain SBA-
guaranteed loans. The Agency will offer education for small businesses
in electronic commerce and electronic data interchange, expand its on-
line services for small businesses, and focus business development
assistance on traditionally under-served groups, such as veterans,
women, African Americans, Native Americans, Hispanic Americans, and
Asian Americans.
SBA will also continue to integrate the use of private sector
resource partners such as the nearly 1,000 Small Business Development
Centers and 12,500 Service Corps of Retired Executives (SCORE)
volunteers to provide counseling, training and other resources with
SBA's financial programs.
Small Business Development Centers.--The Small Business Development
Center (SBDC) Program operates nearly 1,000 centers in all parts of the
country to foster economic development through the provision of
management, technical and research assistance to the nation's small
businesses. SBDC's are partially funded from Federal appropriations,
using significant matching funds to provide for the program's
successful operation.
For fiscal year 1998, the Administration proposes to reduce the
federal appropriation for Small Business Development Centers to a level
of $57.5 million. Beginning in fiscal year 1996, the congressional
restriction on charging fees for counseling was lifted. The SBA assumes
that SBDC's use this authority to supplement the level of federal
funding to provide enhanced services to small businesses. Education and
training are critical to the success of established small business
owners as well as new entrepreneurs. Last year, an estimated 850,000
individuals received management training and counseling from SBA's
national network of business education and assistance programs,
primarily from the nearly 1,000 SBDC's and 12,400 SCORE volunteers.
Business Information Centers.--This program is requested at a level
of $500,000 for fiscal year 1998, allowing us to open 10 to 12 new BIC
locations. SBA will also support the effort started two years ago to
open new Tribal Business Information Centers (TBIC's) to assist Native
American entrepreneurs. BIC's combine the latest computer technology,
hardware and software, an extensive small business reference library of
hard copy books and publications and management videotapes to help
entrepreneurs plan their business, expand an existing business or
venture into new business areas. The use of software for a variety of
business applications offers customers of all types a means of
addressing diverse needs. In addition to the self-help hardware,
software and reference materials, BIC's have on-site counseling
provided by Service Corps of Retired Executives (SCORE) volunteers and
other resource partners. The BIC's are one of our most innovative
methods of providing a one-stop approach to information, education and
training for small business owners.
Service Corps of Retired Executives.--The budget requests that
funding for the SCORE program return to a level of $3.5 million, an
increase of 6 percent above the fiscal year 1997 level of $3.3 million.
SCORE counsels and trains the largest number of start-up business
owners each year. Through one-on-one counseling and workshops conducted
by 12,500 volunteers, SCORE reaches approximately 350,000 business
owners annually, and because the program utilizes volunteers, the
program represents one of the best bargains for the taxpayer in terms
of expenditures compared to services delivered.
Women's Business Centers.--The fiscal year 1998 budget proposes to
continue funding for the Women's Business Centers (formerly known as
the Women's Demonstration Sites) at a level of $4 million for fiscal
year 1998, allowing SBA to open 10 to 12 new business centers. These
Centers provide valuable counseling, training, and other forms of
assistance to the ever-growing population of women-business owners and
entrepreneurs.
To expand the information available to the federal government on
women business owners, SBA will facilitate a survey by the Bureau of
the Census. For fiscal year 1998, the cost of this effort to the Agency
will be $1 million, which is included in the Agency's budget request.
This will not reduce any of the funding for our Women's Business
Centers.
One-Stop Capital Shops.--The One-Stop Capital Shop (OSCS) program
is requested at a level of $3.1 million, an increase of 12 percent
above the fiscal year 1997 level. This amount is needed to support the
program after an additional six shops are opened in fiscal year 1997,
bringing the total number to 17. The OSCS program combines several of
SBA's resources into a single program located in Empowerment Zones and
Enterprise Communities. Combining the delivery of our financial and
business development programs in one location provides a more user-
friendly approach to serving our customers.
United States Export Assistance Centers.--SBA proposes to increase
funding for the U.S. Export Assistance Centers (USEAC's), which provide
U.S. exporters with information and access to all export promotion and
export finance activities of the Federal Government. The requested
level is $3.1 million, an increase of 24 percent above the fiscal year
1997 level of $2.5 million, which will be used to support a network of
19 USEAC's in operation.
Small business advocacy
Office of Advocacy.--During fiscal year 1998, SBA, through its
Office of Advocacy, will assist the small business community by
providing the small business perspective in regulatory, policy and
legislative forums. This includes providing oversight of the Regulatory
Flexibility Act, championing implementation of recommendations from the
1995 White House Conference on Small Business while maintaining close
liaison between the Agency and Conference delegates.
SBA requests funding for the Advocacy Database and Analysis at a
level of $1.4 million. This amount represents a funding level similar
to the levels provided to this office by Congress prior to fiscal year
1995. It is also the amount required to fulfill the office's statutory
mandates. Funding for this office's functions during fiscal year 1996
and fiscal year 1997 has depended on limited reprogramming of SBA's
general salaries and expenses. The Advocacy database facilitates the
analysis and reporting on small business trends, needs and
characteristics, which are relied on heavily by legislators, federal
policy makers and the media. The database also provides the basis for
the statutorily-mandated annual report, ``The State of Small Business:
A Report of the President''.
Minority Enterprise Development.--Through the MED program, SBA
assists small businesses owned and controlled by socially and
economically disadvantaged individuals to develop to the point where
they can compete successfully in the mainstream economy. Through
management and technical assistance and the award of sole-source and
limited-competition contracts, MED provides a way for such small
businesses to grow so that they can create jobs and contribute to our
economy.
SBA proposes to increase funding for Section 7(j) management and
technical assistance. This program is requested at a level of $9.2
million, an increase from the fiscal year 1997 level of $2.6 million.
The 7(j) program provides necessary business development and technical
assistance to socially and economically disadvantaged individuals,
allowing them to improve their skills.
SBA also proposes a $1.9 million increase in the MED operating
budget to improve processing of 8(a) applications and eligibility
determinations, and to improve program administration by hiring 10
FTE's and making improvements to the MED program systems.
Government Contracting.--SBA's Government Contracting program
ensures access to opportunities for government contracts and
subcontracts. Each year, these opportunities result in billions of
dollars in contract and subcontract awards to small business firms.
The budget requests an increase in funding for the Procurement
Automated Source System (PASS), to a level of $1.2 million. This
increase will allow for the maintenance of this important small
business database and its expansion as a government-wide source of
small businesses to address recent Electronic Commerce initiatives.
Office of the Inspector General (OIG).--SBA proposes to increase
the Office of Inspector General's (OIG) staffing by 10 FTE above the
fiscal year 1997 authorized level. The burgeoning Agency loan portfolio
(both in the business loan and the disaster assistance programs) and
the increased reliance on lenders to originate and service SBA-
guaranteed loans make the oversight role of the OIG critical.
Inadequate OIG staffing would be an imprudent risk at a time when
``doing more with less'' is a policy which must succeed--and failures
resulting from fraud, waste, or abuse cannot be tolerated. An increase
of $1.36 million over fiscal year 1997, for a total of $10.6 million,
would allow the OIG to fund a ``current services'' level of oversight,
as well as add 10 FTE to begin addressing SBA's business loan portfolio
growth. This level of staffing would ensure at least a minimal level of
oversight and assurance that the programs and funds of the Agency are
being managed in an appropriate manner.
Championing Regulatory Reform and Paperwork Reduction.--During
fiscal year 1998, SBA will continue to work with other Federal
agencies, including the Occupational Safety & Health Agency (OSHA), the
Environmental Protection Agency (EPA) and the Internal Revenue Service
(IRS), to minimize the burden of regulations and paperwork requirements
on small businesses so that they can be more productive. The Small
Business Regulatory Enforcement Fairness Act (Public Law 104-121)
enabled SBA to create a national Ombudsman and to establish ten
regional regulatory fairness boards. These initiatives began in fiscal
year 1996 without separate funding in SBA's budget. The fiscal year
1998 budget requests $500,000 to support the Ombudsman and the
operational costs of the regional Regulatory Fairness Boards.
Streamlining the SBA
Efforts to streamline the SBA can result in a more efficient, cost-
effective delivery of services and reduced fraud, waste, and abuse.
Improved financial management, expanded training, and increased use of
information technology will also result in portfolio quality
improvements and, consequently, fewer defaults and reduced loss reserve
requirements. These efforts include:
Participating lenders will service and liquidate all new 7(a)
loans.--Starting in fiscal year 1998, an SBA participating lender will
be required to service and liquidate all new 7(a) loans. The lender
will liquidate all non-real estate assets of the business prior to
SBA's purchase, and complete the liquidation of the real estate after
the purchase. This proposal has a direct impact on the lowering of the
7(a) subsidy rate in fiscal year 1998 due to the deferral in the timing
of the SBA purchase and the anticipated increase in net recoveries to
the government.
SBA will increase its lender oversight and financial information.--
Over the past four years, SBA has aggressively increased access to
capital, reduced staffing, and delegated authority to its private
sector partners. In order to support these trends and to maintain a
quality portfolio, the budget provides $18 million for improving
portfolio monitoring. This funding will be used to recruit expertise in
lender oversight, establish financial performance goals for private
sector partners, create a database for tracking lender and portfolio
performance, and develop a management information system to provide
timely and accurate information to Agency management. Because this
improved oversight capability will allow SBA to reduce the risk of
default and increase recoveries, this proposal has a direct impact on
lowering the 7(a) subsidy rate in fiscal year 1998.
Business loan assets will be sold.--Beginning in fiscal year 1998,
and through the end of fiscal year 1999, SBA proposes to sell its
business loan assets comprised of all direct loans, guaranteed loans
purchased, and other liquidation assets, such as collateral acquired as
a result of liquidation. The Administration estimates that these
business loans can be sold above the government's hold value, producing
$50 million in savings in both fiscal year 1998 and 1999. SBA will sell
future defaulted guarantees on an on-going basis. SBA's loan asset sale
initiative draws on the success of other federal agencies, such as the
RTC, HUFD, and the VA, in selling loan assets. These sales will allow
the government to take advantage of the efficiencies of the private
sector and allow SBA to focus its limited budget resources on extending
credit to small businesses rather than servicing and liquidating a
growing portfolio.
Disaster loan assets will be sold.--Beginning in fiscal year 1998,
and through the end of fiscal year 2000, SBA proposes to sell its
disaster loan assets comprised of direct loans and other liquidation
assets, such as collateral acquired as a result of liquidation.
Provisions will be concluded in the sale contracts to protect the
public policy mission of this program.
SBIC examination and license fees will be used to offset
administrative costs.--A legislative proposal is being made to have the
license and examination fees charged SBIC's deposited into the Salaries
and Expenses account. This will help offset the administrative costs of
this program and provide for the contracting-out of certain
administrative activities, such as annual SBIC examinations. The fiscal
year 1998 budget includes a minimum of $1 million as ``offsetting
collections'' from this proposal.
Improve Office of the Chief Financial Officer expertise.--This
budget requests $1 million over the current services funding for the
OCFO to allow the office to increase staffing, skills, and systems
capacity. This funding will allow SBA to continue to improve its
financial analysis of loan performance and subsidy estimates, including
contract for outside expertise as needed.
Increase SBA's Full-Time Equivalent (FTE) employment level by 62
above the fiscal year 1997 funded level.--The budget proposes to
increase SBA's regular-funded FTE level by 62 above the level that
could be funded within the fiscal year 1997 appropriation. These
positions will be specifically targeted to bring technically expert
individuals to the priority areas indicated within our proposed budget,
such as lender monitoring and oversight, asset sales, 8(a) application
processing, financial management and systems.
Mr. Chairman, the fiscal year 1998 budget reflects the President's
continuing commitment to the nation's small business community and to a
strong SBA. SBA will build upon its successes and accomplishments of
the last four years. SBA will continue to serve as a vital catalyst for
economic growth through its support of the small business sector, using
both the proven successes of its traditional credit and business
education programs, and the new initiatives which are improving the
accessibility and efficiency of SBA's services. The budget request for
the SBA provides the appropriate level of resources to support these
goals and objectives.
______
Addendum
Recent Accomplishments of the U.S. Small Business Administration
The following achievements and others during fiscal year 1996 have
laid the groundwork for SBA's continued contribution to this
Administration's economic legacy.
providing access to capital for small business owners
Recent SBA achievements in this area are:
The 7(a) and 504 Loan Programs.--Access to adequate start-up and
working capital is a key to a healthy small business sector. Since
fiscal year 1992, SBA has significantly improved access to capital for
America's entrepreneurs through its 7(a) and 504 loan programs. In
fact, the agency's annual guaranteed loan volume has more than doubled
since fiscal year 1992. Over that same period, the number of loans to
non-minority businesses has grown, loans to women small business owners
has more than tripled, and loans to minority borrowers have nearly
tripled in number and more than doubled in amount (see table below).
The important factors in this expansion were the Small Business Lending
Enhancement Act of 1995, internal agency reforms, and our emphasis on
reaching traditionally underserved segments of the populace.
INCREASES IN SBA'S 7(A) AND 504 LENDING
----------------------------------------------------------------------------------------------------------------
Fiscal year 1992 Fiscal year 1996
-------------------------------------------------------------
No. of No. of
loans Dollars loans Dollars
----------------------------------------------------------------------------------------------------------------
Total............................................. 26,381 $6,500,000,000 52,729 $10,200,000,000
Women............................................. 3,588 634,000,000 11,452 1,600,000,000
Minorities........................................ 3,868 1,000,000,000 10,135 2,100,000,000
Veterans.......................................... 3,710 904,000,000 7,155 1,400,000,000
----------------------------------------------------------------------------------------------------------------
SBIC Program.--The SBA has extended greater access to equity
capital through the SBIC program which provides leveraged private
equity and subordinated debt to small businesses through licensed
private venture capitalists. In fiscal year 1996, more than 2,100
businesses received SBIC financing valued at $1.6 billion. In fact,
more private capital has been raised in the SBIC program in the last
two years than in the past 20 years combined. It is significant to note
that SBA-backed venture capital assisted, at some point, in the
development of 18 of the ``100 Fastest-Growing Public Firms'' in the
U.S. as ranked by Fortune magazine in 1996.
Liquidation Improvement.--Last year, the Agency developed and began
implementation of a Liquidation Improvement Project (LIP) to increase
the SBA's dollar recoveries and reduce the Agency's subsidy rate (loss
reserves requirement), through timely completion of liquidation and
litigation and other improved servicing actions. LIP's impact is
reflected in the fiscal year 1998 7(a) and 504 subsidy rates. These
rates project that SBA will increase recoveries by 7.3 percent in the
7(a) program and 11.4 percent in the 504 program over historical rates.
SBA anticipates that will result in a 20 percent increase in
recoveries. LIP has also lowered the estimate cost of loans disbursed
in fiscal year 1991-1996 by $89.4 million.
Disaster Assistance--Serves as the federal government's ``disaster
bank'' for non-farm private sector losses.--For over 40 years, SBA has
helped more than 1.3 million homeowners, renters, businesses of all
sizes, and non-profit organizations pay for rebuilding after disasters,
an amount exceeding $24.2 billion in assistance. In fiscal year 1996,
SBA approved 37,822 loans for a total of $987.9 million in disaster
assistance to both homeowners (27,542 loans for $475.7 million) and
large and small businesses (10,280 loans for $512.2 million). Note that
the preponderance of the agency's disaster loans are made to
individuals, not businesses, notwithstanding SBA's name.
Angel Capital Electronic Network (ACE-Net).--SBA's Office of
Advocacy developed the ACE-Net, which was announced by President
Clinton in October, to help small businesses raise private equity
capital in the range of $250,000 to $5 million. ACE-Net will make it
easier for small entrepreneurs to network with ``angel'' (accredited)
investors nationwide by listing investment opportunities on the
Internet.
Microloan Demonstration Program.--The Microloan Demonstration
Program makes very small loans ($25,000 and under) available to
entrepreneurs traditionally considered ``unbankable,'' largely due to
inexperience with credit, credit problems, or lack of assets. Since its
inception in 1992, more than 100 lender intermediaries have made $51
million in microloans to more than 4,000 entrepreneurs, and we have
experienced no losses to date due to the oversight provided by the
microloan technical assistance providers.
Minority, Women's, and Veterans' Prequalification Loan Programs.--
SBA has developed two pilot loan programs to provide specialized
support and financial assistance to minorities and women. The Women's
Prequalification Loan program, which was highlighted by President
Clinton in October, is now offered through many of the SBA's district
offices, and the Minority Prequalification Loan program continues in
its initial pilot stage. Both programs allow SBA to prequalify
guarantees for loans of up to $250,000 before the business owner
approaches a bank and to focus on the applicant's character, credit
experience and reliability rather than assets. Additionally, SBA is now
developing a Veterans prequalification pilot program to further assist
veterans seeking to start a small business.
International Trade.--In fiscal year 1996, SBA initiated
partnership agreements with its counterparts in Russia and Ireland to
foster improved cooperation and business opportunities for small
businesses in these markets. SBA, now represented in the Gore-
Chernomyrdin Commission, is actively working with the banking and small
business communities to encourage American small businesses to explore
exporting opportunities in the Russian Federation. Similarly, at the
State Department's request, Administrator Lader made presentations at
the past two Middle East/North Africa Economic Summits and led the U.S.
delegation to this year's Asia Pacific Economic Cooperation (APEC)
Small and Medium-sized Enterprises Ministerial meeting. Such SBA
efforts to promote small business export and development
internationally are likely to have long-term positive consequences.
U.S. Export Assistance Centers (USEAC's).--Working with the
Department of Commerce and Export Import (Ex-Im) Bank, SBA has already
opened 15 USEAC's across the country to provide in a single location
hands-on export marketing and trade finance counseling. Another 4
USEAC's are scheduled to open in early 1997 for a total of 19. SBA and
Ex-Im have also harmonized their Export Working Capital Guarantee
programs to achieve a streamlined application process and cut
duplication of effort. These actions are important to help small
businesses with foreign orders secure financing to produce goods and
services for export.
Research and Technology Development.--SBA is also improving access
to capital for small businesses in the research and technology sector.
Under SBA's Small Business Innovation Research (SBIR) program, small
businesses propose innovative ideas in competition for specific
research and development awards from participating federal agencies
with the goal of subsequent commercialization. Federal agencies made
approximately 4,500 awards to SBIR firms totaling almost $900 million
in fiscal year 1996; and this amount is expected to grow to 5,500
awards totaling approximately $1.1 billion in the current fiscal year.
reduce burdensome regulations and unnecessary paperwork requirements
that inhibit the growth of small businesses
Increase the support for SBA's Ombudsman and Regional Regulatory
Fairness Boards.--For fiscal year 1998, SBA requests $500,000 to
support the ``Ombudsman'' and the operation costs of the Regional
Regulatory Fairness Boards, mandated by the Small Business Regulatory
Enforcement Fairness Act (SBREFA), passed by Congress last year.
Recent SBA achievements in this area are:
Regulatory Reform.--SBA's page-by-page, line-by-line review of its
regulations converted them to a plain-language format and eliminated
more than half the pages. The Agency has nearly completed the same
reform of its 25,000-page Standard Operating Procedures, which are
anticipated to be reduced to about 8,000 pages when completed.
SBA has also achieved significant results in working with other
federal agencies to ensure compliance with the Regulatory Flexibility
Act. Illustrations include the EPA (simplifying reporting for small
firms dealing with hazardous waste), the SEC (developing a simplified
registration requirement for small companies), the FCC (structuring
bidding rules favorable to small businesses for the auction of personal
communications services licenses), and OSHA.
Paperwork Reduction.--The SBA's Low Documentation, or ``LowDoc,''
loan application, first established in 1993, is an excellent example of
reducing paperwork and providing better service. Through this program,
SBA has reduced the paperwork small business owners need to complete to
obtain loans of under $100,000 from a voluminous application to just
one page, with dramatically faster approval time. Since smaller loans
are less profitable for lenders, LowDoc makes it easier for a lender to
ask for SBA's guarantee. In fiscal year 1994, 5,862 SBA LowDoc loans
were approved; that number increased to 20,728 loans in fiscal year
1996. Additionally, in 1993, the disaster business loan application was
cut in half.
A new pilot, FA$TRAK, reduces paperwork further by allowing
certified lenders to use their own paperwork, complete no SBA forms,
and share the risk equally with the Agency by retaining a 50 percent
exposure on the loan. In fiscal year 1996, this program accounted for
2,733 loans worth $113 million.
The average processing time for 8(a) applications has been reduced
from 208 days in 1993 to 89 days currently; and through the recent
introduction of computer-disk applications, the processing time will
soon be reduced to 15 days.
streamlining the sba
Recent SBA achievements in this area are:
U.S. Business Advisor.--In 1996, SBA and the Commerce Department
unveiled the U.S. Business Advisor, an Internet service providing
nearly all the federal government's available small-business
information. SBA's own Home Page, developed in this Administration, has
already logged over one million hits per week.
Centralization and Streamlining.--SBA has centralized the Preferred
Lenders Program (PLP), which authorizes active, best-performing lenders
to use their own credit judgment, without SBA's re-analysis, in giving
an SBA guarantee on a loan. This provides the opportunity to initiate
more efficient, computer-based tracking systems and to streamline the
loan eligibility determination process. Centralization played a strong
role in increasing the number of loans approved under the PLP process
from 4,298 loans totaling $1.3 billion in fiscal year 1995 to 9,624
loans totaling $3 billion in fiscal year 1996, nearly 40 percent of the
dollar value of all 7(a) loans approved.
Continue to support centralization.--SBA continues to look for
further opportunities to streamline operations and centralize functions
when it improves the efficiency and effectiveness of program delivery
and operations and serves to improve customer service. During fiscal
year 1996-1997, SBA centralized a large portion of its loan servicing
operations, and is currently implementing the centralization of its
LowDoc loan processing.
Contracts in the 8(a) program have increased.--8(a) contracts have
increased from a total of $4.9 billion in fiscal year 1992 to
approximately $6.6 billion for fiscal year 1996. Also, in the past
year, more firms have been removed from the 8(a) program than in the
program's cumulative history since 1968, and renewed emphasis has been
placed on its economic development mission.
expanding access to education and training
Recent SBA achievements in this area are:
One Stop Capital Shops (OSCS's).--A good example of SBA's
commitment to traditionally underserved constituencies is the OSCS's,
SBA's contribution to President Clinton's Empowerment Zone/Enterprise
Community (EZ/EC) initiative. In the last 18 months, SBA opened 10
OSCS's in Boston, Kansas City, Detroit, Harlem, Philadelphia/Camden,
the Kentucky Highlands, Rio Grande, Baltimore, Tacoma, and Oakland,
providing a full range of SBA lending programs, counseling and
technical assistance to distressed urban and rural communities. Seven
more sites are planned for fiscal year 1997, bringing the total number
to 17.
SBDC's and SCORE.--Education and training are critical to the
success of established small business owners as well as new
entrepreneurs. Last year, an estimated 850,000 individuals received
management training and counseling from SBA's national network of
business education and assistance programs, primarily from the nearly
1,000 SBDC's and 12,400 SCORE volunteers.
Women's Business Centers.--Across the country, SBA sponsors 54
Women's Business Centers (formerly the Women's Demonstration Sites),
designed to provide long-term training and counseling to current and
potential women business owners. Women's business ownership, through
these centers and in all of the Agency's programs, has been a major
Administration initiative.
USEAC's.--The USEAC's jointly operated by SBA, Commerce, and the
Ex-Im Bank provide business counseling and training to small businesses
interested in exporting and provide them access to programs like SBA's
new Export Working Capital loan program. This year, four new USEAC's
are scheduled to open, for a total of 19.
BIC's.--Since 1993, SBA has established 38 BIC's, and in the past
two years established 15 Tribal BIC's nationwide. These facilities make
available to small business owners the latest high-tech hardware,
software, interactive videos and telecommunications equipment.
advocating for america's small businesses
Recent SBA achievements in this area are:
White House Conference on Small Business.--The 1995 White House
Conference on Small Business, including the preliminary state and
regional conferences held across the country, attracted more than
20,000 small business owners who contributed their thoughts, interests,
and ideas to the Clinton Administration and to Congress. At the
national Conference, some 2,000 national delegates made 60
recommendations concerning areas as diverse as access to capital, the
globalization of markets, health care, pension reform and the effect of
taxes on small business formation and growth. During the
Administration's first term, an unprecedented number of recommendations
from the White House Conference have been addressed, either whole or in
part, making the 1995 gathering the most successful White House
Conference on Small Business ever. The Office of Advocacy worked
tenaciously to keep delegates informed about the Administration's and
Congress' progress, distributed an implementation report to
participants, and at the end of last year hosted a Washington
conference for White House Conference delegates to update them on
continuing progress.
------
Biographical Sketch of Aida Alvarez
Aida Alvarez is administrator of the U.S. Small Business
Administration (SBA) and a member of the President's Cabinet.
Alvarez, 47, is a former government financial regulator,
investment banker and journalist. She is the first Hispanic
woman and the first person of Puerto Rican heritage to hold a
position in the President's Cabinet.
As SBA Administrator, Alvarez directs the delivery of a
comprehensive set of financial and business development
programs for U.S. small businesses. The agency provides
financing worth about $11 billion a year to small businesses
across the nation.
Alvarez comes to the SBA after leading the government's
first effort to regulate the nation's two largest housing
finance companies, the Federal National Mortgage Association
(Fannie Mae) and the Federal Home Loan Mortgage Corporation
(Freddie Mac). As Director of the Office of Federal Housing
Enterprise Oversight (OFHEO), she created a financial safety
and soundness oversight program for Fannie Mae and Freddie Mac.
These two firms are government-chartered corporations whose
operations form the core of the trillion-dollar secondary
mortgage market.
Before her OFHEO appointment in June 1993, Alvarez was an
investment banker at the First Boston Corporation and at Bear
Stearns. Her public service background includes two years as
vice president at the NYC Health & Hospitals Corporation. She
also served as a commissioner on the New York City Charter
Revision Commission, a member of the Governor's State Judicial
Screening Committee, and a member of the Mayor's Committee on
Appointments.
During her career as a journalist, Alvarez won a Front Page
award while at the New York Post. She also was an award winning
television news reporter and anchor for Metromedia television
(Channel Five) in New York. In 1982, she won an Associated
Press Award for Excellence and an Emmy nomination for her
reporting of guerrilla activities in El Salvador.
Her past board memberships include the National Hispanic
Leadership Agenda, the New York Community Trust and the
National Civic League. She is a former board chairman of the
Municipal Assistance Corporation/Victim Services Agency, New
York.
Alvarez is a native of Aguadilla, Puerto Rico. She is a cum
laude graduate of Harvard College. In 1985, she was awarded an
honorary Doctor of Laws from Iona College.
summary statement
Ms. Alvarez. I am most enthusiastic about the challenge
before me and I am grateful for the opportunity to be the 20th
SBA Administrator. This is my 22d day on the job, and during
that time, I have been quite busy, including being involved at
the four different disaster sites in Arkansas, Kentucky,
Tennessee, and Ohio. I have to say, I marvel at the courage of
the disaster victims, but I also was very impressed by the
Federal response. Certainly, I was very impressed by the SBA
response. I think many people do not realize that the SBA is
the banker to disaster victims and making loans across the
board beyond the small business loans. The sort of the first-
rate operation that the disaster folks operate is actually
typical, I think, of what SBA does and of the smart
professional people with a lot of heart who work at SBA.
SBA's budget request for fiscal year 1998 continues the
administration's commitment to assisting small businesses. We
are requesting $701.6 million, compared to $852.4 million for
fiscal year 1997. Though this request is reduced from previous
years, it does allow for a continuation of all the existing
programs, and, in fact, the total credit assistance would be
$14.4 billion for fiscal year 1998 as compared to $13.8 billion
for fiscal year 1997.
Loans
This is a critical time for the SBA. We are shifting the
traditional loan-related activities to the private sector and
we are also centralizing loan servicing and processing
functions. Currently 70 percent of new 7(a) loans are serviced
and processed by private lenders and the expectation is that in
1998, all new 7(a) loans will be serviced and liquidated by
private lenders.
We are implementing a pilot project to privatize 30 percent
of the disaster home loan servicing and we are also starting in
fiscal year 1998 to begin selling business loan and disaster
loan assets. So there is a great deal going on that should
transform the SBA and it is something that we intend to execute
in a carefully managed and monitored way to ensure positive
results. This is a fundamental shift and it does pose critical
questions with public policy implications regarding the
objectives of SBA programs and the effect of this fiscal
reordering on the SBA mission, its structure, and its
employees.
There is a critical element to the budget request related
to this transformation and that is the request for an
additional $18 million, which will be used to improve the
financial and information management systems as well as to
improve oversight of the SBA portfolio and of participating
lenders.
We also are asking for an additional $1 million to conduct
a more sophisticated analysis of the loan performance. Our goal
is, simply put, to make SBA into a leading-edge financial
agency, which will allow us to better assess risk and manage
our credit programs.
By the way, related but not part of the budget request, I
note that there are a number of deadlines that were part of
last year's omnibus appropriation bill that were meant to
ensure a timely transformation of these credit programs as well
as other programs and I intend to make sure that SBA meets
these deadlines.
review of SBA programs
SBA is at a critical crossroads, I believe, as we attempt
to bring more Americans into the economic mainstream, and to
accomplish this requires a review of program effectiveness and
an infusion of resources, for example, into the minority
enterprise development programs. I would also want to see
reform and a modernizing of the 8(a) program, which has a need
for technology and systems as well as staffing to accomplish
that end.
Another segment that needs to be brought into the
mainstream are families on welfare, and in the next year, we
hope to explore an array of alternatives to providing
opportunities for former welfare recipients, including hiring
them at the SBA. We will also work with small businesses to
explore incentives for employment, coordinating with State
efforts, collaborating with other Federal agencies to provide
technical assistance, and also using the SBA microloan program
to help budding entrepreneurs.
There is no question that SBA plays a critical role as the
source of much needed access to capital and credit for small
business. The requested authority for the fiscal year 1998
business loans budget is $173 million [sic], which would
provide guarantee authority of $8.5 billion for 7(a) loans,
$2.3 billion for the 504 debentures, $832 million for SBIC
debentures and participating securities, and $44 million for
microloans, and, of course, for continued support and
assistance for disaster victims.
Training programs
In addition to requesting continued support for SBA's
credit programs, we currently train and educate nearly 1
million small business owners and we hope to continue assisting
those most in need. We believe that restoring funding to
previous levels for the 7(j) program, for example, is one way
to help more women, minorities, and disadvantaged individuals,
to make them competitively viable. We also propose to add 10 to
12 new women's business centers to the existing network of 54
and to increase the 39 business information centers, the BIC's,
by 10 to 12. We have heard overwhelming praise for these
centers. They do a fabulous job and we think they deserve
strong funding.
We also hope to continue support for SCORE and the SBDC's.
We are strongly committed to the SBDC program. They do a very
capable job in counseling and training across the country and
we want them to continue their fine work. As the budget
reflects, SBA wants those benefitting from the program to bear
a share of the costs and we propose that they pay reasonable
fees for the services rendered. We will work very closely with
the SBDC's to ensure their continued viability and success.
And finally, I hope to follow closely the progress of the
ombudsman and the newly created Regulatory Fairness Board. I
think that those boards, together with the Office of Advocacy,
should protect the interests of the small business community
from regulatory missteps.
SBA has played a key role in the growth and support of
small business throughout its history. There are many
significant achievements. SBA now manages a $42 billion loan
portfolio and it has improved the lives of millions of
Americans, helping them to start, run, and succeed in their own
small businesses. I hope to add to this list of achievements
and accomplishments.
This is an important time of transition. I look forward to
working with you closely to improve the way in which our
Government serves small business. I welcome your questions.
Senator Gregg. Thank you. Thanks for that overview. I
appreciate that.
First off, let me say that I think the Small Business
Administration does a superb job, at least in my State. It has
a track record of being very successful in helping people who
are starting businesses, especially those who probably would
not otherwise be able to find financing, and it is a well-run
organization.
Disaster funding
There are a few issues, though, that do stand out that I
would like to get your thoughts on. The first is the disaster
in Arkansas. These disasters appear to happen with more
regularity in recent years, but there does not appear to be any
significant disaster money in your budget. Can you tell us how
you plan to pay for it?
Ms. Alvarez. SBA makes an assessment of the future disaster
funding need by using a 10-year rolling average to calculate
what the projected funding requirements might be. As a result
of that calculation, the administration felt that there was
sufficient funding that could be carried forward.
Senator Gregg. You do not expect to ask for supplemental
funding, then?
Ms. Alvarez. That is not the expectation. The expectation
is that the existing moneys would cover us not only in fiscal
year 1998 but there would also be some left to go forward to
fiscal year 1999, God willing.
7(a) program
Senator Gregg. In the 7(a) program, you talked about this
$18 million you are going to spend. Have you checked with any
of the other agencies that do the management, such as Fannie
Mae, to see how they do it? There is a lot of experience out
there.
Ms. Alvarez. You know I was the regulator for Fannie Mae
and Freddie Mac. That was my previous incarnation.
Senator Gregg. So then you are bringing in their
experience.
Ms. Alvarez. First of all, the proposal for the $18
million, is well considered, and frankly, it may not be enough
given what it costs to really create an infrastructure that is
very sophisticated technically. It is, I think, potentially a
very modest request, but it is best to proceed carefully.
I certainly have not had the opportunity yet but intend to
devote time and also work to see to what extent the Fannie Mae/
Freddie Mac technology is relevant here. But I think a great
deal of time and thought went into this.
Greg Walter is the Deputy Chief Financial Officer [CFO] at
SBA. Do you want to comment on that?
Mr. Walter. Sure. Mr. Chairman, we have already reviewed
three of the current systems that are being used throughout the
Government. We went over and visited with Ginnie Mae a couple
of weeks ago and saw what they call the issuer portfolio
analysis data bases and the correspondent portfolio analysis
data base system which they use at VA and HUD, and then we have
also visited with Farmers Home to look at their policy
financial analysis model system.
We think there is some portability, if you will, in the
technologies they are using with what we will need, but we have
to look into it further as we go along to see exactly how much
can be used and how much distinction there is between what SBA
needs and what they do.
Senator Gregg. We would strongly encourage you to do that.
You know, we find in this committee, and not specifically with
SBA but with a number of other agencies, that they keep trying
to reinvent the wheel when some other agency in Government has
already gone through and invented the wheel.
Ms. Alvarez. Right.
Senator Gregg. It does seem like a terrible waste of
ability. It is a turf issue to some degree, but I would suggest
a formalized system of going out and finding out what is out
there and using that expertise to the extent that you think it
is appropriate.
A number of industry lenders claim that with the 7(a)
program the amount available in that area is underestimated.
What are your thoughts in response to that?
Ms. Alvarez. We have been monitoring that very closely, in
fact, on a daily basis. Presently, we think we are OK, that we
have got enough funding to meet the needs, but frankly, if the
demand steps up, we think there is a possibility of shortfall.
We will certainly be talking with you about it.
Senator Gregg. That is going to be a problem, both in the
7(a) program and 504 program, because we are going to be under
tremendous pressure in this committee. For a variety of
reasons, the White House has targeted this committee for
dramatic increases in spending but has not agreed to pay for
them in different accounts. For example, in the State
Department, they want an extra $1 billion for the United
Nations and in the Justice Department they want a huge amount
of money for juvenile justice.
We are not going to have a whole lot of flexibility, so we
need to know what the numbers are because you are not going to
be coming back to us. You are going to have to live with what
we give you. I hope you are as confident as you appear with
these numbers, because it is probably what you are going to end
up with.
There is a little bit of history on the 7(j) program. The
only reason it survived was because of me. It would have been
gone 1\1/2\ years ago. The prior chairman of this committee
would have eliminated it, as did the House. I notice you are
expanding it. What I am interested in is what the expansion is
going to be used for.
Ms. Alvarez. There is an expectation that as a result of
Adarand, the question of who becomes eligible, for example, to
be an 8(a) firm will expand, as well. The test, if you will,
the strictness which eliminated about 50 percent of the
applicants from that field will be loosened and many women and
other disadvantaged who might not have been eligible will be
eligible. The thought is that really the intent of 8(a) was
that this should be a business development program, that we are
going to need funding to provide expertise, counseling, and
training, at various stages in the development of these
companies. That is why we are requesting the expansion.
Senator Gregg. That gets away from the basic education and
workshop type of approach.
Ms. Alvarez. It is not exclusive.
Senator Gregg. Do you expect the education and workshop
type of approach to be maintained or is that going to be
reduced in order to fund the review of the 8(a) accounts?
Ms. Alvarez. We had success with the education workshops,
but I think as we expand the pool, there is going to be a need
for one-on-one counseling and other types of training. It would
be an expansion, not an elimination of the existing approach.
Small business development councils
Senator Gregg. How about these fees for the small business
development councils [SBDC's]? How are people going to react to
that? What do you think they are going to be and how much
pressure are they going to put on utilization?
Ms. Alvarez. In our judgment, the intent is certainly not
to diminish or to reduce the services rendered because we
believe that, in fact, the users of the SBDC's will pay. We are
talking about very modest fees with a great deal of flexibility
on the part of the SBDC to decide whether someone should be
charged and how much they should be charged.
The SBDC's already charge fees for training. Last year,
they charged and made $4.8 million in training fees. In
addition, other programs that serve comparable populations, for
example, the women's business centers charge fees to women who
are considered economically and socially disadvantaged and they
actually have a very successful track record.
So we do not think this should be an impediment. We think
this will be very modest. We think it is consistent with what
other programs are asking and we hope to continue to support
what the SBDC's do.
Senator Gregg. How are these fees being accounted for? Are
they going directly back into your budget?
Ms. Alvarez. The $4.8 million?
Senator Gregg. Yes.
Ms. Alvarez. They are not.
Senator Gregg. Are they being accounted for in the way that
the other fees----
Ms. Alvarez. Yes.
Mr. Morhard. They are used to run the program.
Mr. Walter. The SBDC's define it as program income, so it
comes back into the SBDC network and they use it to do their
agenda. It is not part of the matching formula.
Ms. Alvarez. It is not part of the matching formula.
Mr. Walter. It does not come back into the SBA or count as
matching funds against the grant funds.
Senator Gregg. How does that affect the budget?
Mr. Morhard. It does not affect the budget. That was part
of the 1990 agreement.
Senator Gregg. I do not understand. I am going to have to
have someone explain that to me at some point.
Ms. Alvarez. All right.
Microloan program
Senator Gregg. OK. How about this Microloan program? How
much have you spent out of that, do you know, and where do you
stand on it, and whether it is working?
Mr. Walter. On the lending program itself?
Senator Gregg. Right.
Mr. Walter. I can tell you, through the end of January, we
have made about $1.2 million in the direct program and just a
little over $1 million in the guarantee program.
Senator Gregg. How much is left in those accounts?
Mr. Walter. This year, we have availability of about $37
million in the direct program and $22 million in the guarantee,
so very little has been spent on those programs.
Senator Gregg. What are your plans for that? Do you plan to
accelerate that or can you move that money around?
Ms. Alvarez. My understanding is that little has been spent
partly because of the pilot nature of the program; that there
are lots of kinks to be worked out of the system. These
intermediaries were wanting assurances on technical assistance
funds and so far, there have been no defaults to SBA related to
these loans.
Senator Gregg. It is a little early.
Ms. Alvarez. So we are on a good path there. And also, I
think that as people become more familiar--as long as there is
technical assistance associated with those loans, the
expectation is that they will be successful and that is a
substantial part of what the funding goes for.
Greg, is it not 25 percent?
Mr. Walter. One other clarification here, too, is the
formula that is in the statute calls for us to provide
technical assistance for loans that were made in prior years as
long as they stay outstanding in the portfolio, so a good
portion of SBA's current technical assistance budget is used to
continue to fund technical assistance for loans that were made
in prior years, which restricts our ability to add new loans
into the system and to add new intermediaries.
So the technical assistance component of the program is
critical to not only maintaining the current portfolio but also
to allow us to expand the program. If there is not sufficient
technical assistance to support the micro intermediaries to
enter the system, they will not even come into the process.
Senator Gregg. If you were to point out the one thing in
the agency that you are most interested in pursuing and
expanding or improving, what would that be?
Ms. Alvarez. I am very focused on making SBA a leading-edge
financial agency. I really think that not only is SBA
positioned to do some interesting things with the private
sector which I hope will result in economies, efficiencies, and
potentially a reduction in cost to the taxpayer and an increase
of access to credit to the consumer. Given my recent background
as the direction of OFHEO, I just feel that that is at the top
of my list.
SBA 2000
Senator Gregg. This SBA 2000, have you gotten very far into
that yet or do you have a program for that?
Ms. Alvarez. I have not gotten into it. Oh, you are talking
about the----
Senator Gregg. The planning.
Ms. Alvarez. You are talking about the planning for the
transformation into the----
Senator Gregg. No; I am talking about your plans for the
strategic effort called SBA 2000 that is just starting out.
Ms. Alvarez. Right. OK. With respect to the strategic
planning, the 6-year strategic plan, the Government Performance
and Results Act [GPRA], we have actually begun to talk to the
folks on the Hill to get their input. In my 22 days as
Administrator, I have had an opportunity to read the plan. I
cannot say that I have had an opportunity to have a meeting
about it.
Senator Gregg. Is there any money in here for that planning
process, do you know?
Mr. Walter. No, Senator, there is not.
Senator Gregg. Very good. Is there anything else you think
we should know?
Ms. Alvarez. We are an open book and it is in front of you
in the form of a budget. I look forward to working with you.
Senator Gregg. So do I. If you have problems or concerns or
other issues, give me a call, or give Jim a call. Obviously, if
you are going to have problems with these accounts and you see
it coming, the earlier we know, the better, especially with the
disaster issues and maybe the underestimation of the 7(a). This
is important, so give us lead time.
Ms. Alvarez. Yes, sir; we will do that.
Additional committee questions
Senator Gregg. Thank you for coming. I appreciate it. If
there are any additional questions, they will be submitted to
your agency for response.
Ms. Alvarez. Thanks very much.
[The following questions were not asked at the hearing, but
were submitted to the administration for response subsequent to
the hearing:]
Questions Submitted by Senator Pete V. Domenici
small business regulatory enforcement fairness act advisory panels
Question. Will you, as Administrator, give the support and
resources necessary to ensure these panels are established and become
an integrated force within the regulation review process?
Answer. Yes, of course. But the agency will need some help from
Congress.
The Office of Advocacy has been very active in promoting compliance
with SBREFA. It has conducted training sessions for more than 600
Federal executives, including economists. It has also held meetings
with small business trade association executives on the new law and is
currently conducting additional sessions for trade association staffs.
One thing that the new law has done is place a greater emphasis on
data that will help agencies, and the Office of Advocacy, measure the
impact of proposed regulations and their alternatives on small
business. For the past two years, research funds for the Office of
Advocacy have not been explicitly appropriated by the Congress. The
Agency has used discretionary authority to reprogram minimum funds to
finance very basic economic research. For fiscal year 1998 we are
requesting $1.4 million specifically for SBA's database and for
economic research by the Office of Advocacy, a significant portion of
which will be used by the panels reviewing OSHA and EPA regulatory
proposals. These funds are needed if Advocacy is to fulfill the
statutory mandates established by Congress.
Question. What is the current status of establishing the small
business advisory panels mandated by SBREFA?
Answer. Under SBREFA, OSHA and EPA are to convene small business
regulatory review panels if the agencies believe a rule they are
contemplating will have an impact on small business. The Office of
Advocacy will provide names of small entities that both the agency and
the panel should consult. The entities recommended by Advocacy are
selected according to their particular stake in the issue and will vary
from rule to rule. The panel then convenes to review all the materials
provided by the Agency to the small entities and the small entities'
comments and recommendations on the materials. This review is to occur
before an agency publishes a proposed regulation for public comment as
required by the Administrative Procedure Act.
OSHA has convened one panel on a proposal to limit employee
exposure to TB infections. The panel completed its report and submitted
it to the agency. OSHA is planning to publish its proposed regulation
in the very near future. The Office of Advocacy will submit comments
for the record on the proposal as appropriate. OSHA has also started
outreach to small entities, many of which were recommended by Advocacy
to convene a second panel on another issue. The outreach will help the
agency determine, preliminarily, the extent and nature of the impact on
small entities.
EPA has convened one panel on off-road diesel emissions. The
panel's work is currently in process, with an estimated completion date
soon. EPA has also convened a panel for Implementation of Phase I of
the National Ambient Air Quality standards for ozone and particulate
matter.
office of women's business ownership
Question. Has the SBA fully integrated the OWBO into its decision
making activities so that other programs and activities of the agency
take into account and address the needs of women owned businesses?
Please provide examples.
Answer. SBA has integrated the OWBO by taking into account the
needs of women's business in other programs and activities of the
agency. For example, SBA involves the needs of women in the following
programs:
Access to Capital
From 1992 to 1995, SBA increased loans to women by almost 300
percent. SBA went from making 3,588 loans to women in fiscal year 1992
to making 11,452 in fiscal year 1996 (this includes the 7(a) and 504
programs).
The Women's Pre-Qualification Pilot Loan program, in effect since
June 1994, has made more than $58 million in loans in 16 pilot sites.
Under the program, SBA agrees, up-front, to guarantee the loan if the
borrower meets the lenders' credit criteria. Loans under these programs
are limited to amounts of $250,000 or less. The prequalification
program focuses primarily on the character, credit and apparent ability
of the applicant to repay the loan from earnings. On Oct. 22, 1996,
former Administrator Philip Lader signed a decision memorandum to
extend the program nationwide.
In 1996, women received 28 percent of LowDoc loans. These loans of
less than $100,000 combine a simplified, one page application with a
rapid response from SBA loan officers, usually only two or three days.
More than 40 percent of all SBA microloans go to women. The
Microloan program targets individuals, often low-income, who would not
otherwise be able to obtain standard loans from financial institutions,
largely due to bad credit, no credit, or lack of assets. The average
microloan amounts to $10,800 and creates three new jobs.
SBA Offices and Resource Partners
All SBA resources are available to men and women equally. Services
focused on women business owners vary from district office to district
office. Individual District Directors have the discretion to assign an
employee to serve as a Women's Business Ownership Representative and to
decide how much time should be spent on that task. The Office of
Women's Business Ownership has insufficient resources to assign an
employee full-time--as it has in the past--to serve as a field liaison.
District SBA offices, often in conjunction with SCORE members,
organize mentoring for current and aspiring women business owners
through the Women's Network for Entrepreneurial Training. Both peer-
group and one-on-one mentoring is offered. SCORE has just added its
first woman to its board of directors to help spearhead an effort to
bring more women into SCORE as both counselors and clients.
By sponsoring research on women and entrepreneurs, the Office of
Women's Business Ownership and the Office of Advocacy promote
thoughtful development of public policy to foster women's business
ownership. The Office of Advocacy worked with the OWBO and the National
Women's Business Council to introduce its new Internet-based Angel
Capital Electronic Network (ACE-NET) at a White House meeting of key
women business leaders. OWBO is continuing to work with the Office of
Advocacy on PRO-NET, an offshoot of the ACE-NET technology that will
help all small businesses, including women-owned business, get
government contracts.
The Office of Women's Business Ownership has a homepage that is
part of the SBA's World Wide Web site. The OWBO page reaches women
regardless of their location and provides links to 40 related websites.
(www.sba.gov/womeninbusiness/)
To increase women's access to capital for high-technology research,
OWBO and the Office of Technology jointly sponsor seminars for women on
accessing the Small Business Innovation Research grant program.
Question. What are the current prime contracting and sub-
contracting goals for women owned businesses for each participating
federal agency?
Answer. Please see the attached chart which details the goals and
actual awards of prime contracts and subcontracts to women-owned
businesses by the major federal purchasing centers for fiscal years
1994 and 1995, the latest years for which federal agencies have
reported their awards to SBA.
TABLE 11.--WOMEN-OWNED SMALL BUSINESS SHARE OF FEDERAL PRIME CONTRACTS: PERFORMANCE BY MAJOR FEDERAL AGENCIES, FISCAL YEAR 1994 AND FISCAL YEAR 1995
[Dollars in millions]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Fiscal year 1995 Fiscal year 1994
-----------------------------------------------------------------------------------------------------------------------------
Agency projections Actual awards Agency projections Actual awards
-----------------------------------------------------------------------------------------------------------------------------
WOB share WOB share WOB share WOB share
Total ---------------------- Total -------------------- Total -------------------- Total -------------------
dollars Dollars Percent dollars Dollars Percent dollars Dollars Percent dollars Dollars Percent
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Department of Agriculture......................................... 2,643.8 92.5 3.5 3,115.5 87.4 2.8 2,905.1 72.6 2.5 3,897.5 123.0 3.2
Department of Commerce............................................ 766.0 38.3 5.0 829.6 54.4 6.6 697.4 27.9 4.0 750.8 27.3 3.6
Department of Defense............................................. 103,900.0 1,766.3 1.7 110,033.0 1,994.0 1.8 100,000.0 1,599.9 1.5 112,013.0 1,857.0 1.7
Department of Education........................................... 310.0 15.5 5.0 376.6 12.7 3.4 284.0 10.0 3.5 329.9 8.9 2.7
Department of Energy.............................................. 16,480.0 415.0 2.5 16,375.4 505.5 3.1 18,000.0 639.9 3.5 17,104.7 418.2 2.4
Department of Health and Human Services........................... 2,818.1 113.2 4.0 3,163.0 816.3 5.9 2,538.5 103.3 4.1 3,119.3 149.6 4.8
Department of Housing and Urban Development....................... 906.5 63.5 7.0 668.9 49.9 7.5 690.1 38.0 5.5 685.3 55.5 8.1
Department of the Interior........................................ 1,292.8 53.0 4.1 1,289.2 63.5 4.9 1,282.3 51.3 4.0 1,386.3 65.0 4.7
Department of Justice............................................. 1,964.0 58.9 3.0 1,941.3 49.2 2.5 1,786.4 53.6 3.0 1,983.3 47.2 2.4
Department of Labor............................................... 766.8 39.8 5.2 871.7 24.1 2.8 767.7 32.5 4.2 846.4 17.3 2.0
Department of State............................................... 500.0 25.0 5.0 636.1 42.2 6.6 475.0 23.8 5.0 616.6 38.3 6.2
Department of Transportation...................................... 3,363.1 67.3 2.0 2,513.8 96.9 3.9 3,601.0 72.0 2.0 2,471.9 55.1 2.2
Department of the Treasury........................................ 1,500.0 78.0 5.2 1,278.5 66.7 5.2 1,500.0 60.0 4.0 1,310.6 64.0 4.9
Department of Veterans Affairs.................................... 2,000.0 60.0 3.0 4,655.6 226.7 4.9 3,000.0 72.0 2.4 4,114.8 155.9 3.8
Environmental Protection Agency................................... 1,400.0 70.0 5.0 1,144.8 26.5 2.3 1,300.0 26.0 2.0 1,342.1 18.5 1.4
General Services Administration:
Federal Supply Schedule \1\................................... 2,465.3 46.2 6.3 2,806.8 47.8 7.2 2,459.3 30.8 5.9 1,801.0 34.0 6.3
Non-Federal Supply Schedule................................... 5,443.0 163.3 3.0 6,531.9 135.8 2.1 5,428.6 97.7 1.8 6,461.9 129.2 2.0
National Aeronautics and Space Administration..................... 10,643.0 112.0 1.05 10,109.0 159.1 1.6 10,430.0 104.3 1.0 9,766.0 118.4 1.2
Tennessee Valley Authority........................................ 1,945.0 31.1 1.6 2,956.2 43.8 1.5 1,700.0 23.8 1.4 2,112.0 14.1 .7
U.S. Agency for International Develop- ment...................... 433.9 21.7 5.0 1,431.1 33.1 2.3 413.3 18.2 4.4 1,505.5 21.7 1.4
All Others........................................................ 900.2 29.5 3.3 901.0 40.6 4.5 873.3 27.4 3.1 936.0 48.7 5.2
-----------------------------------------------------------------------------------------------------------------------------
Total....................................................... 162,441.5 3,360.1 2.1 173,629.2 3,946.2 2.3 160,132.0 3,075.2 1.9 174,554.9 3,466.9 2.0
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ GSA FSS goal percentages are based on number of contracts awarded.
Note: Dollar or percentage figures may vary slightly because of rounding or necessary corrections of figures submitted in year-end reports by some federal agencies. Information not given in
written reports was obtained by telephone.
Source: U.S. Small Business Administration, Office of Government Contracting, unpublished data, 1996.
Question. What percentages of federal contracts are currently being
awarded to women owned businesses for each respective agency?
Answer. Please refer to the above answer.
Question. What recommendations does the SBA propose to Congress
concerning efforts to increase the number of government contracts being
awarded to women-owned businesses?
Answer. A major priority of the Office of Women's Business
Ownership is to expand public and private market opportunities for
women-owned business. As an advocate, OWBO is involved in the following
initiatives:
--The fifty-three Women's Business Centers offer procurement
training;
--The Federal Procurement Pilot Program for Women-Owned Businesses
brings together SBA officials with representatives from federal
agencies with substantial procurement budgets to work toward
increasing opportunities for women in the federal marketplace;
--Small Business Innovation Research seminars);
--PRO-NET;
--SBA sponsored procurement training conference, Women $ and Sense;
--Update of the publication ``Women Selling to the Federal
Government.''
Question. What current plans are being made to expand the OWBO
Demonstration Sites program to all fifty states? Please provide
examples.
Answer. OWBO's goal is to establish a Women's Demonstration Program
site in every one of the fifty states. This year, the program has the
budget to open four new sites. If reauthorized at the requested level
of funding of $4 million for fiscal year 1998, OWBO can open 10 to 12
new sites.
To enhance the success of the Women's Demonstration Program, the
Office of Women's Business Ownership began in 1995 to build a women's
business center in cyberspace. This service, the Online Women's
Business Center, consists of a private Intranet site shared by the 53
women's business centers, and an Internet site that will be available
to women in all geographic locations every day at all times of day.
paperwork reduction within the small business administration
Question. What goals were established for the SBA with regard to
the reduction of federal paperwork?
Answer. SBA's continuing goal is reducing federal paperwork. With
respect to the Financial Assistance programs the goals are as follows:
Review and revise loan application documents and procedures to
minimize paperwork.--The SBA is currently reviewing its application
forms and required documentation to determine whether any can be
eliminated, combined with others or simplified. In addition, the review
of the forms includes amending the language in the forms to use plain
English to provide easier understanding and interpretation. Frequently,
the frustration of applicants with paperwork is from a lack of
understanding of what is wanted rather than the amount of information
being sought.
Review and revise loan closing documents and procedures to achieve
easier understanding through use of plain English language and to
reduce the amount of paperwork required to close a loan by combining as
many documents as possible.--The SBA is currently reviewing and
amending the loan Authorization and other loan documents for each of
its lending programs to eliminate unnecessary conditions, convert the
wording to plain English, and achieve standardization, to the greatest
degree possible given differences between state statutes.
SBA has just completed a revision to its 7(a) loan closing process
to eliminate the requirement that the lenders submit documents to SBA
at loan closing, and substitute the submission of a single document
that provides critically needed certifications and information.
Develop and implement a centralized franchise clearance process.--
We anticipate that changing these procedures will permit a shorter
response time on franchise applications and maximize utilization of
SBA's limited personnel resources. Loans to franchise operations
account for 6.97 percent of fiscal year 1996 loan volume and 7.7
percent of fiscal year 1997 year-to-date loan volume, but currently
take more time to process than non-franchise business loan
applications.
Question. Other than the Low Document Loan Program (LowDoc), what
efforts are being taken within the SBA to curb unnecessary paperwork?
Answer. The SBA is working to expand the Preferred Lender Program
(PLP) and encouraging lenders to utilize it more. The Agency has also
developed and implemented on a pilot basis, a similar program for
preferred Certified Development Companies (CDC's), the Premier
Certified Lenders Program (PLP).
The SBA is currently reviewing the FA$TRAK pilot loan program to
determine whether to expand it from 18 lenders (with approximately 42
additional affiliates) now authorized to use these expedited
procedures; and to identify any necessary changes in procedures or
policies to better serve applicants or protect the interests of the
Government. Under this pilot, specified lenders may make and close
small business loans of up to $100,000 using their own forms and
procedures. In return, SBA guarantees only 50 percent of the loan.
SBA plans to increase its use of automated (paperless) systems
which will allow lenders to send information to SBA from their
databases electronically. There are several advantages to this,
including speedier transmission of application and other loan related
requests, elimination of transposition and other errors due to re-
entering the same data more than once, and the ability to have all
information readily available without having to use physical file
folders. SBA's staff would be able to concentrate on review of
information--non data entry and the handling of documents. Ultimately
SBA would only need to hold documents necessary for legal action. We
are currently testing electronic transmission of loan applications with
a small numbers of lenders.
Question. How many loans have been issued under the Low
Documentation Loan pilot program?
Answer. From the inception of the LowDoc pilot in late November,
1994 through February 28, 1997, SBA has approved 63,259 loans totaling
$3.9 billion.
small business development centers
Question. What efforts are currently being made to make Small
Business Development Centers be utilized more effectively?
Answer. The Small Business Administration continues to integrate
Agency programs into the SBDC delivery system. With this as an
objective, the Agency has established goals for SBA District Directors
to emphasize, encourage, and develop positive relationships with
SBDC's. As part of the effort to improve the utilization of SBDC's, the
Agency has actively participated in SBDC conferences, briefing them on
SBA programs. In May of this year, the Agency will conduct training for
its Field personnel with SBDC oversight responsibilities. SBA's
District Directors and SBDC Directors will also participate in this
training. SBA has also successfully negotiated agreements with other
Federal entities, such as the Department of Commerce, the Environmental
Protection Agency and the Department of Energy, to deliver certain of
their services. Consequently, the SBA has been able to successfully
expand the scope of the SBDC Program to provide greater assistance to
the small business community. The Agency is currently revising its
regulations and Standard Operating Procedures governing the SBDC
Program. During 1996, the Agency completed a total of fifteen (15)
program and financial examinations in an effort to make SBDC's more
effective.
Question. What recommendations or changes to SBDC's do you propose
Congress should consider as we begin to debate the reauthorization of
the SBA?
Answer. The Agency recommends that it be given discretion under the
SBDC funding allocation formula to provide additional funds to smaller
SBDC's in order to help maintain a network in those states. SBA also
recommends revising the ratio of matching funds required from SBDC's
from $1 for each federal dollar in fiscal year 1997 to $1.60 for each
federal dollar in fiscal year 1998 and thereafter. The Agency further
recommends that SBDC's be permitted to use program income (revenue
generated from fees and other sources) as a match for Federal funds.
Question. Understanding the unique funding partnerships involved
with these centers, do you anticipate any changes in the current
partnerships of these centers due to a reduced SBA budget?
Answer. In addition to the legislative changes noted above, the
Agency would also encourage SBDC's to increase their reliance on their
non-Federal partners to offset the Federal reductions.
These initiatives should result in maintaining the program at the
same overall level of funding with a larger portion of the matching
funds coming from the SBDC's' other partners.
Question. Does the SBA have any plans to begin charging counseling
fees for the services business owners and entrepreneurs receive at
these centers?
Answer. While the SBA has no plans to mandate that SBDC's charge
fees for counseling, SBDC's are now allowed to charge such fees since
Congress removed the prohibition against fees previously contained in
appropriations legislation. SBDC's' ability to raise additional funds
through the charging of fees for counseling is one of several options
for keeping the program operating at the current funding level.
reauthorization of the small business administration
Question. What current activities will be sustained with these
resources?
Answer. The fiscal year 1998 President's budget proposes to
continue all programs conducted in fiscal year 1997 and proposes
increases in a number of programs to expand access to capital, assist
disadvantaged small businesses, and provide education and training.
Some of the more significant aspects of our fiscal year 1998 budget
request include:
--The budget requests $153 million to provide guaranty authority of
$8.5 billion for the 7(a) General Business Loan Guaranty
program;
--For the Section 504 Certified Development Company loan program, no
new budget authority is required to provide a program level of
$2.3 billion;
--For the Small Business Investment Company program, $20.2 million in
budget authority is requested to provide program levels of $376
million of debenture guarantees and $456 million for
participating securities;
--For the microloan program, $44.3 million in microloans will be
funded and an additional $16.5 million is requested for
technical assistance to microloan borrowers;
--$18 million is requested to support enhanced lender monitoring and
oversight;
--$600,000 to support increased International Trade outreach and
implementation of the new ``SBA Export Express'' lending tool;
--No new budget authority is requested for the disaster loan program,
as expected carryover from fiscal year 1997 will be used to
support the $785 million program. The fiscal year 1998 budget
proposes to increase the interest fee to borrowers ``without
credit elsewhere'' to the Treasury cost of funds and the 8
percent interest cap for borrowers ``with credit available
elsewhere'' is proposed to be removed;
--$57.5 million in federal funding is requested for the Small
Business Development Center (SBDC) program;
--$3.5 million is requested to provide $1.7 billion in surety bond
guarantees;
--An increase in funding is requested for the Minority Enterprise
Development (MED) program to restore 7(j) business development
assistance funding to previous levels;
--A restoration of $1.4 million to the Office of Advocacy is
requested for data collection and research that is statutorily
mandated;
--In support of women business entrepreneurs, $4 million is requested
to provide technical and business development assistance
through the Women's Business Centers;
--$500,000 is requested to support SBA's Regulatory Ombudsman and the
regional Regulatory Fairness Boards; and
--$10.6 million is requested for the Office of Inspector General.
Question. What activities will be reduced or eliminated due to
budget reductions?
Answer. The fiscal year 1998 budget does not propose the
elimination of any programs, however, the budget does propose
reductions from fiscal year 1997 funding levels for the following
programs:
Non-Credit Programs:
Small Business Development Centers will be reduced by $16 million
which is proposed to be offset, at least in part, through charging fees
for counseling; and
Funding for the disaster loan making function is reduced from the
fiscal year 1997 estimated level of $103.9 million to $98.3 million
consistent with previous funding levels.
Credit Programs:
No funds are requested for the Disaster Loan program, as sufficient
unobligated balances were estimated to be available in fiscal year
1998. This is a reduction of $218.4 million from the fiscal year 1997
appropriations level;
Appropriations requested for the 7(a) General Guaranteed Business
loan program are reduced by $45 million from fiscal year 1997. Due to a
reduced subsidy rate, a program level of $8.5 billion is proposed, up
from $7.8 billion in fiscal year 1997;
For the microloan program, no new budget authority is requested
because $44 million in microloans will be funded through the estimated
carryover of unused budget authority from fiscal year 1997. This is a
reduction of $4 million from the fiscal year 1997 appropriations for
this program;
$3.5 million is requested to provide $1.7 billion in surety bond
guarantees. This compares to the $3.8 million enacted in fiscal year
1997 for this program; and
For the Small Business Investment Company program for participating
securities, $11.6 million is requested to support a $456 million
program level. This compares to the fiscal year 1997 enacted level of
$13.5 million for this program.
Question. What current efforts are being taken to streamline SBA
programs to provide more access to assistance? Please provide examples.
Answer. Although the President's fiscal year 1998 Budget for the
SBA requests $150 million less than was appropriated in fiscal year
1997, the actual salary and expense portion of the budget is
approximately the same as in fiscal year 1997. For fiscal year 1998, in
order to cut costs of our programs, we are looking for ways to have
those who benefit directly from our programs help pay for them. For
example, in the Small Business Development Center (SBDC) program we are
encouraging SBDC clients to pay a fee for the counseling services they
receive. We believe that by charging reasonable, limited fees, we can
re-direct the savings captured to extend assistance to other small
businesses. We will also continue to focus on improving the way we
manage and deliver our programs. For example, in order to improve
access to capital, we will continue to improve efficiencies in
processing, servicing and liquidating loans.
More specifically, the President's Budget for fiscal year 1998
incorporates a plan for continued modifications in the way we do
business. In recent years, SBA's financial and operational environment
has changed in several ways:
--For business loans, SBA now almost exclusively extends credit
through guarantees, not direct loans.
--Participating lenders under the 7(a) and 504 programs are
performing more of the loan origination processing, such as
data collection, financial and credit analysis, collateral
valuation, and actual loan approval.
--Participating lenders are performing more of the routine loan
servicing and liquidation activities.
--New technology is being introduced into all phases of loan
administration to allow for the collection, analysis, transfer,
and use of more information in managing programs.
--SBA is consolidating more of its routine loan approval and
servicing functions at centralized locations to rely more on
technology and gain economies of scale, thus mirroring private
sector practices.
--SBA will begin selling its loan assets starting in fiscal year 1998
in order to free up resources and concentrate more on essential
lending activities.
Question. What efforts are being taken to ensure all programs such
as the Office of Women Business Ownership, Small Business Development
Centers and Service Corps of Retired Executives are being made a part
of the decision making processes within the SBA regarding the
reauthorization of SBA?
Answer. The SBA Programs focusing on financial assistance (Finance,
Investment, International Trade, and Surety Bonds) and business
education and training (Small Business Development Centers, Service
Corps of Retired Executives, Women's Business Ownership, Native
American Affairs and Veterans Affairs) are currently incorporated into
SBA's Office of Economic Development. On April 17, 1997, the
Administrator notified the Congress of her intention to restructure the
Office of Economic Development by separating the finance programs from
the business assistance programs and establish two new organizations
called the Office of Capital Access and the Office of Entrepreneurial
Development. This proposal allows for increased attention to the need
to expand access to the Agency's business education and training
programs. The consolidation of business education and training programs
also reflects the Agency's commitment to customer service, more
efficient utilization of public/private partnerships and better
integration of intermediary resource partners such as the SBDC's and
SCORE.
In addition, each of SBA's program offices participated in the
fiscal year 1998 budget process, which included the development of
proposed reauthorization legislation submitted to the Congress on May
13, 1997. The proposed legislation includes program narratives
submitted by the Offices of Women's Business Ownership (WBO), SBDC's,
and SCORE, and contains specific reauthorization language for WBO,
SBDC's and SCORE, as well as the remainder of SBA's programs.
section 8(a), the minority small business program and 8(d), the small
and disadvantaged business program
reauthorization
Question. Does the SBA propose any modifications to the current
utilization of SIC codes by qualified 8(a) and 8(d) small businesses
seeking contracting opportunities?
Answer. As part of the Agency's review of the 8(a) program to
streamline its regulations, we will evaluate current policy concerning
the requirement that 8(a) firms have approved SIC codes prior to
solicitation of Federal contracting opportunities. It is expected that
the current standard will be amended to allow Program participants to
market 8(a) contract opportunities in a manner consistent with the way
that they market to other public sector agencies and private sector
business.
Question. What possible ramifications would be seen if SIC code
designation were conducted in a self-certification process as opposed
to the current application process?
Answer. We do not envision any serious ramifications if SIC code
designations are conducted as a self-certification process. SBA is
responsible for the review and approval of any changes to an 8(a)
firm's business plan. Currently, the addition of SIC codes to the
business plan is considered to be such a change. Accordingly, SBA must
now review and approve changes to a firm's SIC code profile.
While we will continue to review business plans annually, we plan
to eliminate review and approval of specific SIC code changes and
additions. If a Federal agency has accepted an 8(a) firm's assertion of
performance capability under a certain SIC code, then the firm should
have the opportunity to market and be awarded a contract for this work.
In essence, by eliminating review of SIC code changes, bureaucratic
procedures will be removed from the procurement process.
streamlining
Question. Is the SBA currently attempting to streamline and/or
standardize the various rules and regulations used by different
agencies to establish eligibility for minority or disadvantaged
business to participate in contract procurement? Please provide
examples.
Answer. SBA is currently working with the Administration on
developing a standardized government-wide certification process for
Small Disadvantaged Businesses (SDB). When the drafting of these
procedures has been completed, they will be published in the Federal
Register as Proposed Rules for public comment.
Question. What efforts are currently being made within SBA to
identify and eliminate the numerous ``front companies'' which are
plaguing these programs?
Answer. In order to preclude entry of ``front companies,'' into the
8(a) program, SBA carefully reviews the eligibility of firms applying
for program participation. This is a rigorous process. In fact, the
statute allows SBA 90 days to complete the application review and
eligibility determination process. Further, once firms are in the
program, SBA conducts thorough annual eligibility reviews to determine
the appropriateness of continued participation in the program, or
termination or graduation from it.
SDB status is currently based on a self-certification. In a basic
sense, competition within the marketplace is intense, and tends to
``weed out'' companies through the SDB protest mechanism. SBA is
working with the U.S. Department of Justice to establish a formal
certification process for SDB status which will impose additional
safeguards.
Question. Does the SBA support an effort to qualify small
businesses in the 8(a) program which are not owned by a minority person
but which hires a large percentage of minorities?
Answer. The 8(a) program is a business development program, which
is targeted to individuals who are socially and economically
disadvantaged. (While it is not a targeted employment program, it is
noteworthy that many minority individuals are employed by 8(a) firms.)
The program is predicated upon provision of business development
opportunities to economically disadvantaged entrepreneurs, not upon the
demographic composition of firms' employment rolls. A change in the
basis upon which eligibility is determined would require legislation.
Accordingly, SBA determines the eligibility of small businesses
based on whether they are at least 51 percent owned and controlled by
individuals who are socially and economically disadvantaged, not by the
ethnic makeup of the employees the firm hires. Socially disadvantaged
individuals are those individuals who have been subjected to racial or
ethnic prejudice or cultural bias because of their identities as
members of groups without regard to their individual qualities.
In the absence of evidence to the contrary, the following
individuals are presumed to be socially disadvantaged: Black Americans;
Hispanic Americans; Native Americans; Asian Pacific Americans; and
subcontinent Asian Americans. Individuals who are not members of a
designated group must establish their individual social disadvantage by
providing to SBA a clear and convincing case of social disadvantage.
Economically disadvantaged individuals are socially disadvantaged
individuals who have been denied market access. Their ability to
compete in the free enterprise system has been impaired due to
diminished capital and credit opportunities as compared to others in
the same business area who are not socially disadvantaged.
subsidy rate on business loans (credit reform)
Question. Given that in the very recent past, policies were adopted
that appeared to reduce the subsidy rate from 2.74 percent in fiscal
year 1995 to 1.06 percent in fiscal year 1996, only to have the subsidy
estimate corrected upwards to 2.54 percent in fiscal year 1997 (with no
policy changes). What confidence should we have that the anticipated
subsidy reductions in the budget are attainable?
Answer. The estimation of the subsidy rate is a very complex
process, requiring the analysis of several cash flow elements that
occur simultaneously. The development of the loan performance database
in 1995 has enabled the SBA to make great strides in analysis of loan
performance data for the purposes of subsidy estimation. As a result of
the inclusion of additional data and refinements in the subsidy models,
incremental changes to the subsidy rates should continue to decline.
The fiscal year 1997 subsidy rate is 2.54 percent compared to the
current services rate for fiscal year 1998 of 2.32 percent. Further
reductions to the subsidy rate in fiscal year 1998 are reliant on the
policy changes presented in the budget including expansion of lenders'
responsibilities in servicing and liquidating loans, deferral of claim
payments and improved portfolio oversight. The fiscal year 1998 budget
request includes $18 million to strengthen oversight and monitoring.
Even with these improved analytical capabilities, SBA acknowledges
there is still great potential for improvement. The requests for $18
million, mentioned above, and $1 million for sophisticated econometric
analysis of loan performance are intended to further improve our
analytical capabilities and enhance the precision with which subsidy
estimates are made.
Question. To what extent has loan performance for the 1996 loan
cohort improved compared to previous loan cohorts, since the changes in
law designed to reduce the subsidy rate were implemented?
Answer. The average loan maturity for a 7(a) guaranteed loan is
approximately 15 years. With only one year of actual data available for
the 1996 cohort, assessment of overall performance of the 1996 cohort
relative to older cohorts would not be meaningful. However, early
analysis shows that performance, particularly purchase activity, in the
first activity year of the 1996 cohort does demonstrate improvement
over the first year's performance in most of the earlier cohorts
included in the analysis (1986-1995).
sba disaster loan program
Question. You indicate that carryover funding from fiscal year 1997
will be used to fund SBA disaster loans. What is the estimated
carryover funding available to SBA for this purpose?
Answer. Our fiscal year 1998 budget request assumed that $174.3
million in budget authority would be available in fiscal year 1998.
However, since fiscal year 1997 activity is now anticipated to be
higher than the estimate used in the budget, we now estimate that only
$88.4 million will be available in fiscal year 1998.
Question. How much in disaster lending did SBA support in fiscal
year 1996? How does that compare with the estimated level of disaster
lending anticipated by SBA for the current fiscal year (1997)?
Answer. Total disaster loan approvals in fiscal year 1996 were $988
million. After subsequent cancellations in fiscal year 1996, the figure
was $867 million for a total of $243 million in budget authority. The
fiscal year 1997 budget estimated disaster lending at $752 million (10
year moving average, excluding the mega disaster of Northridge), which
is approximately $236 million less than the fiscal year 1996 disaster
lending level. However, our recent estimates of fiscal year 1997
activity are that approvals will approximate $1.1 billion, using $220.2
million in budget authority.
Question. Does SBA's estimate of the available unobligated balances
take into account the expected request for disaster loans to the winter
flooding in California, Nevada and the Pacific Northwest, or do SBA's
estimates pre-date these floods?
Answer. No. Although the estimate of the available unobligated
balance from fiscal year 1997 in the President's budget was prepared
prior to the Pacific Northwest floods, it is not based on a specific
disaster, but was a product of using the 10 year moving average (less
the mega-disaster of Northridge). However, disasters of the magnitude
of the Pacific Northwest floods would be encompassed in the 10 year
average.
Question. What is SBA's current estimate of the disaster loan
requirements for these winter floods? Could you provide details of
these estimates to the Subcommittee at the earliest possible date?
Answer. The current estimate of the disaster loan requirements for
the Pacific Northwest winter floods is approximately $150 million.
Question. The current spring flooding in the Midwest--in the States
of Ohio, West Virginia, Kentucky, and Indiana--appear to be as
devastating as the winter flooding of the West. What are SBA's
preliminary estimates of anticipated disaster lending needs in the
Midwest?
Answer. As of May 29, 1997, we had approved more than $153 million
in disaster loans as a result of the spring flooding in Ohio, Kentucky,
Illinois, Indiana, Tennessee and West Virginia. The filing period for
physical disaster losses has closed in all states except Kentucky. The
filing period for economic injury disaster loans remains open into
December.
Question. Would you anticipate additional requirements from later
spring flooding due to melting of the snowpack, or has SBA built this
likelihood into its current budget estimate? Should Congress anticipate
a budget amendment to provide additional disaster aid through SBA? When
would you expect such a budget amendment to be submitted to Congress?
Answer. As of May 29, 1996, later spring flooding as a result of
the winter ice pack had caused Presidential disaster declarations in
South Dakota (4/7/97), North Dakota (4/7/97) and Minnesota (4/8/97).
The filing periods for both physical losses and economic injury remain
open. As of May 29, we had approved loans totaling $89,703,100 in the
three states and estimate that there will be additional approvals for
these disasters of $120-$145 million.
At this time we do not anticipate submitting an fiscal year 1998
budget amendment for additional disaster lending requirements. The
requested interest rate changes and contingency funds should enable SBA
to handle disasters based on the 10 year moving average.
The President's fiscal year 1998 budget anticipates that $90
million in subsidy budget authority will be needed to support disaster
lending requirements of approximately $785 million. With the recently
projected available budget authority of $88.4 million, plus recoveries
of $35 million would leave an unobligated balance of about $33.6
million available for fiscal year 1999.
______
Questions Submitted by Senator Ernest F. Hollings
osha's definition of small business
Question. Your Office of Advocacy sent a letter to OMB last year
regarding OSHA's rulemaking for methylene chloride. The SBA Advocacy
Office objected to OSHA's use of size standards for small businesses
other than that specified by SBA. OSHA defines small business as having
20 employees or less while SBA uses 500 employees.
What size standard do you think OSHA should use in defining small
business?
Has OSHA made any changes to its rule as a result of the Advocacy
Office's objections?
Was SBA consulted by OSHA in the selection of the size cutoff?
What impact do you think the selection of this lower size cutoff
would have on OSHA's analysis under the small business fairness
legislation that Congress passed last year?
Answer. For purposes of the Regulatory Flexibility Act, all federal
agencies are required to use SBA size definitions for small entities
when performing a regulatory flexibility analysis. 5 U.S.C.
Sec. Sec. 601 et seq.; 13 C.F.R. 121. An agency may use an alternative
definition for the analysis only after consultation with the Office of
Advocacy. In comments to the Office of Management and Budget on OSHA's
use of an alternative size definition for the methylene chloride rule,
the Office of Advocacy pointed out that OSHA failed to use the size
definition that is required by law, nor did it consult with the Office
of Advocacy about an alternative size definition. OSHA did not use the
appropriate procedure, and failed to perform a regulatory flexibility
analysis for the entire universe of small businesses. After Advocacy's
objections, OSHA expanded its analysis to include manufacturing firms
with fewer than 100 employees. However, the correct SBA definition for
this manufacturing sector is firms with fewer than 500 employees.
Using a size definition of less than 20 employees fails to
recognize that ``small business'' is more than a micro-business and
that the impact of this regulation, as well as others, can be equally
or more burdensome to small firms with more than 20 employees.
A 1994 survey commissioned by the Office of Advocacy documented the
regulatory and paperwork burdens on small business. Hopkins, A Survey
of Regulatory Burden, June 1995. The report revealed that the costs of
regulatory compliance place a disproportionate burden on small firms.
In fact, firms with 20-49 employees may be the most burdened. They
reported spending nearly 20 cents of every revenue dollar to pay for
the paperwork and operating costs attributed to regulations. These
costs do not include the additional capital investments needed as
result of regulation. Agencies argue that using a broader definition
(i.e., the definition required by law) will hide the costs to micro-
businesses because costs will be averaged. However, effective analyses
will include the cost estimates for businesses of different sizes in
order to identify the sectors with the most need for regulatory
alternatives.
Using an inappropriate size definition creates two main problems.
First, the use of micro-business sizes results in underestimates of the
overall costs of this rule to small businesses. In addition, it
completely leaves many small businesses out of the analysis. In this
case, the alternative definitions used encompass a large portion of
some industry sectors affected by this rule. Therefore, the use of an
alternative size is less significant in some sectors (e.g., furniture
strippers).
Second, and more importantly, OSHA is required to develop
significant alternatives to the proposed rule to minimize the impact on
small firms. By using a different size definition, the full impact and
the need for alternatives were understated. In fact, the feasibility of
implementing this rule for the small manufacturing, construction and
industrial paint stripping industries is in question. By using the
correct definition, OSHA should have recognized that the feasibility
hurdle cuts across all small business sectors and the need for
alternatives (besides phase-ins) are critical in some industries.
new administrator's goals
Question. Ms. Alvarez, you have an impressive background in finance
and managing government financial institutions. Obviously, the budget
before us today was put together largely before you joined SBA.
Could you tell us what your goals are for the agency? Are there
specific programs that you intend to emphasize to change?
Answer. My vision for the SBA at this early point in my tenure has
eight components. Five of these components embrace our traditional
missions and three of these components represent new expanded roles.
First, the SBA must continue to provide access to credit for small
businesses, in general, and for small businesses who are underserved by
traditional lenders, specifically. My own view is that, especially in
these times of severely constrained budgets, we need to do more to
figure out exactly who is underserved by private, unsubsidized credit
markets and then ascertain what are the best products and distribution
systems to use to reach these populations. We already know that we need
to redouble our efforts to increase lending to those populations--
especially women business owners and minority-owned businesses--and
those places--distressed urban neighborhoods and remote rural areas--
which are underserved now. Providing access to credit is my number one
priority.
I am also committed to exploring ways in which the SBA can increase
private, unsubsidized lending to small businesses and lower its cost.
For example, I have already begun to collect information on the
securitization of small business loans. I believe that small business
lending could expand, if we can develop standardization and other
approaches that will allow for increased securitization of small
business loans.
Second, I have embraced our mission to create and support
entrepreneurs through our business education, counseling and
development programs. The SBA support for the entrepreneurial spirit
through programs like the SBDC's, the Women's Business Centers, the
Business Information Centers, and the SCORE volunteers, are fundamental
to our core mission. I am challenging the managers of these programs to
open the doors wider to everyone in this society.
Third, I am very impressed with the role that the SBA plays in
helping communities recover from disasters. We are the Disaster Bank,
providing the downpayment on people's futures. I have seen the SBA at
work helping the recovery. Our employees are doing so much right now
for the people of North Dakota and Minnesota. Our hearts go out to our
own SBA employees who have lost their homes.
The fourth part of our traditional mission that I have made my own
is to help develop procurement opportunities for small businesses--
especially small disadvantaged businesses. I am encouraged by the
efforts to develop new avenues for procurement through technology and
by efforts to reduce processing time by delegating 8(a) authorities to
the procuring agencies. In my short tenure here, we have approved a new
model for 8(a) that allow firms owned by community-based nonprofits to
qualify. This approach, recently approved for a community development
corporation in Washington, D.C., will allow firms in distressed
communities to have an opportunity to compete for federal procurement
dollars. And, with the CDC's involvement, we have the hope that the
benefits from the procurement dollars will accrue to the residents of
the surrounding community. In the area of overall federal procurement,
our challenge is to increase the number and amount of prime contracts
that flow to small businesses and to increase small business access to
subcontracts.
The government is falling short of a statutory goal of providing 5
percent of all federal procurement to small women-owned firms. Actual
performance is at less than 2 percent. I am particularly interested in
taking action to increase the federal government's performance with
respect to the women's goal. It is not acceptable that the government
does not meet this goal.
Fifth, I must be the spokesperson for small businesses in general.
As a member of the President's Cabinet, I have the opportunity to bring
small business issues to the highest levels of decision making in the
federal government. It is my commitment to make sure that the voice of
small business is heard.
On top of these five core missions, I would add the following:
One: I want to transform the SBA into a 21st century leading edge
financial institution. A leading edge financial institution is one that
relies heavily on technology to manage its lending and portfolio
management activities. It employs fairly sophisticated techniques to
identify and manage risk. The 21st century leading edge financial
agency is a cost-effective and efficient organization that delivers
credit to small businesses in a very short period of time. It is an
organization that analyzes and develops new innovative credit products
that serve to meet the various needs of its small business customers.
And, it is an agency that operates in a safe and sound manner to
protect the interests of the taxpayer.
Two: the SBA will take a leading role in the President's Welfare to
Work initiative. President Clinton has promised the American people
that he will end welfare as we know it. Last year, the President and
the Congress passed landmark legislation that is the first step toward
fulfilling the President's promise to the American people. The next
step is to ensure that people are moved successfully from welfare to
work. The SBA must take a leading role in this initiative because we
represent the work side of the welfare to work equation. Small
businesses create 75 percent of the new jobs in the economy. We must
work to find ways to link employees coming off the welfare rolls with
our small business employers. This will be a mammoth organizing task.
Finally, we have a challenge to help small businesses cope with and
benefit from changes in the larger economy. The internationalization of
capital markets, the rapid pace of change in technology and
communications, the reconfiguration of major sectors of the economy
such as utilities and financial services all pose risks for the small
business sector.
Yet, if these changes are understood correctly and foreseen, nimble
small businesses can take advantage of new markets and new
opportunities. We have a mandate to help guide small businesses through
these changes. Through a series of conferences over the next several
years, I want to identify the most important of these macroeconomic
trends for small businesses and organize conferences that will allow us
to share knowledge on these important changes in the economy.
disaster loan program
Question. As I understand it, your budget does not request
additional credit appropriations for the SBA Disaster Loan Program
because as of February 1, 1997, you had $325 million in obligational
authority which should subsidize $1.6 billion in disaster loans. Is
that correct?
Answer. The total amount of funds available for fiscal year 1997
was $326 million which provides for $1.6 billion in obligational
authority. As of February 1, 1997 we had used $63 million to make $311
million in loans, leaving $263 million to cover remaining fiscal year
1997 loan needs, administrative expenses and carryover funds to fiscal
year 1998.
Question. What are the latest estimates for the flooding in
California and the Ohio Valley, and the tornadoes in Arkansas and the
Southeast?
Answer. Based on our current level of activity in the areas that
you mentioned along with the recent flooding in the upper Midwest we
estimate that total disaster loan demand for fiscal year 1997 will be
about $1.1 billion.
Question. Are you still confident that you will make it through
fiscal year 1998 without new appropriations?
Answer. The fiscal year 1998 budget is based on a substantial
carryover from fiscal year 1997, now estimated at $88.4 million, plus
$35 million in recoveries. This amount would still provide
approximately $1.1 billion in loan authority if Congress adopts the
proposal to increase the interest rates on disaster loans. If Congress
rejects the proposal to increase interest rates, available loan
authority for fiscal year 1998 would be $526 million ($259 million
below the ten year average).
Question. However, administrative expenses appropriations for the
Disaster Loan Program are requested to increase from $108.5 million
this year to $173.2 million. Why?
Answer. The fiscal year 1997 appropriation of $108.5 million
included $22 million from the emergency supplemental for disaster loan
making, $50.4 million to be transferred to regular salaries and
expenses to cover indirect costs of the SBA, $0.5 million to be
transferred to the Office of Inspector General for disaster-related
activities, $22 million for disaster loan servicing activities, and the
balance of $13.6 million for additional disaster loan making
activities. Therefore, the disaster loan making operation received
$35.6 million in direct fiscal year 1997 appropriations. This was
supplemented by $18.2 million carried forward from fiscal year 1996,
plus $50 million proposed to be reprogrammed from prior year loan
recoveries in the disaster loan program account. The total amount
available for the disaster loan making activities was, therefore,
proposed to be $103.8 million for fiscal year 1997. To date, only $38.7
million has been approved for reprogramming from the disaster loan
program account by the Congress, providing the disaster loan making
activity $92.5 million for fiscal year 1997.
For fiscal year 1998, there are no estimated carry forward funds
available from fiscal year 1997, and there is no proposed reprogramming
from the disaster loan program account. Therefore, funding for the
disaster loan making activity is requested as a direct appropriation.
This requested level is $98.3 million. The requested level for disaster
loan servicing activities is $24.9 million. The requested level to be
transferred to the regular salaries and expenses account to support the
indirect activities is $50 million. Therefore, the total fiscal year
1998 appropriation requirement is $173.2 million.
Question. This year's budget proposes to increase the interest
rates charged on SBA disaster loans from 4 percent to the cost to the
Treasury borrowing rate plus one point. Could you explain the proposal
and why Congress should agree?
Answer. First, the fiscal year 1998 proposal does not add one point
to the cost of Treasury borrowing. Under current law the interest rates
fluctuate according to statutory formulas; a lower rate, not to exceed
four percent, is available to applicants without credit elsewhere; a
higher rate, not to exceed eight percent, is charged to borrowers who
have credit elsewhere. To reduce the subsidy cost of the disaster loan
program, the budget proposes to increase the interest rate to borrowers
without credit elsewhere to the cost of U.S. Treasury for securities of
comparable maturity. For borrowers with access to credit elsewhere, the
interest rate would be pegged above the Treasury rate. This change
would reduce the subsidy in the program from 23.46 percent to 11.44
percent, enabling more loans to be made with the same amount of budget
authority. An increase in the interest rate would also remove a
disincentive for potential disaster victims to purchase insurance,
which is the most desirable method of protection against the financial
costs of physical disasters. Removing the caps and raising the interest
rates to the cost of money to the government would encourage more
reliance on insurance.
mbda/sba minority assistance
Question. For several years this Committee has been trying to
eliminate duplication and get SBA and the Minority Business Development
Agency in Commerce to work closer together. In fiscal year 1997 we
fenced appropriations in both agencies for this purpose. Could you give
us a status report on where efforts stand between the two agencies?
Answer. The report language for the fiscal year 1997 Omnibus
Appropriations Act earmarked $2 million in MBDA funding and $1 million
in SBA funding for projects jointly developed, implemented, and
administered in conjunction between the two agencies. MBDA and SBA
jointly developed a proposal that was submitted to the House and Senate
Appropriations Subcommittees on Commerce, Justice and State in November
1996. The proposal would utilize the resources of both MBDA and SBA to
provide business development assistance to three different categories
of small disadvantaged businesses and medium sized businesses
traditionally served by these two agencies.
The proposed project has been designed to bring to bear the
resources, resource partners and programs of both agencies, without
duplication of effort, for the benefit of (1) current eligible Section
8(a) Program participants in the developmental phase, (2) traditional
MBDA clients and 8(a) participants about to transition out of the
program, and (3) former 8(a) participants and other minority-owned
businesses that are no longer small under SBA's size standards and
regulations, but still benefit substantially from the transitional
business development assistance programs of MBDA for which they remain
eligible. To date, we have not been given a response from Congress on
the proposal.
small business development centers
Question. Your budget proposes to reduce appropriations for Small
Business Development Centers from $73.5 million to $57.5 million. Could
you explain your proposal? Why is the Defense Transition Program zeroed
out in the budget?
Answer. The SBA is attempting to increase the reliance of the SBDC
program on the private sector and make the program more effective and
self-sufficient by passing a portion of the costs of the program on to
the clients. SBDC's charge fees for training (in 1996 SBDC's offset
about $4.8 million in training costs through fees) and its own clients
value the program at about $686 million. The Agency feels that those
who use SBDC services should share some of the costs.
The Defense Economic Transition Initiative, which was initially
funded in fiscal year 1995 for $3.375 million and continued in fiscal
year 1996 for $2 million, has always been a Congressional initiative.
Based on the limited resources of SBA, we believe the SBDC program
could generate greater economic impact if it remains dedicated to its
core responsibility of business management training and counseling. We
have therefore not sought additional funding for this initiative.
sba field structure
Question. For years, this Subcommittee has urged SBA to reduce and
rationalize its field structure. In 1995, your predecessor, Phil Lader,
proposed some changes but he was stopped by the House side. Have you
taken a look at this issue? Have you assessed SBA's field structure?
Answer. The SBA is continuously looking at its field structure and
how it fits with the Agency's mission. Over the last 2\1/2\ years, the
district offices have been reduced in FTE's by 17 percent. Although the
loan processing and servicing responsibilities are moving away from the
district offices, lender oversight and training responsibilities are
increasing. In addition, training and technical assistance required for
small business constituents continue to increase.
loan guarantee volume
Question. It seems to me that SBA runs the 7(a) program like an
entitlement. If there is demand for loans then the assumption is that
the Government has to meet that demand. Do you agree? How do we know
that Government funding is necessary? I mean, what incentive does any
bank have to use its own funds when it knows that the Government will
underwrite 80 percent of the risk?
Answer. SBA believes that it is appropriate to allow reasonable
program growth within necessary budget constraints, and has requested a
slight increase in 7(a) funding for fiscal year 1998 to reflect this
growth. SBA has not, however, requested authority to broaden the
category of small businesses for which it may guarantee loans.
Therefore, for the past several years actual 7(a) loan approvals have
remained relatively the same. The last time that SBA asked for
supplemental appropriations to support the 7(a) program was during
fiscal year 1993. When SBA ran short of appropriated funds again in
fiscal year 1995, SBA imposed two measures, reducing gross loan size
and eliminating refinancing, to dampen demand.
SBA is well aware that budget constraints make it necessary for
every Federal agency to examine its programs to determine whether they
represent an appropriate use of taxpayer dollars. You may be interested
to know that no lender may ask for an SBA guaranty on a loan until it
certifies that it could not make the loan under the same terms and
conditions without the guaranty. Based on these certifications, and our
feedback from small businesses in need of capital, we believe that the
loans that SBA guarantees are important to the Nation's economy, and
are not available in the commercial marketplace. SBA's guaranty allows
lenders to extend credit when it could not normally do so by allowing
longer maturities, less restrictive collateral requirements and loans
larger than allowed under some lenders' practices. By selling the
guaranteed portions of their loans on the secondary market, SBA's
lending partners are also able to leverage their resources to have
additional funds to lend to small businesses.
subcommittee recess
Senator Gregg. The subcommittee is recessed.
[Whereupon, at 2:21 p.m., Tuesday, March 11, the
subcommittee was recessed, to reconvene at 10 a.m., Wednesday,
March 12.]
DEPARTMENTS OF COMMERCE, JUSTICE, AND STATE, THE JUDICIARY, AND RELATED
AGENCIES APPROPRIATIONS FOR FISCAL YEAR 1998
----------
WEDNESDAY, MARCH 12, 1997
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 9:57 a.m., in room SD-138, Dirksen
Senate Office Building, Hon. Judd Gregg (chairman) presiding.
Present: Senators Gregg, Domenici, Hutchison, Hollings,
Inouye, and Mikulski.
DEPARTMENT OF JUSTICE
Office of the Attorney General
STATEMENT OF JANET RENO, ATTORNEY GENERAL
ACCOMPANIED BY:
STEPHEN R. COLGATE, ASSISTANT ATTORNEY GENERAL FOR
ADMINISTRATION
MICHAEL J. ROPER, DEPUTY ASSISTANT ATTORNEY GENERAL, CONTROLLER
ADRIAN A. CURTIS, DIRECTOR, BUDGET STAFF
opening remarks
Senator Gregg. I appreciate the Attorney General arriving
early and the Senator from Hawaii is always early. We are very
lucky to have such promptness, so we will start a few minutes
early ourselves. I know the ranking member is going to be
joining us in a few minutes. I know the Attorney General's time
is in great demand and we appreciate her taking time out of her
schedule to come and testify relative to her budget and other
issues. We welcome you to the committee. It is always a
pleasure to have your input and thoughts and ideas, and so I
will open the floor to you. Let me first yield to the Senator
from Hawaii to see if he has an opening statement.
Senator Inouye. No, Mr. Chairman.
Senator Gregg. I open the floor to the Attorney General.
Attorney General Reno's opening remarks
Ms. Reno. Chairman Gregg and Senator Inouye, thank you very
much for this opportunity. I appreciate your strong support
that you have consistently given the Department in our efforts
to deal with the crime problems in this country. During this
time of fiscal constraint and steadily decreasing amounts of
discretionary spending, please know that I recognize the
tremendous effort that has been made by this subcommittee to
carve out resources for the Department during the past 4 years.
I know it is no easy task, and I appreciate the difficult
choices that you have made.
prepared statement
For fiscal year 1998, we are seeking a budget that totals
$19.3 billion, an $800 million, or 4.9 percent, increase in
discretionary funding over 1997 levels. These new resources
will be used primarily to escalate our fight against drugs,
youth violence, terrorism, and illegal immigration. I
appreciate your thoughtful approach to many issues, Mr.
Chairman, and I appreciate the thoughtful way that you
addressed the issues facing the Department, and I look forward
to working with you and the entire subcommittee, and I would be
happy to try to answer any questions.
[The statement follows:]
Prepared Statement of Janet Reno
Mr. Chairman and Members of the Subcommittee: Good morning.
Chairman Gregg, Senator Hollings, members of the Subcommittee, it is
again a pleasure to appear before you to present the President's budget
request for the Department of Justice. This Subcommittee, under both
your leadership, has been tremendously supportive of our efforts at the
Department, and I look forward to working closely with you in this, my
fifth year.
For fiscal year 1998, the President is seeking a budget that totals
$19.3 billion for the Department of Justice, including $5.2 billion in
resources from the Violent Crime Reduction Trust Fund, and $2 billion
in funding through a variety of fees and fines.
During these times of continued fiscal constraint and reduced
federal spending, the fiscal year 1998 budget request demonstrates the
Administration's resolve to escalate our nation's fight against drugs,
youth violence, terrorism, and illegal immigration, by providing the
Department with an $800 million or 4.9 percent increase in
discretionary funding over 1997 levels.
management initiatives
If the budget I present to you today is approved, it will mark a 70
percent increase in Justice Department funding during my tenure as
Attorney General. Please know that I recognize the tremendous efforts
that have been made by this Committee to carve out the resources that
you have made available to the Department of Justice during this time.
I know it has been no easy task.
I know, too, of your deep concern over the management of these
resources, and let me say that I share them. In fact, as a result of
the hiring problems we had with border patrol officers and our shared
concern over large-scale automation projects such as IAFIS and NCIS
2000, I instituted a management initiatives tracking process within the
Department early last year. The process focuses on results. Like you, I
am interested in what has been accomplished--how the Department's major
organizations are implementing critical initiatives, including those
supported by the budgets approved by this Committee.
Under the process I have in place, the components and I agree ahead
of time on the subject areas to be tracked, as well as the measures and
milestones to be used to demonstrate that a task is completed, on the
right course, or needs corrective action. I am told this is the first
time in over twenty years that such a management review process by
senior level Department of Justice officials has been instituted. The
components report on their status to me monthly, unless I ask for a
more frequent update--as is the case with the INS and the FBI. We have
regularly-scheduled face-to-face meetings to discuss progress and
actions needed to keep the initiatives on track.
I will continue with this close management oversight to ensure
these resources are properly used and that intended results are
achieved. In addition, we need to strengthen our internal program
monitoring and evaluation capabilities within each agency. And, your
recent approval of the INSpect reprogramming is one example of
improvements we are attempting to make in this regard. Another is our
request for increased resources to enhance the Office of the Inspector
General. In the coming months, I hope we can work together to match
audit and monitoring capabilities consistent with the Department's
significant growth in funding.
I want to assure you that I am making every effort to use the
resources provided by this Committee in the most efficient and cost-
effective manner possible.
fiscal year 1998 request
fighting crime and youth violence
The budget I present to you today builds on the commitment made
consistently by this Committee over the past four years to strengthen
our fight against crime, particularly crimes of violence. Our efforts
to work with communities and local police forces, through programs like
Community Oriented Policing Services (COPS), are achieving positive
results. Serious and violent crime dropped for the fifth year in a row
in 1996, marking the longest period of decline in 25 years. And, the
number of youths arrested for violent crime dropped by nearly 3
percent--the first decline in seven years.
new initiatives
However, while overall crime rates are dropping, young people are
increasingly the perpetrators and victims of some of society's most
violent crimes. To address the continuing problem of youth violence,
the budget before you seeks more than $230 million in additional
resources to target gangs and youth violence, hire new gang
prosecutors, establish anti-truancy and anti-school violence programs,
and develop new initiatives to get young people back on the right track
after they have broken the law and before they stray too far.
These resources include $100 million to establish the Prosecutorial
Initiatives Targeting Gang Crime and Violent Juveniles Program,
designed to provide grants directly to State and local prosecutors'
offices for new local prosecutors and anti-gang initiatives designed to
pursue, prosecute, and punish dangerous gang members for their crimes.
Another $75 million is requested for the ``At-Risk Children
Initiative.'' Grants will be made to local communities, through the
States, for anti-truancy, school violence, and other, similar
initiatives aimed at getting or keeping high risk juveniles on the
track to success. And, $50 million is requested to establish a Youth
Violence Court Program that will provide funding for specialized,
court-based activities--like juvenile gun and drug courts--to more
effectively handle violent youthful offenders as they proceed through
the justice system.
The changing profile of juvenile crime to a more violent and
destructive phenomenon demands that we develop an aggressive, national
strategy to effectively address it. The Anti-Gang and Youth Violence
Act of 1997, which was transmitted to the Congress on February 25,
contains that blueprint. I believe these new initiatives are the first
step in developing a coordinated system to stem the rising tide of
youth violence in America. I urge you to support them.
community-oriented policing services [cops]
Our budget request for fiscal year 1998 also includes $1.4 billion
to continue our effort to put even more police on the streets of
communities throughout America. This funding will be used to hire
approximately 17,000 additional police officers, bringing the total
number of officers funded to nearly 80,000.
Police chiefs and sheriffs from across the country are telling us
the good news--community policing is working. Just two weeks ago, the
President and I traveled to Boston and saw firsthand what a difference
community policing can make. We must maintain and strengthen the
partnerships that we have built with local law enforcement.
And, we are requesting resources to enhance State and local law
enforcement recruitment, retention, and education. The budget includes
$20 million each for the Police Corps program and for law enforcement
scholarships to increase significantly the number of police officers
with advanced education and training. The budget also includes $5
million for police recruitment.
prosecutions in the district of columbia
An increase of $16.6 million is included to provide enhanced
support for the United States Attorney's work in prosecuting D.C. crime
before the D.C. Superior Court. Specifically, additional attorney
resources will be used to expand the community prosecution initiative,
and to address the rising problem of domestic violence. Additional
staff will also be used to target and remove violent gangs from the
streets of the District, and to investigate and prosecute unsolved
murder cases.
violence against women
Violence against women continues to be a significant problem. To
combat this crime, the fiscal year 1998 budget includes an increase of
$52 million--bringing State and local assistance under the 1994
Violence Against Women Act to $249 million.
A coordinated, aggressive, and thoughtful criminal justice approach
employing law enforcement and prosecution, coupled with victim
services, can help break the cycle of violence and reduce subsequent
incidents of domestic violence. The expansion of these programs will
enable States to enhance their efforts to respond to domestic violence,
sexual assault, and stalking, and further expand access to previously
under-served American Indian and other minority populations.
victim witness assistance
Responding to the growing concern of Congress and the
Administration to safeguard the rights of crime victims, and to ensure
the proper and considerate treatment of government witnesses, the
Department is also requesting 134 additional victim-witness
coordinators and advocates to be placed in United States Attorneys'
offices throughout the Nation.
keeping criminals off the street
For fiscal year 1998, the budget includes $710 million--of which
$525 million is unearmarked--for State grants to build new prisons and
jail cells under the Violent Offender Incarceration and Truth in
Sentencing Grant programs. These monies can support the construction of
up to 9,000 new prison beds to accommodate State prison populations.
Of the $185 million in earmarked State prison monies, $35 million
is for the U.S. Marshals Service's Cooperative Agreement Program (CAP)
to allow for the replacement of approximately 700 beds provided through
agreements expiring by 1998, and to purchase additional beds to support
the projected growth in the Federal unsentenced detention population.
The remaining $150 million is to augment the $350 million provided for
the State Criminal Alien Assistance Program (SCAAP)--bringing the total
available to reimburse States for the costs of incarcerating criminal
aliens to $500 million in fiscal year 1998.
To address the steadily increasing federal inmate population,
estimated to reach 116,762 in 1998, the budget includes program
increases of $144 million for the Federal Prison System. These
resources will permit the activation of 1,152 new inmate beds in 1998,
the construction of another 1,216 beds, and the conversion of dormitory
style housing into single cells at two U.S. Penitentiaries.
These resources include $3.6 million to support the activation of a
medium security facility at the Federal Correctional Complex in
Beaumont, Texas. It also includes $120.6 million to build a high
security facility with a minimum security camp at Castle Air Force
Base, California, and $16.7 million to convert dormitory style housing
into single cells at the U.S. Penitentiaries at Lewisburg, Pennsylvania
and Lompoc, California.
And finally, $1.4 million is included to enhance the Bureau of
Prison's ability to identify the background of inmates entering the
Federal Prison System. This initiative will improve prison management
by collecting information on security threat groups coming into BOP
institutions and coordinating its intelligence gathering efforts with
other law enforcement organizations.
fighting drug trafficking and drug abuse
Drug abuse and drug-related crime cost our society an estimated $67
billion a year and destroy the lives and futures of our most precious
resource--our children. The budget I present to you today seeks to step
up our efforts to control the flow of illegal drugs with $288 million
in new resources targeted at Southwest border interdiction,
methamphetamine production and distribution, investigation and
prosecution of drug offenses, and successful drug treatment programs.
With these additional funds, the DEA will be able to hire 168 more
agents to identify and assist in the prosecution of major Mexican drug
trafficking organizations operating along the Southwest border; expand
its anti-methamphetamine efforts; and continue implementing its five-
year strategy that targets heroin trafficking within the United States.
For the FBI, 76 new agents will be added to expend the Department's
Southwest Border Strategy, investigate public corruption along the
border, and assist the DEA's Country Attache office in Mexico. The
United States Attorneys will hire 59 new Assistant U.S. Attorneys to
work with the FBI and DEA in reducing the availability of illegal drugs
by investigating and prosecuting internal and multi-jurisdictional drug
trafficking organizations. They will work together to coordinate
attacks against international drug organizations such as the Cali
cartel.
During the past year, the Department has significantly disrupted
the flow of cocaine trafficking along the Southwest border; identified
and assisted in the destruction of four major clandestine laboratory
sites in Colombia; and successfully prosecuted drug kingpin Juan Garcia
Abrego. With your help in 1998, we can build on these successes.
To continue our efforts to break the cycle of drug abuse and crime,
we have included $45 million in additional funding for Drug Courts,
bringing the program total of $75 million to assist State and local
governments in developing specialized drug courts for non-violent
offenders. Another $33 million is added to increase funding $63 million
for the Residential Substance Abuse Treatment of State Prisoners
Program. In both instances, our research shows this kind of coercive
intervention by the criminal justice system can force offenders to
change behavior--with a real decline in recidivism being the result.
And, finally, you will note a change in the presentation of the
budget request for the Interagency Crime Drug Enforcement Program that
supports the Organized Crime Drug Enforcement Task Forces (OCDETF).
Beginning in fiscal year 1998, funding for OCDETF organizations in the
Department of Transportation and Treasury will be made available from
appropriations provided directly to those two department. This change
in funding source will have no effect on the oversight, management, and
day-to-day operations of the OCDETF program. I will continue to provide
policy, program, and budgetary direction to the regions, and to all of
the participating organizations. The centralized management and
coordination of Organized Crime Drug Enforcement Task Force activities
is a critical component to the success of the program, and I will work
to see that it is maintained.
fighting terrorism and international crime
While recent acts of terrorism appear to have been isolated
incidents, we are seeking increased funding to ensure the safety and
security of the Government and public from future violent acts.
We are seeking an increase of $3.1 million and 30 positions for
United States Attorneys to work with the FBI in the investigation and
prosecution of domestic terrorism. The Anti-terrorism and Effective
Death Penalty Act of 1996 broadened the tools available in terrorism
cases. These United States Attorney resources will be critical in the
Department's coordinated strategy to respond to incidents when they
occur.
We are also requesting $29.5 million for the Counterterrorism Fund
in fiscal year 1998. As you know, the Fund is used to reimburse Justice
agencies for costs incurred in support of preventing, investigating, or
prosecuting domestic and/or international terrorism, and to finance
reward payments. Further, an additional $14.3 million is requested to
support 23 FBI agents and 11 support personnel to enhance existing
Legal Attache offices and open eight new ones. Another $3.1 million
will allow the Criminal Division to increase its attorney presence
overseas, expand its ability to critically analyze sensitive
international law enforcement information coming into the Department,
and augment international computer crime investigations and
prosecutions. This funding will also allow the Department to hire staff
as the United States assumes the Presidency of the G7/P8 in 1997.
The 1998 budget also includes $17 million to continue the three
State and local counterterrorism programs established in 1997 that
provide grants to law enforcement agencies, as well as firefighters and
emergency services personnel, to enhance their ability to respond to
terrorist attacks. These monies also support grants for the development
of technologies that can be used by State and local law enforcement to
fight terrorism.
fighting illegal immigration
The fiscal year 1998 budget includes $3.6 billion for the
Immigration and Naturalization Services (INS)--a 13 percent increase in
funding to strengthen the aggressive efforts we've made to date. These
resources will enable the INS to further control illegal immigration by
targeting resources to stop those who want to enter the United States
illegally, detain and quickly remove those who slipped by, and make it
harder for illegal immigrants to get jobs.
These increased resources will strengthen border enforcement in the
South and West with 500 additional border patrol agents, exceeding the
President's commitment to a Border Patrol staffing goal of 7,000 agents
on the line. The funding will also support a program aimed at
identifying criminal aliens in county jails as well as support INS'
efforts to expand criminal alien record holdings int he FBI's National
Crime Information Center (NCIC). And, resources will be used to enhance
the existing Law Enforcement Support Center to respond to increased
numbers of queries from State and local law enforcement agencies. To
reduce the job magnet for illegal entry, the funding will enhance INS'
interior enforcement initiative in states with high illegal immigrant
populations, and increase funding to verify the employment eligibility
of newly-hired non-citizens.
Last year's immigration bill requires mandatory incarceration of
aliens involved in crime, pending deportation. The budget request will
support 1,864 more jail beds in 1998. And, an additional 1,132 bed
spaces will be available using resources in the new detention account,
bringing total detention bedspace to over 15,000 in 1998. Specifically,
the INS will be activating new beds in the Buffalo (NY) Service
Processing Center, the Krome (Miami, FL) Service Processing Center, and
in the San Diego, CA area.
restoring critical infrastructure
Once again, the budget before you seeks to address the critical
infrastructure needs fundamental to the effective enforcement to our
nation's laws. Without the proper tools to get the job done, current--
let alone additional--attorneys, agents, and inspectors will be less
efficient and less effective in performing their duties.
For the INS, we are seeking $76.2 million for infrastructure
improvements. These include resources to address the problem of aging
and overcrowded Border Patrol stations along the Southwest border, and
additional detention bedspace. These funds will also be used to
establish a construction management program, strengthen INS' records
infrastructure, enhance information and analytical services, and
provide advanced training for INS officers.
For the FBI, the budget includes $51.6 million to improve its core
infrastructure. This funding includes items such as renovation of space
at the J. Edgar Hoover Building; five-year security investigations of
all FBI employees and contract personnel with access to classified
materials and facilities; expansion and renovation of the Los Angeles
Field Office; and equipment to upgrade the capabilities of the FBI's
National Backstopping Program so critical to FBI undercover operations.
Another $36.9 million is requested for the DEA. These funds will be
used to purchase and install advanced computer equipment for the
establishment of a secure, centralized computer network that will be
used in conjunction with the FBI and other Department components in
drug investigations. The funding will also support a multi-year project
to reconstruct at least five deteriorating DEA field laboratory
facilities.
general legal activities
As I have stressed in past testimony before this Committee, I am
deeply concerned that our litigating divisions have sufficient
resources to cope with national problems that need a coordinated,
expert approach, such as the defense of federal statutes against legal
challenges. With the exception of the Criminal Division, the
Department's litigating components have not had an increase to cover
inflation for the past three years--yet their workload has continued to
grow. The 1998 budget request includes funding to address this
shortfall.
Specifically, it will allow us to pursue illegal tax protester
groups, to better enforce the Americans with Disabilities Act, and to
prosecute hate crimes; to develop strategies for interdicting dangerous
pollutants, to challenge anti-trust violations, to defend multi-billion
dollar claims against the Treasury based on cases such as Winstar,
address other increasing defensive litigation workload, and to speed
the automation of our Freedom of Information processing system.
conclusion
Mr. Chairman, I have attempted to outline for you today, the
principal focus of the fiscal year 1998 budget request for the
Department of Justice. But, our mission is so vast and varied, I have
not been able to touch on it at all.
I appreciate the support you've given to me, and to the Department
of Justice during the past four years. We've made tremendous progress
in fighting drugs, violent crime, terrorism, and illegal immigration.
And now, with your continued support, I am certain we can build on the
progress we've made and rid America of the violence that has become all
too commonplace.
Thank you. I look forward to answering any questions you might
have.
Senator Gregg. That may be the briefest opening statement
that any witness has ever made before this committee. It is
much appreciated. It is in the New England tradition. I
appreciate it. Well, I know that the Senator from Hawaii has a
Defense Appropriations Subcommittee meeting going on at the
same time, so I will yield to the Senator from Hawaii to ask
such questions as he may have because I know he has to get
going.
Juvenile crime
Senator Inouye. Thank you very much, Mr. Chairman. I do
have a few questions. General Reno, the aspect of crime that
concerns, I believe, all Americans would be juvenile crime. It
has been not only frustrating for many of us, but it has been
frightening at the level of brutality and the increase. The
administration has introduced a measure on juvenile crime. Can
you tell us some of the key points in this measure?
Ms. Reno. What we have tried to do is build on what we have
seen as successful in communities across this Nation. We have
seen the COPS program provide officers for the streets who can
relate to young people and have had tremendous effect in
community policing initiatives across the country. Congress and
the administration have provided more moneys for correctional
facilities, but we are also trying to focus on this initiative
with a balanced approach that also provides to prosecutors in
this first year $100 million to develop initiatives focused on
youth violence, tailored for the problem in that particular
community.
We also provide $50 million for a focused attempt by courts
to deal with the problem of youth violence. I have worked with
the State chief justices conference on a regular basis over
these last 2 years to identify how the courts can participate
in this initiative since, as you may well know if you talk to a
juvenile court judge, they say they are just absolutely
overwhelmed by the caseload, and do not feel that they can do
justice to the particular youth appearing before them. So this
will give prosecutors and courts the opportunity to participate
in the juvenile justice system in a more complete way.
What the initiative tries to do is to provide a balance
focused on the serious youthful offenders, provide for
punishment that is firm, fair, and fits the crime, provide for
aftercare when they return to the community to give them a
chance of success, but it also provides for an intervention
program such as moneys for youth drug courts or youth gun
courts that can make a significant difference. We provide $75
million in this budget, a $50 million increase, for at-risk
children through initiatives such as mentoring, truancy
prevention, conflict resolution programs, that can give
children a chance for a strong and positive future. So it is a
balanced approach. Let us get tough on those serious offenders,
but let us provide opportunities for programs that keep our
kids out of trouble in the first place.
Crime prevention
Senator Inouye. So am I to gather that from the debate on
crime, you opt out more for prevention than for enforcement?
Ms. Reno. No; as I was clear to point out, we are providing
enforcement initiatives through prosecution initiatives and
through the court's initiatives. We are trying to provide a
balanced approach, Senator, that recognizes that too often
there is not an adequate punishment, an adequate followup, for
the serious offender, but at the same time we have seen
prevention programs that are working across this country, that
are keeping kids out of trouble, that are reducing the crime,
where we bring community initiatives together such as mentoring
and truancy prevention, and programs where community probation
officers ride with community police officers to keep tabs on
the youngsters in the neighborhood who are in that probation
caseload. There is so much that is happening, and this is a
focus to enable it to happen across this Nation.
successful Juvenile crime prevention programs
Senator Inouye. The State of Hawaii, like all other States
and communities, has its own juvenile crime program. So I would
assume that there are literally hundreds, if not thousands, of
different programs in all of our communities, and I would
assume that many are successful and many are not. How can we
get hold of programs that are successful so my community in
Hawaii can try it out?
Ms. Reno. What we have tried to do is to identify the
cities that have been successful, the communities that have
been successful, in reducing crime. Boston is a classic
example. They had a significant youth murder rate that has
declined so that there were no youth murders in a significant
period of time in this last year. What we did was put together
a booklet of the programs that have come together in Boston to
make a difference. We worked with the police commissioner, and
we are distributing that information across the country, but in
this initiative, we are also providing moneys for evaluation,
for research, and for dissemination to the entire country of
programs that are working.
You are correct when you point out that there are different
programs and some work, some do not. Some could work if there
was just another piece that could fit into the puzzle to create
a whole approach that can make a difference for a child. It
does no good to have a marvelous school program, and then have
no afternoon or evening programs. So in the Department of
Education's budget, there is a budget request for $50 million
for after-school and evening programs that can, I think, make a
significant difference for our children.
Senator Inouye. General, I thank you very much. Mr.
Chairman, I have several other questions which I hope I can
submit.
Senator Gregg. Absolutely.
Senator Inouye. So I thank you very much.
Ms. Reno. Thank you, Senator.
FBI/White House confrontation
Senator Gregg. First, welcome to the ranking member. We did
forego opening statements, and the Attorney General basically
did as well.
Senator Hollings. Very good.
Senator Gregg. We have gotten right into questions. There
are a couple of issues which I think we have to address
preliminarily here because they are of such public
significance. I had mentioned that we would be addressing them
to you so that I did not feel that we were being unfair in
bringing these up, but I would have presumed that you would
have anticipated we would have done this.
The most significant, obviously from our standpoint as a
committee, is this confrontation--I do not think there is any
other way to describe it--between the White House and the FBI.
The statement of the White House was initially, if I can review
the facts, that the two lower-level or mid-level people within
the National Security Council [NSC] had been briefed by the
FBI, on the potential for influence by a foreign government
being asserted by using campaign contributions. That same
briefing, as I understand it, was given to at least six Members
of the Senate. When this was disclosed, the White House put out
a statement that the FBI had advised these NSC individuals not
to communicate this information with the President.
The FBI then put out a statement, a portion of which I will
read: ``the FBI placed no restrictions whatsoever on the
dissemination up the chain of command at the NSC on any
information provided to the NSC senior staff''--I said mid-
level; they were senior; I am sorry--``senior staff by the FBI
during the June 3, 1996, briefing.'' So the FBI specifically
contradicted the public statement of the White House.
Today and since that time, there have been some mitigating
statements, not coming out of the FBI but coming out of the
White House, and at least through unidentified sources, coming
out of the Justice Department. I will quote from a New York
Times article today that appeared in the Nation section under
Money and Politics entitled ``Justice Department Rebukes FBI
for Statements.'' One of the paragraphs says, ``Another Justice
Department official speaking on the condition of anonymity
criticized the Bureau for the blunt public statement on
Monday.''
There are a number of very significant issues that are
raised by this obviously. To quote the Washington Post, which
is not generally my inclination, in the first paragraph of
their editorial today, ``It is a pretty chilling spectacle when
you have, as you did on Monday, the FBI, the Nation's premier
Federal law enforcement agency, flatly contradicting the White
House, the President himself, on a matter of some considerable
importance to both. But there were things out of the ordinary
here.'' This is further down. ``But there were things out of
the ordinary here, and there continue to be,'' is the essential
summary of the editorial.
So it is not necessarily my own view, but the view, I
think, of a number of people that this spectacle of the FBI and
the White House contradicting each other is very significant
and creates major concerns. The concerns which I wish to
address are the following, and which I would appreciate your
commenting on. First, have you taken a look at the situation,
which I am sure you have, and what is your determination of
what happened? Second, does it not put the Justice Department
in an untenable position to have the chief investigative arm of
the Justice Department, which is in the process of pursuing an
internal Justice Department investigation of campaign funding,
and specifically, we understand this funding issue as the
alleged influence of another government or an attempt by
another government to influence our system through campaign
funding. Does that not put the Justice Department in an
untenable position to have its investigative arm in a public
disagreement with the White House? Public disagreement may have
been mitigated slightly, but is clearly still there. Does it
not put the Justice Department in a situation where pursuit of
an internal investigation through its internal offices as
versus through an independent office of an independent
prosecutor creates at least a perception of a conflict of
interest?
Ms. Reno. Yes; I have looked into it, and the FBI agents
who provided the briefing state that they placed no restriction
on the dissemination of the information up the chain of command
at the NSC, as you have pointed out. I have been advised that
the NSC staff members state that they were asked to curtail
further dissemination, and that the notes of the briefing of at
least one reflect or suggest something to that effect. What I
think happened, but we are continuing to review it, is that
they pointed out that the matter was sensitive and should be
handled carefully, and I think there was a miscommunication
with respect to that and a misunderstanding of just what was
intended. I think the White House has further clarified that by
an additional statement.
With respect to an issue of an independent counsel, this
does not have anything to do with the campaign finance and does
not in any way trigger the independent counsel statute.
Fundraising
Senator Gregg. Well, that is technically true. I guess my
concern, however, is--and I will couple this with another
question--that recently both your Department and yourself made
statements reflecting the definition of what would be an
illegal act within the White House relative to raising funds.
At the same time, of course, the Department is investigating
whether or not illegal acts occurred at the White House
relative to raising funds, at least one presumes they are as
part of this internal review. Does that create a perception of
conflict or inconsistency as to the ability to pursue an
independent investigation when you have the Department which is
doing the investigation defining the law which has not yet been
defined judicially and which is in issue? In addition to that,
is there a conflict when the Department which has an
investigative arm that does the investigation is in a
confrontation with the White House? My question goes more to
the issue of whether or not there is a perception here that the
Justice Department is putting itself in a position where the
perception of fairness, the perception of objectivity, and the
perception that there might be a conflict of interest are all
raised as to whether they are appropriately being followed?
Ms. Reno. First of all, I have made no statement with
respect to the definition of what is legal and illegal, and I
have specifically said that we are continuing to review every
allegation, pursue every matter, take every investigative step
possible, and that it is my policy not to make such
determinations until the investigation is complete so that we
do not prejudge it. With respect to the second issue, as to
whether there is an appearance of conflict, Congress has
spelled out what that appearance would be in terms of high
public officials at the White House or otherwise and has
defined those people. It recognized by that statute that the
Department of Justice as an institution could carry forward an
investigation without triggering that statute, and at this
point, I do not think that I have the conflict that would
justify triggering the statute. What I have said was that at
any moment that specific and credible evidence developed that
would trigger the statute, I will be the first to request the
appointment.
Senator Gregg. You make the decision as to when the
independent counsel should be triggered, which is appropriate
under the law. The question is, however, whether if in not
making that decision but yet having all these different ebbs
and flows of confrontation going on, we are not creating an
atmosphere where people are going to say that no matter what
the conclusion the Justice Department reaches, it was not
independent. The fact that the Justice Department was fighting
with the White House over what the disclosure was, what they
told the President, and what was said to the NSC people as to
what could be said supports this conclusion. There was a clear
implication that there was a statement from the Justice
Department--I believe it was from yourself also--that the law
does not apply to soft money and, therefore, there may not be
an issue here. The question becomes one of, when does it become
counterproductive for the Justice Department to hold this in-
house when there is so much ebb and flow that involves the
Justice Department itself in the substance of the issues?
Ms. Reno. The Justice Department has considered these
issues through both Democratic and Republican administrations.
Career lawyers have defined and have reviewed issues. Again, I
have made no statement as to what is legal and illegal, and I
refrain from doing that until the investigation is complete,
and we have all the evidence. There is always an ebb and a flow
in an investigation. Again, Congress has defined the area in
which we should trigger the statute, and if I triggered it
without doing so according to the specific provisions of the
statute, I would have to do so otherwise, and the last time I
did that and appointed a special counsel on my own, everybody
said he could not be independent because I appointed him.
Senator Gregg. Well, every counsel is going to be appointed
by you, I presume, under the law.
Ms. Reno. No; under the statute, as Congress has defined
it, the independent counsel is appointed by a special division
of the court.
FBI/White House confrontation
Senator Gregg. Oh, I am corrected then. Well, how do we get
over this hurdle, though, of the FBI and the White House in
what appears to be a very clear disagreement? There is the
implication that the White House is trying to blame the FBI, or
that the FBI, in the alternative, is running as a rogue agency
because that is what it would be if its statement was
inaccurate. These are very significant public policy concerns.
How do we get over that issue?
Ms. Reno. I think the most important thing for us to do is
to look at exactly what happened, consider the statements made
by the White House and the FBI and do everything we can to make
sure that briefings like this in the future are done with
precision and that there is no misunderstanding in the
communication.
Senator Gregg. Well, I will hold on to the rest of my
questions. Senator Hollings.
Senator Hollings. Along that same line, Madam Attorney
General, I think there has been some miscommunication. We all
know in the Government that there will be various efforts not
only by China but other nations to penetrate and to find
information out. I thought it sort of looked in a way
questionable when the President of the United States said he
was not told about China trying to get in. He did not need to
be told. The President ought to know that as Commander in
Chief. But, otherwise, I go back to experience. When it really
counted, I was Governor when we apprehended one of Martin
Luther King's troops, and we got a call from the FBI and said
you got to let him go because we have got a wiretap on Martin
Luther King, and the White House was denying that very fact at
the time. They said ``No, we do not have any wiretaps on Martin
Luther King.'' And, in fact, I have read books and histories of
the situation which confirm that the FBI was doing exactly
that.
I happen to know from my own experience. We were contacted
in South Carolina and told to let the gentleman go because in
order to really pursue the case, we had to reveal the fact that
the FBI had a tap on Martin Luther King. So that was
significant. This here of a briefing received by this office or
that office and say keep it secure happens all the time. What
really bothers me, for example, is if they will come with an
FBI report on an appointee, for example, a Senator, they will
sit with you and say you cannot take any notes, do not say
anything, and give the FBI back the report. Yet over at the
White House they can pile up the reports and keep them.
So I do not think the FBI is a rogue agency. I think it is
a miscommunication, and I do not think it is a significant
miscommunication because--everybody wake up--we have been
trying--I looked at Herblock's cartoon this morning--we have
been trying to influence the domestic conduct of affairs in the
People's Republic of China for a long time. And they will
continue to try to influence domestic decisions with respect to
MFN and otherwise here in the United States. We all know it.
And we do not have to get--do you know of any evidence--rather
than ask, I am not asking about the evidence--but do you know
of any evidence given any of us here that actually China is
trying to get involved in our elections? I listened closely to
Senator Feinstein. She never was given anything. She just said
we understand, but I would think that we ought to have some
kind of evidence rather than making a mountain out of a
molehill here unless we do have some evidence of that kind. Do
you know of any evidence?
Ms. Reno. First of all, with respect to a rogue, if
somebody is a rogue in this process, let me just point out both
to the chairman and to you that the FBI was very careful to
brief. It briefed both committees of the House and the Senate.
There is nothing rogue about it. They briefed the
administration, and the administration in the statement it
makes notes that the NSC staffers elected not to brief their
superiors about the information although they recognized the
NSC procedures would have permitted them to do so. So I do not
think anybody is being a rogue. We are trying to make sure that
we fulfill our responsibilities for national security and
foreign policy.
Senator Gregg. Well, that, of course, was my point, and in
the alternative, I was pointing out that if the White House is
right, the FBI would be deemed a rogue agency. I do not think
the White House was right. I think the FBI was right. The White
House was wrong in their assessment of what the FBI told them,
or at least in the way they reported it to be told.
Ms. Reno. OK.
Senator Gregg. I am not implying that the FBI is a rogue
agency. It is just the opposite.
Ms. Reno. I am delighted to hear that, and I think what
that then points to clearly is that we must make sure that
there is clear communication, but with respect to the
additional question, Senator, I do not think it would be
appropriate for me to discuss evidence other than as through
the briefings that we have made.
Senator Hollings. Well, I understand over on the House
side--I was watching those hearings, and Chairman Livingston
and Chairman Rogers were giving you the very dickens for being
too supportive of the White House. Now you come over to this
side and you get the dickens for, by gosh, challenging the
White House on what the fact is.
Ms. Reno. Well, I got the dickens from them about
everything the other day, sir. [Laughter.]
Campaign finance
Senator Hollings. Can you tell me, General Reno, on a show
of the public, that the Justice Department has taken all the
appropriate steps with respect to these violations of campaign
finance laws?
Ms. Reno. Senator, what we have done from the first is to
make sure that the public integrity section has the staff it
needs to pursue every lead; that the FBI and the public
integrity section have all the resources they need to properly
pursue this. I have directed them to pursue every lead, to let
me know if they need additional resources, but as importantly I
have told them that if at any point they develop specific and
credible evidence that would trigger the statute, that it would
be, I want them to let me know immediately so that I can take
appropriate steps.
Senator Gregg. May I ask a followup question?
Senator Hollings. Yes, surely.
Senator Gregg. Can you tell me what the criterion is that
you deem triggers the statute? I think that would clarify the
record.
Ms. Reno. There are two sections. But both sections in
order to trigger it require specific and credible evidence of a
violation of law either by covered parties or in situations
where there is a political, personal, or financial conflict,
but both require specific and credible evidence.
Senator Gregg. Thank you.
Senator Hollings. And have the campaign finance laws been
broken?
Ms. Reno. I will not comment on that, Senator, until the
investigation is complete. I do not want to say anything in
regards to the pending investigation. What I can say is at this
point I have not received from the public integrity section,
from the career lawyers who have handled this issue through
Republican and Democratic administrations, that they have
specific and credible evidence of a violation of law by a
covered person or person with whom I would have a conflict.
Border Patrol
Senator Hollings. Very good. With respect to the Border
Patrol school that we instituted at the abandoned Charleston
naval base, let me state for the record that Ron Myers and the
rest of the agents in charge are really can-do folks that are
working and making a fine effort. What happens is we will turn
out some 1,430 additional Border Patrol agents this year, but
then I see over on Treasury that they are including $14 million
for duplicative facilities at the Federal Law Enforcement
Training Center there at Glynco, GA. They have only been
operating in Charleston, as you well know, 6 months. I wish you
would look at that and get some coordination because that let
us use what we have put money into to fix up and got a going
school and everything else before we start rebuilding in
Georgia if we want to save the money. Ultimately, I guess it
will all go back to Glynco someday. This is not a permanent
facility, but it seemed to be a waste if we are going to start
after having refurbished the buildings and class space and
otherwise to then go and put $14 million over there for new
buildings for the same effort down in Georgia.
Ms. Reno. Senator, you made a comment about a specific
word, and it was certainly true. Can-do. They really performed
and delivered. That facility has been absolutely indispensable
in our efforts to put well-trained Border Patrol agents in the
field, and I think it will continue to be. The Treasury
Department would not have asked for the money when it is
ultimately phased out. That would be a DOJ expense. My
understanding is that Treasury has additional plans that are
not related to Charleston for the Glynco facility. But we will
certainly work with that because that facility has been
indispensable for our efforts, and we just appreciate what has
been done there.
National Advocacy Center
Senator Hollings. I have colleagues ask about that $8.3
million budget item for the National Advocacy Center that will
open April of next year. Now, that ought to be explained by way
of record here. As the Attorney General, you are a former local
prosecutor. Can you tell us, this center was the one that
Attorney General William French Smith recommended after he had
a task force look at the violent crime problem back then. They
made this recommendation back in 1981, and we are just now
about to make it a reality. I think something ought to be
stated on the record with respect to that $8.3 million, the
Advocacy Center and its significance.
Ms. Reno. My experience as a prosecutor is that there is
nothing more important other than hiring the best people you
can, nothing more important than training, and what I have seen
in my experience as a local prosecutor, and now as Attorney
General, is that it is very important to train Federal
prosecutors with State and local prosecutors so that we
appreciate the spirit of federalism, but that we learn how to
work together, provide for opportunities where we can know what
is needed in both courts to get a conviction. This Advocacy
Center can be so extraordinarily important. As you point out,
it was developed in response to a task force, a bipartisan task
force, cochaired, as I understand it, by former Attorney
General Griffin Bell and former Governor of Illinois, Governor
Thompson, and they made the recommendation that we also provide
not only the capacity to train Federal prosecutors, but that we
provide the capacity to train them along with State and local
prosecutors, and I think that can be so very important.
Staffing
Senator Hollings. I understand, Madam Attorney General,
that the Department of Justice is now proposing an additional
55 attorneys for criminal prosecutions here in the District.
What has been a particular interest to me is that we really put
the effort here on 14th Street and within the city itself. I
say that by way of comparison of your DEA effort, say, down in
Santa Cruz, Bolivia. You got a big component, and they will
give you a briefing like Vietnam. We are getting them; we got
them here; we got them there; we go down the river, and
everything else of that kind. It is just outrageous nonsense.
You go up to La Paz, the capital, and people are walking around
the streets chewing coca. They give you a particular area in
Bolivia that is bigger than the State of Georgia that is off
limits. Growing coca is illegal there. I want to bring those
DEA agents home and put them up on the streets and clean this
thing up so that the drug smugglers cannot just walk out,
drugged up, and just shoot the policemen at will. We are just
not making an effort in this country. We are running all around
the world in a total wasteful fashion. Can you comment on that?
Ms. Reno. Yes, sir; I think what we are trying to do is a
very balanced approach. Senator Gregg can tell you about the
U.S. Attorney's Office in New Hampshire in terms of working
with State and local officials, both prosecutors and law
enforcement agents, providing for prosecutions in Federal court
when it is appropriate, when everybody agrees, and the impact
that that has had in New Hampshire. In other areas where we
have seen increased violence, the DEA MET teams have moved in,
and worked with State and local law enforcement. They have not
wanted the credit. They have not claimed the turf. They said
how can we help you in exchange of information? And I get
letter after letter from police chiefs in small or large cities
that say what a difference it has made.
We have developed an antiviolence initiative focused on how
we can do this in a comprehensive way across the country, and
we are dedicated to that. The District of Columbia obviously
has significant crime problems, and under the leadership of
Eric Holder, who has been a splendid U.S. attorney, we have
addressed that, but one of the points that we have got to
remember with the District of Columbia, when we fund that
office, we are not only funding a Federal prosecutor's office,
but we are funding a State prosecutor's office as well. And we
must be able to ensure that Mr. Holder has the resources that
the best funded State prosecutors have across the country.
Senator Hollings. Not only prosecuting attorneys but DEA
agents out there on the streets.
Ms. Reno. Well, it will also help, if you notice this
morning, that the FBI has committed agents to the issue, and
this is important. What we discover is that crime goes back and
forth across the District line with Prince Georges County, and
so we have tried to work with all the officials involved to use
the Federal jurisdiction to assist, and I think you will note
in the paper this morning, the commitment of additional Federal
agents to that effort.
Senator Hollings. I will yield. Thank you, Mr. Chairman.
What happens, though, I can just see it if we could take the
DEA agents down there in Bolivia and just move them up here on
14th Street, running up and down, we could run all of that
crowd over into Virginia and into Maryland, and then you would
see this Congress really act on crime. I can tell you that
right now. They are not around town. I have lived here now for
30 years in the city, and it gets worse and worse. Now the
police force is asking. Do not be so considerate about
coordinating with the local people. The local people say
``Sooey, pig, ya'll come, hurry, we need help,'' because it is
just unforgivable that they can walk out and just shoot the
officers in the cars at will.
Ms. Reno. Senator, what is happening because of
comprehensive efforts across the country with Federal agencies
and prosecutors working with State and locals, what is
happening with the crime, the COPS program, special initiatives
such as in New Hampshire, is that we have seen crime go down,
but we cannot rest on those laurels. We have got to continue an
effort in a balanced way, not only within our borders but
across the borders. Senator Hutchison knows along the Southwest
border the problems associated with violence. That is not going
to be solved just by having DEA agents or Border Patrol agents
there because they can go back across the border. We have got
to have an approach that says there is no place to hide, and we
have got to work on an international scope as well. And I know
the Senator is very concerned about that area.
Senator Hollings. Thank you, Mr. Chairman.
Senator Gregg. Senator Hutchison.
Mc Allen, TX/Mexico border
Senator Hutchison. Well, that was a perfect opening for
some of my concerns. Let me start with that one. Federal data
shows that the McAllen sector in Texas is quickly overtaking
the San Diego sector in terms of numbers of undocumented
illegal aliens apprehended. Last year McAllen led the Nation in
marijuana seizures and was second in cocaine finds. In November
1996, McAllen had only 1,400 fewer illegal alien apprehensions
than San Diego. Nevertheless, the number of Border Patrol
agents in 1996 in San Diego was 1,955. McAllen had 501. Now,
the administration was to have assigned 1,000 new agents in
1997. As of now, only about 700 have been assigned with the
remaining 300 to be assigned this spring. In the first 1997
assignment, McAllen received 159 new agents, San Diego received
201. It seems that the imbalance between Texas and California
in the distribution of the added Border Patrol agents is not
balanced. Are you going to take steps to address that in your
next assignment?
Ms. Reno. What we are trying to do in all of this is to
make sure that we respond. I have long said that we have got to
watch McAllen like a hawk because I have, as you know, been
from one end of the border to the other and realize the
pressures that are brought to bear. What I would like to do is
perhaps come visit with you, look at the figures, see what we
can do, but I want to provide as an effective response along
the entire border with the resources we have to do the job as
possible and will continue to address that issue.
Senator Hutchison. I would like for us to be able to talk
about this because I have communicated with your office for the
last 2 years on the imbalance. As you know, Texas has 1,200
miles of border with Mexico. California has roughly 125. And
much of our problem is in the uninhabited areas, the big
ranches. Those people are under siege, Ms. Reno. They are
unarmed. They feel like prisoners in their own home. They can
walk out into their yard and meet a drug kingpin with an AK-47.
Now we have got a real problem, and our resources are, I think,
very imbalanced. I along with Senator Gramm and others worked
very hard to increase the number of Border Patrol agents. I am
concerned that only 500 additional agents have been requested
by the administration in fiscal year 1998, whereas the Illegal
Immigration Reform Responsibility Act of 1996 requires that you
increase the number of Border Patrol agents by 1,000, and yet
the administration is only asking for 500 in 1998. I am very
concerned about this. Why are you not asking for the full
1,000? I will ask that question.
Ms. Reno. I have regularly explained to the committee my
concern about hiring too fast. As you look at police
departments across the country, those that hire too fast are
without adequate supervision because the ratio of supervisor to
new recruit is so low. It is important that we hire in an
orderly way. We asked the IACP to conduct a study on Border
Patrol growth in 1995. They cautioned that a work force with
too many inexperienced officers and supervisors could pose
serious risk. The study looked at 3-year growth options and
concluded that overall growth in supervisory and officer ranks
of 41 percent over 3 years would threaten operational
effectiveness.
Some of these threats included: too many inexperienced
supervisors overseeing a large number of new agents, threats to
the organization's systems, and the threat of possible improper
behavior. The Border Patrol's recent growth in agents has
resulted in 43 percent of the current work force having less
than 3 years' experience and 37 percent having less than 2
years' experience. This growth exceeds the levels cautioned by
the IACP study, and that is the basis for our recommendation.
Senator Hutchison. Of only 500 new agents?
Ms. Reno. That is correct.
Senator Hutchison. Well, I am in a real dilemma here
because I worked very hard to get you the equipment you need,
the Border Patrol agents you need, and yet my State is under
siege, and the balance of assets is, I think, very, very unfair
and not tuned in to the realities.
Ms. Reno. Well, what I would appreciate----
Senator Hutchison. Let me just reiterate. We have one-third
of the number of Border Patrol agents in McAllen as you do in
San Diego, and you continue to increase the number in San Diego
at a greater rate.
Ms. Reno. But the number of apprehensions in San Diego has
significantly exceeded the number of apprehensions in McAllen.
Senator Hutchison. Not two-thirds more.
Ms. Reno. We will be happy to work with you and sit down
with you, look at it, see how we can balance, see what we can
do. As you know, you are referring to the specifics because you
have been so helpful in providing sensors and providing the
equipment, in committing resources. We have, with respect to
the violence that you talk about--which is primarily in the
Eagle Pass Area--we have designated that as a hot spot and have
tried to organize resources around it. With respect to the Del
Rio sector, it has been designated to receive 52 new agents for
fiscal year 1997. We will look with you, and I will ask my
staff to call and arrange an appointment and come see you and
just look at the balance, look at the figures, and see what we
can do.
Senator Hutchison. I really would appreciate it because, as
you know, I have written you letters and have talked to your
staff, our staffs have talked together, for over 2 years, and
we feel that the situation is getting worse, not better, and it
is going into other remote areas. I have visited out in
Marathon and Alpine, and these are places that just do not have
the ability to deal with these kinds of crime issues because
they are not areas that have had to deal with crime to any
great extent in the past, and they are very underforced. So I
would love to talk to you more about it, but I would like to
see more action and more relief for this 1,200 mile border area
with the resources that you have, and I must say that when you
have the ability to hire 1,000 and you are only requesting 500,
not only the ability but the direction to add 1,000 agents, and
you are only asking for 500, I have to say that I am
unconvinced that we are doing everything we can.
Ms. Reno. It is one of the more difficult issues that one
has in trying to prepare. I have been through that experience.
A community that I love very much, beginning in the late
1970's, experienced an assault of trafficking from outside our
borders that is as stiff a threat as any community in this
Nation received. The police department and the prosecutor's
office hired as rapidly as we could, and it produced problems.
It is something that is a very difficult issue to judge, but we
will be happy to work with you in every way that we can to
address the issues in the most responsible manner possible.
Citizenship USA
Senator Hutchison. Let me move on to a slightly different
subject, but one that will bear again on the criminality in our
country, and that is the thousands of immigrants with
apparently criminal records that were cleared for citizenship
in 1996. I would like to ask you why the INS had such pressure
to clear immigrants for citizenship before all of the normal
processes had been accomplished?
Ms. Reno. The INS inherited, or this current leadership in
the INS inherited, a system whereby the system that had been in
place for processing naturalization requests extended back to
1982. In 1995, they received a significant number of requests
and had anticipated a significant increase in applications for
naturalization because of the amnesty granted during the
1980's. In addition, they found that there was an additional
increase over and above what otherwise would have been
anticipated because of the concerns created by proposition 187
and so people who had been eligible for naturalization were
seeking to naturalize. Beginning in 1995, they began to prepare
for this increase and to prepare to address it.
Senator Hutchison. Ms. Reno, let me just ask you, are you
going to try to make the case that the procedures were not
short circuited in 1996?
Ms. Reno. No.
Senator Hutchison. Why were they short circuited in 1996?
Ms. Reno. Because there was a system in place that did not
work very well. In 1994 the inspector general had recommended
some changes. INS was in the process of putting those changes
in place, but some of it required automation. They still had
not gone far enough, but they were not seeking to bypass or to
shortchange procedures that had been in place.
Senator Hutchison. Why would you not just continue or why
would not INS just continue the procedures? Why did it have to
be done on such a haphazardous basis and particularly in the
area of criminal record checks?
Ms. Reno. As I am pointing out, the system had been in
place. I do not think much of the system, but they were not
trying to shortchange anything or short circuit what had been
in place. What is important now is to identify the steps that
have got to be taken, and I have tried to do it in terms of
what we need to do to move forward and make sure that the
system is in place and operating correctly.
Senator Hutchison. Are you not going to check the records
of those who have already been naturalized and try to enforce
the ban of people with criminal records becoming citizens?
Ms. Reno. I am checking that right now, as I am saying. As
I have learned of this process, I am trying to do everything I
can to make sure that the process works like it should and that
we review what has been done to correct any errors. Let me
describe to you what we are doing. INS field offices have been
instructed to confirm that the FBI fingerprint check is
completed and that any FBI criminal history information is in
the applicant's file before naturalization proceedings are
completed.
Senator Hutchison. Let me just ask you this question
because I have one other area that I need to cover, and I only
have 2 minutes. Are you going to try to reverse the process if
people were naturalized in this 1996 group with criminal
records?
Ms. Reno. That was the last point I was going to make.
Senator Hutchison. Thank you. Could you?
Ms. Reno. Yes; we are going to revoke, take steps to revoke
all citizenship improperly granted, and let me use my 2 minutes
just to explain to you----
Senator Hutchison. I am afraid that it will be my 2
minutes.
Ms. Reno. OK. I will not take your 2 minutes, but I will
explain if, Mr. Chairman, you will give me.
Senator Gregg. Well, we are going to get into that issue
later on.
Val Verde County military voting issue
Senator Hutchison. OK. Let me ask one more question then on
my 2 minutes because that is another area of concern, and that
is the Val Verde County military voting issue. I am very
concerned that the Justice Department has taken a we-will-
monitor-it-closely attitude to standing up for the rights of
our military voters who have really been harassed in a case
that was brought to disallow two people elected in Val Verde
County because there were 800 military absentee votes. And I
would just like to ask you if you are going to stand up for the
rights of military voters because you are the legally
designated counsel for the military personnel in this type of
case?
Ms. Reno. I am going to, and let me give you some evidence
of what we are trying to do. This is a letter signed by the
Joint Chiefs of Staff, all six of them:
Madam Attorney General: This is to express sincere
gratitude for your efforts regarding the lawsuits filed in
Texas challenging military absentee ballots. The voting rights
of the men and women serving our great Nation in uniform, as
well as their families, must not be diminished because of a
military assignment outside their State of residence. We
understand your Department is closely monitoring these cases
and has had frequent contact with State and Federal officials.
We greatly appreciate your personal involvement in protecting
the voting rights of our people and their families. Please do
not hesitate to call us if we can provide any assistance.
Senator Hutchison. Madam Attorney General, I am pleased
that they have thanked you for your efforts, but when the
Justice Department filed an unsolicited amicus brief in the
ninth circuit in California opposing proposition 209 to make it
illegal to discriminate against any citizen in their right to
vote, and yet you have taken a wait and see attitude on Val
Verde and refuse to intervene on behalf of the our military
personnel, I am very concerned that they are not going to have
proper representation.
Ms. Reno. The Federal matter has been on March 11. Just
recently, we participated in a conference call with the Federal
judge who reiterated that the case before him was stayed and
that the answers to the questionnaires would not be required.
We are pursuing every opportunity that we can to properly
protect the rights of the servicemen involved.
Senator Hutchison. How about an amicus brief?
Ms. Reno. I am not aware of an amicus brief filed in the
Texas case because there is not a matter pending. The Federal
proceeding has been stayed.
Senator Hutchison. Thank you, Mr. Chairman.
Senator Gregg. Did you want to make that comment now--we
are going to go back to this whole immigration issue and how
you plan to address it.
Ms. Reno. Why do we not just do it in an orderly way.
Senator Gregg. OK. Senator Domenici.
Senator Domenici. Mr. Chairman, I was not present when you
established the ground rules. Are we on 5 minutes?
Senator Gregg. We are basically working on about a 10-
minute, fairly flexible questioning period.
Senator Domenici. I have an awful lot of questions. I am
going to make sure that they are submitted for the record. I
have to be at a markup and another hearing that I am presiding
at, so I will give you about 12 questions. You can just give
them to the Attorney General. I would appreciate answers as
soon as possible.
special immigrant status for certain Juveniles
I want to ask about a certain issue that has been brought
to my attention that is bothering me as what may be the
improper use of our immigration laws. Madam Attorney General,
let me just cite a couple of factual cases to make a point and
then ask you what you think about this. In 1990, the Congress
enacted a provision entitled, and I quote, ``Special Immigrant
Status for Certain Juveniles Declared Dependent on a Court.''
That was the name of the act. This section was intended to be
reserved for certain juveniles who were abused, neglected, or
abandoned.
For example, in 1991, after that act, a small child was
brought illegally from Mexico by her parents. The child was
sexually abused and beaten by the parents. The Department of
Health and Human Services in New Mexico took custody of the
child and petitioned on her behalf for the appointment for
special immigrant status under that statute. She was granted
permanent resident status. The parents were deemed to be unfit
parents, and the child was placed into foster care and
eventually was adopted by U.S. citizens who became adoptive
parents.
The child was 11 years old when she was granted this
permanent status. Clearly, this was the type of case that the
special immigrant status was designed to protect.
Unfortunately, in New Mexico, we have found that the special
immigrant status provision is being used for some other cases
that I believe are clearly an abuse. For example, in February
1996, a petition for a permanent guardianship was filed by a
relative of a juvenile with the court in New Mexico. The
juvenile, who was on her way to college under a nonimmigrant
student visa, did not even arrive in the United States until
March of the same year. The juvenile, who was just 8 days shy
of her 18th birthday, the age of majority in New Mexico, was
later granted eligibility for special resident status.
In another case, a 20-year-old Mexican male entered the
United States as a foreign student. Guardianship was given to
his uncle by consent of his parents in Mexico. The 20-year-old
became a resident because the court determined in a petition
granting guardianship to the uncle that the boy was quote
``eligible for long-term foster care,'' the words of art
required by the statute granting that special quality.
Finally, in another case, an 18-year-old Venezuelan male
received permanent resident status by way of the special
immigrant status provision. He was studying in the United
States as a foreign student. A petitioner of unknown
relationship went to the court and petitioned for permanent
guardianship. The attorney stated that the parents in Venezuela
had failed to respond to a notice that they were provided. On
that basis, the court declared the Venezuelan male a dependent
of the court allowing him to seek permanent resident status.
Now I don't know how many more of these cases there are, but I
might ask if you would agree with me that special immigrant
status should not be given to the individuals described above
who are neither abused, neglected, or abandoned, and who in
these cases came here to attend our universities and either
were attending or planned to attend when the petitions were
filed? And if you do not have an answer to that yet, would you
work on it? It seems to this Senator that this is a giant
loophole. When the lawyers find this, every visiting student
from overseas can have a petition filed in a State court
declaring that they are a ward and in need of foster care. It
is ex parte from what I can tell--I looked at these petitions--
and the courts are only interested in whether there is any
burden on the State, and since there is none, they are granting
them. Should we do something about this?
Ms. Reno. We certainly should, Senator, and when you raised
the issue with me several days ago, I immediately started
checking. We are going to review all this area to see what can
be done, whether we need legislative changes, what we can
undertake through investigation to undo it, and if I may I will
ask my staff to contact your staff, get the specifics that you
have, and we will continue to report back to you on what we
find and work with you if legislative efforts are necessary to
correct the loophole.
Senator Domenici. I would hope that as your people in the
field review these cases and find them, that they would be
called to your attention specifically because I think in some
cases there could be a serious misleading of the court. We have
one where the student has not yet entered the country when the
petition is filed, and the petition seemed to have been filed
to avoid that person reaching the age of majority.
Ms. Reno. That is what I have asked for because I want to
investigate each instance to see whether there is a prosecution
that should result because of false statements made or false
statements made through the INS procedure. We will work with
local prosecutors, but we intend to followup on it, and I
appreciate your noting it for me.
Senator Domenici. Thank you, Mr. Chairman.
Senator Gregg. It might also be helpful if you find that
there is a problem if you could give us some language which
would correct it so that we could put it in the bill even
though we may be limited in our language.
Senator Domenici. You will give us a legislative fix if we
need it?
Ms. Reno. Absolutely.
Senator Domenici. All right. Mr. Chairman, I yield back my
time and thank you for your generous time.
Senator Gregg. Thank you. The Senator from Maryland.
Senator Mikulski. Thank you, Mr. Chairman, and I cannot see
any lights or anything.
Senator Gregg. No; it is a very casual 10 minutes.
Senator Mikulski. Thank you. And if I am approaching my
time, I ask the Chair to remind me.
Senator Gregg. It is very much a flex time.
Senator Mikulski. First of all, good morning, Madam
Attorney General. It is delightful to be here with you, and I
am a new member to this subcommittee and really look forward to
an active participation and working with you, Mr. Chairman. We
have worked on the Subcommittee on Aging and also Treasury and
General Government. It is amazing how our careers go.
COPS program
Madam Attorney General, ultimately, fighting all crime is
local, and I have a series of questions about the COPS program,
but also we in Maryland have a very unique situation because so
much of the crime impacting our suburbs adjacent to Washington
are what we would call interstate crime. First, there is I-95
which is almost like a corridor of death, with illegal drugs
and illegal guns and so on. We know we have the HIDA program,
the high intensity effort. I visited that. Remarkable job that
they are doing there. But at the same time, people get off, and
they are in Montgomery and Prince Georges Counties.
Also, we have people leaving the District of Columbia and
committing crimes in the suburbs and going back and forth
again. My question to you is, what thoughts do you have for
addressing this issue? We note that you have through the
concurrence with the head of the FBI deployed a significant
number of agents to Prince Georges County for a crime blitz. We
are enormously grateful for that, and I speak for the county
executive and all the residents for that. But that is a nice
blitz to come in and get the most violent criminals, but I
wonder if you have given thought to some type of regional
agreement that would involve both Federal officials and local
officials because we are in an interstate crime network? Did I
make my question clear?
Ms. Reno. Yes.
Senator Mikulski. So we thank you for this FBI blitz. It
will have a significance. But after they leave, we are looking
to put in place a structure to be able to deal with the
interstate consequences, whether it is hot pursuit with the
District of Columbia, or the appropriate use of Federal law
enforcement in local jurisdictions.
Ms. Reno. First of all, I am delighted you are on the
subcommittee. I have been here for 4 years now. It is 4 years
ago today, and I think this was the first subcommittee, first
congressional committee other than confirmation that I appeared
before, so I feel a bit at home here. What we did, I worked
with the chief of police of Prince Georges County back in Dade
County, and he described to me the problems that he saw with
people going back and forth.
Senator Mikulski. So you know Farrell from Florida?
Ms. Reno. Yes; going back and forth across the line. Many
months ago after he had gotten here, I called Director Freeh,
U.S. Attorney Eric Holder, DEA Administrator Tom Constantine,
and the Director of the Marshal Service, Eduardo Gonzalez, and
said it is important that we enhance our efforts. We already
have an antiviolence initiative, which I referred to earlier in
discussions with Senator Hollings, in which we have tried to
reach out to State and local prosecutors and law enforcement
agents and form a real partnership, but I said it is imperative
that we address this issue in a comprehensive way.
Lynne Battaglia in Baltimore I have asked to reach out to
local prosecutors to determine what is the appropriate Federal
role. We do not want to take credit. Sometimes it may be just
exchanging information, but we want to do everything we can in
terms of an antiviolence initiative that will utilize Federal
prosecutors the right way to assist, and we are continuing that
effort. I was not aware that they were going to announce
something like this.
Senator Mikulski. It was in the Washington Post. I did not
announce it. I wish I had the chance, too. [Laughter.]
Senator Gregg. Next time.
Senator Mikulski. But that is neither here nor there.
Ms. Reno. And Mr. Holder has got both hats on with respect
to this area, but he and Lynne Battaglia coordinate as between
the District.
Baltimore-Washington corridor
Senator Mikulski. What I am wondering, Madam Attorney
General, you have got two U.S. attorneys, you have got FBI, you
have local government, we have DEA, we have BATF, we have a lot
happening. Do you see some type of coordinating mechanism or do
you prefer these bilateral negotiations--bilateral arrangements
as they are going on?
Ms. Reno. What I have asked in all these situations is that
the U.S. attorneys serve as the coordinators, and I think it
has proven very effective rather than just proliferating task
forces, and then they assign based on what is important. It is
interesting to note that it is not just this area, but you take
the Eastern District of Virginia and you see the connections
between Maryland and the Eastern District of Virginia. I think
the coordination mechanism is appropriately in place.
Senator Mikulski. Well, then how do we deal with that,
though, between--and I appreciate that--between U.S. Attorney
Battaglia and U.S. Attorney Holder? Do they have like a
cochairmanship?
Ms. Reno. My understanding is that they have a close
working relationship, but what I will do is, when I leave here
today, I will call both of them and Helen Fahey from the
Eastern District of Virginia and see if further coordination is
necessary.
Senator Mikulski. And if they need to essentially have a
formalized arrangement where at least there is a monthly
meeting maybe between the big guys, and maybe there really are.
Ms. Reno. My experience from these meetings, I have tried
to let each district coordinate with others in the best manner
possible. In Senator Gregg's district, there is one initiative
underway that the U.S. attorney has led. In others, it may be a
different situation. One of the things I used to see in Miami,
though, is that we would have formal meetings every month, and
it would be a dog and pony show. Where the work really gets
done is between people who have got the day-to-day
understanding, the communication in place, and that is what we
are striving for here in the Baltimore-Washington corridor. I
will go back and review it.
Senator Mikulski. Well, I would like to be able to talk to
you or your staff further about it. Let me then go to the next
part of cops on the beat and thank you for the community
policing effort. It has had a big impact certainly in my own
State and particularly in urban suburbs as well as Baltimore
city. This then gets me to what I call the techno cops. In
meeting with my police chiefs, what they tell me is that now
not only are courts backing up, but the whole issue of the need
for greater forensic laboratory capability, the kinds of stuff,
if you will, technological stuff that both maximizes police
officers, the role of the laptop computer in the police car has
been terrific, but also other things related to. For example,
crime laboratory forensics so that a lot of the evidence that
is now gathered is not only gathered from eye witnesses, but
through technological gathering which is in some ways superior.
Those little plates in a crime lab are not afraid to come
forward, they do not need a witness protection program, and
their memories do not fade. So what I am asking, having said
that, do you see an extension and does it require statutory
authority to also beef up our police departments, not in terms
of bells and whistles and techno-gadgets, but really the use of
both information technology and now in enhancing and amplifying
their forensic laboratories?
Information technology
Ms. Reno. First of all, let me address the information
technology.
Senator Mikulski. Which has really been astounding.
Ms. Reno. And it is incredible. When a man can sit in the
kitchen in St. Petersburg, Russia and steal from a bank in New
York or a bank in Carroll County or someplace like that, you
understand the challenges faced by State and local law
enforcement. We have developed within the Justice Department,
the Criminal Division, the National Institute of Justice, as
well as the FBI, a working group that is trying to reach out to
State and local law enforcement to provide the expertise, the
training, and a plan with respect to equipment, because in this
whole information technology area, we run into the situation of
the technology changes so rapidly that equipment purchased 1
year ago becomes obsolete, and how can we share it? So we are
making, I think, some progress in that regard, and I feel
comfortable with that.
Crime laboratories
With respect to laboratories, we have a problem of that
whether it be in Indian country where we are the first
responder, if you will, and this is something that we are
trying to address through a more comprehensive development and
sharing of forensic services so that we have, if you will, a
seamless web across the country. It is going to be so exciting
in about 5 years, Senator. You are going to be able to have a
lab tech go to the scene of a crime, take fingerprints at the
crime, and immediately match them with a data base across the
country that can provide instant identification of the subject.
You will also have, and they estimate it will be about 5
years, you can do a DNA test at the scene of the crime and
immediately match it with the data base that it is developing.
In these last weeks, we have had two significant matches made
through the DNA data base. It is just an exciting opportunity,
a great challenge, but I am trying to work with the sheriffs,
with the State law enforcement authorities, and with police
chiefs to make sure that we share the information the right
way.
exchange of Information
The third problem is that with the exchange of
information----
Senator Mikulski. The third?
Ms. Reno. The third problem is--not problem but challenge--
is that with computers we can now identify information and
correlate it so that we identify evidence that can lead us to
the right person far more quickly. It used to be if we had a
convenience store robbery in Miami and there were five
different convenience store robberies with a green automobile
with a dented right fender, you never found it because there
were 26 different police agencies. Now, we can begin to match
these crime reports as they come in and make these
identifications. We are going to be able to give tools to law
enforcement that stagger the imagination, but it is important
that we work together, and I would like to work with this
committee in the years to come to make sure that our budget is
reasonable and that it addresses this issue.
Senator Mikulski. Well, this is exactly one of the areas I
think we need to focus on. It is really great to go back into
your local community and announce more cops on the beat, and I
believe that there is no substitute for a police officer, a
trooper, a State trooper, or an agent of the Federal
Government. But they need to be backed up and amplified,
enhanced, and in many instances, even their own lives protected
because of technology, either information or biological. So I
want to work with you, and that is why I did not know if you
needed new statutory authority, whether there were particular
lists within the budget, what line items this comes in so that
we can really have a plan, where we are this year, how we can
build on it for next year, et cetera, to get you to that 5-year
goal, and that each year we accomplish something and do not end
up with the kind of boondoggle they have over at IRS with their
computers. I will not draw you into that, but we are enormously
frustrated. We appropriate money to bring agencies into the
modern age, and then we are embarrassed by it.
Ms. Reno. The Senator and I are smiling because we have got
our own problems.
Senator Gregg. A little bit, and we are attempting to avoid
that, although we have already had that problem.
Senator Mikulski. I am not blaming that on you.
Ms. Reno. No, no, but the Senator knows this is one of the
most important issues that we face in the Justice Department,
in the Federal Bureau of Investigation: How do we move into an
age of technology that law enforcement never dreamed of 15
years ago, and do it the right way within cost estimates on
time? And I am dedicated to trying to do that because I have
been faced with issues of overruns in the IAFIS system. I am
working with the FBI. I am trying to work with the chairman to
identify issues where we can, and we have developed time lines,
and I monitor on a regular basis these issues, so you do not
have to draw me into the IRS problem. I deal with my own.
Senator Mikulski. Well, not to take the time of the
committee, but see what happens is very often the people who
buy it, it is like buying automatic weapons and everybody likes
the latest gizmo or little hot-dog bell and whistle, and they
are seduced by this green light or this little cute software
program. We face it in politics where you have no idea how
everybody will come in and give you the software program that
will guarantee you a 92-percent victory. And it turns out to be
folly, an expensive folly. So there is a difference between
substance and salesmanship.
Ms. Reno. You are singing to the choir, Senator.
Senator Mikulski. OK. Having said that, if I could ask the
indulgence for one other question. I know that you are focusing
on juvenile justice and antigang initiatives, and, therefore,
what I wonder is what you are advocating and also if part of
the President's initiative is what you have in mind for
prevention? I am a big believer in prevention, but as you know
when we are involved in political debates and discussions, it
is viewed as sissy, it is viewed as wimpy, it is viewed as
ineffective, it is viewed as something better done by the
Salvation Army, which I believe also is the right part of that,
and, therefore, why are we in it? We get embroiled in trivial
discussions like are we bankrolling midnight basketball? We are
getting ready for this, and I am going to have a serious
discussion on prevention. I wonder what you could share with us
on that?
Juvenile crime prevention
Ms. Reno. As you know, Senator, when I testified before the
Senate Judiciary Committee 4 years ago, I said that youth
violence was one of the single-greatest crime problems that we
faced. But after serving for 15 years as the State attorney in
Miami, I recognized that we could not jail our way out of it;
we could not prosecute our way out of it; we had to provide
stiff sentences for the serious offenders, for those that
committed crimes, so that they knew that there was a
consequence for what they did, but we had to engage in far more
effective prevention efforts than we had undertaken.
I think most Americans agree with that, but what they do
not know is what is working and what does not work, and what
also happens is there may be a wonderful prevention program for
8-, 9-, and 10-year-olds, and then nothing when they move into
middle school. There is not a comprehensive effort underway in
the community. So what we have tried to do since taking office
is to work with communities. They have a program in Montgomery
County now where we focus with the community in building a
comprehensive effort with police, others working together, as
in Boston. Prevention is working now.
Senator Mikulski. Well, what are some of those examples?
Ms. Reno. It is the chief of police and it is the sheriff
who is saying the prevention programs are working. Let me
describe to you Boston. Commissioner Paul Evans is the police
chief of Boston. He has worked together with the private
sector, with religious leaders in Dorchester and Roxbury, with
the probation service, with the courts, with the local
hospital, with community activists in developing a
comprehensive effort focused both on the serious offender but
on preventing the crime in the first place, and it is exciting.
Senator Mikulski. What do they do? You told me who it is,
but what is it?
Ms. Reno. Let me give you different examples.
Senator Mikulski. Do they have after-school programs?
Ms. Reno. They have after-school programs. They focus on
conflict resolution. They have mentoring programs. One of the
major insurance companies has a summer program where they bring
youngsters in and teach them how to get job ready and teach
them the responsibilities of jobs. They have the local hospital
intervening with children who are victims of crime because they
found out that the 12-year-old that gets shot may oftentimes be
the shooter next time, thus interrupting the cycle of violence.
They are using domestic violence money from the VAWA grants,
realizing that that is one place, if you can stop violence in
the home, you are going to make a difference.
They have community probation officers riding with
community police officers, getting to know the neighborhood as
a whole and working to get the kids out of trouble and to keep
the kids out of trouble. It is an exciting program. In
Jacksonville, FL, the State attorney is working with the local
sheriff in focusing on the serious offender but developing
prevention programs for youngsters, again along the lines of
those in Boston. These programs can work when a community comes
together and when we use our resources wisely. And it is the
police chiefs and the sheriffs that are talking about it so I
do not think anybody can call it wimpy anymore.
Senator Mikulski. No; that is not my phrase.
Ms. Reno. I understand that.
Senator Mikulski. You know I am a supporter of prevention,
but that is often the way it has been portrayed. Thank you, Mr.
Chairman. You have been very generous with the time. We could
have these interesting conversations all day, but I yield and
thank you for the courtesy.
Senator Gregg. Thank you.
Senator Mikulski. Thank you very much, Ms. Reno.
Senator Gregg. It is certainly nice to have you on the
committee, and both the issues which you raised are issues
which this committee has spent a considerable amount of time
addressing, and we will look forward to your input. We did put
together a prevention package last year. Senator Campbell
played a major role in it, as did Senator Kohl, and so we will
look forward to getting your input on that also.
Investigations
There are a number of issues which I would like to talk
about in addition to what we have discussed already. Just to go
back to the issue which is obviously the testiest, and which
causes the most consternation--let me outline for you my
concern--I do not know that you need to comment on it
additionally but just in a rhetorical way outline it. It deals
with the Public Integrity Division internal investigation that
is going on relative to this issue that we see everyday dealing
with elections and the Chinese connection, for lack of a better
term. Now we have the FBI and the White House at opposite ends
on how that was briefed. I presume it is also addressing the
fundraising within the White House that occurred, especially
the Vice President's most recent statements, and now we have
the Justice Department presenting the statute in its scope of
coverage. At least that is the way I perceive it.
I presume the Public Integrity Division is also looking at,
or should be looking at, the issue of this immigration question
and whether the acceleration occurred as a result of any
political pressure for the election because that has clearly
been in the public domain and involves election law questions,
and even possibly, I presume, the Integrity Division, which, of
course, is an INS issue, which is under the jurisdiction of the
Justice Department. And I also presume that the Justice
Department is looking in the Public Integrity Division relative
to the elections into the issue of why Webster Hubbell was
given hundreds of thousands of dollars to be an advocate when
he was in the process of losing his license to practice law.
Webster Hubbell was a former Justice Department official. The
question it raises for me, is the issue of the perception as to
the effectiveness of an internal Justice Department review and
its objectivity.
I have the highest regard for the Justice Department, for
the Attorney General, and for the FBI, and I do not want to see
that credibility in any way eroded. So I just raise it as a
point that I think that this is creating problems. It is
creating problems in the public perception, and maybe it is an
unavoidable event because of your portfolio of responsibility
that you are going to have to confront these types of
conflicts. The fact is that conflicts are building, and as a
result, I think they are undermining the capacity of the public
to have confidence in the activity that an internal
investigation would bring forward, the information it would
bring forward, and the decisions it would make--not necessarily
determinative, because I still think that everybody has a lot
of confidence in the Public Integrity Division. It is a very
strong division. It does aggressive work, and everybody knows
that they tend to take no prisoners and do their job
effectively.
But there is the issue of perception that I am concerned
about, and I think the issue of perception is being raised, and
it continues to build. And so that is just a statement of
thought on the issue, and if you want to respond to it, you
can. If you do not, that will not bother me either.
Ms. Reno. Let me thank you for the nice comments that you
made and just tell you that I share your deep concern. The
Department of Justice is an institution that I cherish, and I
do not want to do anything that will cause problems for its
reputation or for it as an institution. At the same time, I
discovered long ago that the chief prosecutor is damned if you
do and damned if you do not. And the best thing you can do is
just take the evidence and the law and do it as best you can
according to what you think is right. I am so mindful of your
concerns. I continue to address that issue on a regular basis,
and I appreciate your thoughtful comments.
FBI/White House issue
Senator Gregg. OK. We will move on to something else. Let
me just throw in a further thought. I think there was some
confusion about my representations, though, as to the FBI. My
view is that if it is a contest between the FBI and the White
House as to who I am going to believe, that it is not a
contest. That is a personal and political statement, and I have
a great respect for what the FBI does and for their integrity
in their law enforcement activities, as I do the Justice
Department.
Immigration
Now on this issue of immigration, we know we have got about
10,000 felons that went through the system. It appears that
there are about 170,000 or 180,000 people whose fingerprints
could not be reviewed because they came through the system too
quickly or the fingerprints were not capable of being reviewed.
There may be, as I understand it, about 171,000 who have
potential misdemeanors or felony arrests, but for whom we are
not sure, and in that 171,000 there is 10,000 which we are
pretty sure are felons. These are staggering numbers of people
that went through the system who we have not had a chance to
verify their status and some of whom we clearly do not want in
our country.
My concern is this: the appeals process for getting
revocation of naturalization status is long and interminable
and incredibly expensive. I suspect we are going to find that
if we can ever get a handle on those other 179,000 fingerprint
cards or even the 71,000, we may find that this 10,000 number
is a very low-ball number of the people we want to throw out of
the system who got through. The appeals process is complicated.
The investigative process of getting to the point of actually
filing the decertification for these individuals is extensive,
and then there are problems just finding these people. I mean
if they are felons, obviously they are going to be smart enough
to realize they are not going to walk into the office and say,
``Oh, I am sorry, I got my naturalization papers incorrectly,
here they are back.'' These folks are going to disappear and be
extremely hard to find. I mean just tracking them is going to
be a very expensive undertaking.
I know there is a $10 million estimate on costs, but I
think that is incredibly low, and it seems to me that we are
looking at a huge cost to track these people. Obviously we have
to. We have no choice. We have to find them. We have to take
away their citizenship, take away their status and get them out
of the country. But, No. 1, what is a realistic estimate here
and, No. 2, where are we going to take those resources from? I
do not want to see the basic enforcement activities of the
INS--as you and Senator Hutchison pointed out, there is a lot
still to be done on the Texas border and other places--be
undermined by having to reorient resources to address this
situation here which has gotten away from us.
So, two questions: one, how much is it really going to cost
us in your estimation; and two, where are we going to find the
money?
Ms. Reno. I think it is very important. First of all, I do
not know what the cost will be in terms of revocation because
we now have the capacity for administrative revocation. You are
quite correct that there will be investigations involved, but
let me just point out to you because you used some figures, and
I would like to clarify the figures. There were 71,000
identified as having some record; 34,700 of those were
administrative violations which are not disqualifying; 25,500
were misdemeanors; and 10,800 had felonies.
Senator Gregg. Now can I ask one question on those numbers?
Ms. Reno. Yes.
Senator Gregg. Was there not also 179,000 whose
fingerprints were not clear enough to make an assessment?
Ms. Reno. I am coming to those in just a minute. But of the
10,800 that were determined to have felony records, only 168
have been determined to be presumptively ineligible; 2,800 need
further action for review and were in the process. You are
quite correct in pointing out that approximately 179,000 we
still have to pursue and we are in the process of doing that.
And we will. Ms. Meissner and I will continue to work with you
as we identify the sources of funds to correct the situation
and try to keep you as advised as possible of the steps being
taken by Peat Marwick.
Senator Gregg. Well, I really would like to get a more
realistic estimate of what this is going to cost because I do
not think the estimates we have----
Ms. Reno. What I would like to do, and what I have done
from the beginning since I have determined what the situation
is, is I asked Peat Marwick to report back to Mr. Colgate, the
Assistant Attorney General for the Justice Management Division,
on a regular basis any new developments, any new problems. I
have tried to keep the relevant staff of the appropriate
committees advised, and we will try to do that for you, as
well, on a very regular basis and try to keep you as fully
informed as possible.
Senator Gregg. Could you also advise us as to what the
first cut is on how many of these 10,800 known felons we can
identify where they are?
Ms. Reno. Yes; I will.
Senator Gregg. I mean can we find them?
Ms. Reno. Yes.
FBI fingerprint issue
Senator Gregg. In addition, as I understand it, the way
this worked was that the INS mailed the fingerprints over to
the FBI post and that was one of the major delays in paperwork
problems. Is that true?
Ms. Reno. I think there were a number of different
problems, and what I have asked Mr. Colgate to do on an ongoing
basis--I think one of the problems that developed is that INS
and the FBI did not talk together at a level that fully
addressed in terms of a systems problem what was necessary to
do it the right way. Mr. Colgate now has regular meetings with
the representatives of both agencies at a sufficiently high
level, and I think much progress has been made in streamlining
it. I hear different comments. Both Mr. Colgate and Peat
Marwick, I think, could give you more specifics, and what I
would ask Mr. Colgate to do is to followup with you and make
sure that Mr. Morhard has the information that you need on what
caused it in the first place. I have also asked the inspector
general to review the whole matter to determine who is
accountable for it so that I can take appropriate action.
Senator Gregg. I am presuming that INS gets tied into
IAFIS? You have got this all running, right?
Ms. Reno. One of the concerns that has been raised is how
does IDENT and IAFIS come together, and Mr. Colgate is focusing
on that as well as trying to determine how we use these
resources as wisely as possible in developing an IAFIS system
that has no duplication--that this is one of the issues being
addressed by the group that he is chairing.
FBI laboratory
Senator Gregg. Another issue, we have had these reports
about the lab problems at FBI. When we get the lab going, which
will, hopefully, be fairly soon--obviously it is going to take
a few years, but is it presumed from what I have heard--I would
just like to have you put it on the record--and from what I
have asked and what I have been told, the FBI has put into
place protocols, and they have put in place an outside review
process, and by building the new lab, they will have addressed
the basic issues of concern. Is that your understanding?
Ms. Reno. The FBI had already started to institute changes
in the lab under Director Freeh's leadership. They have now
been provided with the report from the inspector general. As
you know, the inspector general brought in outside expert
scientists who were some of the best in the field. I have had a
chance to meet with them. And Director Freeh has now had the
draft of that report and I know will build on any additional
recommendations in that draft. In addition, he is doing a very
extensive and very thoughtful and very methodical nationwide
search for a leader for the lab that will represent the best
possible person in terms of science and supervisory abilities.
Laboratory consolidation
Senator Gregg. Now I know DEA has, I think, 10 labs around
the country and ATF has 3 or 4. DEA has a legitimate reason for
having these labs, I think and a need for immediate review.
This is not complicated stuff that they are working with in the
way that the FBI often gets into extremely complex lab
activity. I am sure that DEA's is complex, too, but not at the
same level. But should we not be taking a look at whether ATF,
and, of course, it is not your agency, but whether their lab
should not be tied in to the FBI and whether or not we need all
10 of these DEA labs?
Ms. Reno. I think it is important for all of us, I asked
the DIAP and Director Freeh to review the Justice Department
laboratory facility's layout to see whether duplication was
necessary, and as you point out, the working group issued its
report in 1995, finding that the missions of the different labs
were very specialized, and that it was important as they were
cited to maintain the system as it was. I am constantly
reviewing, in light of some of the concerns raised by Senator
Mikulski, how we put these precious resources out across the
country in the most comprehensive manner possible, both as
between Federal agencies and between State and local and
Federal agencies. I am constantly working with Ray Kelley, the
Under Secretary of Treasury, to address what we can do to avoid
duplication, to ensure the most comprehensive coordination.
Senator Gregg. Do you work at all with the ATF people?
Ms. Reno. We have meetings, and you remind me I need to
have another meeting shortly. We have had regular meetings with
Treasury officials on issues of mutual concern, and I know
Director Freeh and Mr. McGaw meet on a regular basis.
Senator Gregg. Should not the ATF be under the FBI?
Ms. Reno. I made a determination long ago in Miami and
certainly after I came to Washington that if I kept pulling at
other people's turf, I was going to spend an awful lot of time
doing that. What I try to do--what I have tried to do these
last 4 years--is not worry about the turf. Just make sure that
I do everything possible to make sure that people talk together
and share information.
Senator Gregg. I am going to take that as a yes.
[Laughter.]
Counterterrorism
On another issue, which is this question of coordination on
terrorism, which you know is one of my pet----
Ms. Reno. Can I just put in a little--that my silences
should not be accepted as confirming your yes.
Senator Gregg. I recognize that. On this issue of terrorism
and coordination of terrorism, can you sort of bring me up to
speed as to what sort of relationship you have with the
Secretary of State, the Secretary of Defense, and the Director
of the CIA in a formal structure as versus an informal
structure to coordinate the anticipation of a terrorist act
from overseas as versus the execution of addressing a terrorist
act that occurs here?
Ms. Reno. Since Secretary Cohen and Secretary Albright have
come into office, I have not had formal meetings with them.
With Secretary Christopher and Secretary Perry, we had
developed a very good working relationship. I was told by
people in both Departments that the working relationship with
the State Department, in which we had put a lot of time and
effort, was the best it had been on the issues of law
enforcement. And I think we had comparable coordination with
the Department of Defense. We spent--the Deputy Attorney
General and the Director of the FBI--spent many, many hours
working with the DI and with people at the agency to try to
develop the closest coordination possible, and I think we have
made real progress in that regard.
We have a coordinated CSG working group which really
operates under the NSC and works together in a coordinated
way--that it is the coordination subgroup, which is
representatives of each Department working under the deputies;
the deputies then have regular meetings as issues arise, and
then when the deputies cannot agree, it is taken up to the
level of the principals. But I have not had a principals
meeting on a major issue with the new secretaries.
Senator Gregg. We are going to have a counterterrorism
hearing in this committee, and in anticipation of that,
hopefully, we can sit down and talk with you about
coordination.
Ms. Reno. I would welcome that opportunity because I
appreciated the opportunity that we had to have some
discussions last fall, and it would be extremely helpful for me
to be able to share with you what we have done to get the
benefit of your thoughts, and I would welcome that opportunity.
Federal prison system
Senator Gregg. Now, in the prison area, as I understand,
the Federal system is about 25 percent overcrowded right now,
and yet the number of dollars for new beds is cut. Can you give
us your thoughts on how you are going to handle what is an
exploding prison population with fewer beds?
Ms. Reno. I would ask Mr. Colgate to correct me if I am
wrong, but the latest figures that I have seen, much of the
forecast for prison construction was of a greater increase than
has occurred, and I work regularly with Dr. Hawk to make sure
that our requests match her needs for properly controlling
against unwarranted overcrowding while at the same time
ensuring that we have the capacity to make sure that we have
truth in sentencing, and that the full sentences are served. In
my more recent meetings with Dr. Hawk, I think we are on target
in that regard, and I think she feels comfortable with the
request that we have provided.
Mr. Colgate. I would just add also we are dealing with the
fact that buildings and facilities is no-year account, and you
are really starting to see prior year appropriations, those
institutions being completed, and constructed, so you are
starting to see the activation curve of institutions that have
been previously appropriated. So that is why, you know, our
overcrowding is going down, but you do not necessarily see new
budget authority requests in the out-years because of the
significant resources that had already been provided in that
no-year account.
Senator Gregg. So we are not going to hear in 3 to 5 years,
when we would not be able to respond in a timely fashion, that
we need dramatic increase in prison space for an immediate
problem of overcrowding?
Ms. Reno. Not for the immediate problem of overcrowding.
Let me caution you, though, because I used to deal with this
situation at home, and I thought--the legislators would tell me
you do not need any more prosecutors now, do you? And I would
say no, and then 2 years later a crack epidemic would hit with
a substance that nobody knew about and cause an escalation in
crime. I am trying to monitor it very carefully to understand
patterns, to do it as wisely as possible and to make sure that
our requests for dollars are based on just what is happening,
and we will continue to work with you, sir, if we may, and try
to keep you advised of trends or problems that we foresee. But
at this point, based on what we know now, and the information
available to us, this seems to be a reasonable request.
Senator Gregg. Well, this committee is not adverse to
adding more prison construction----
Ms. Reno. I appreciate that.
Additional committee questions
Senator Gregg [continuing]. If that is what you need, or
support for. Well, we certainly appreciate your time. You have
given us a considerable amount of your day, and thank you for
it. There is unanimous consent that a number of questions from
various Senators be submitted to you, and I will honor that,
and so you will be receiving a packet of questions.
[The following questions were not asked at the hearing, but
were submitted to the Department for response subsequent to the
hearing:]
Questions Submitted by Senator Pete V. Domenici
southwest border staffing
Question. Ms. Reno, you know I have been following with interest
the Department's deployment of both funding resources and personnel
along the Southwest border. I remain concerned that the two large
neighbors to the west and east of New Mexico (California and Texas)
could consume most of our border law enforcement resources leaving gaps
in states such as New Mexico and Arizona.
I must thank the distinguished Subcommittee Chairman and his staff
for assisting me in monitoring this ongoing situation. I also thank
you, Ms. Reno, for the detailed responses you gave to my several
questions on this issue last year.
I know that the Department is currently undergoing the deployment
of additional Border Patrol agents and other law enforcement and
support personnel along the border. The interim plan now being
implemented also redeploys some 200 Border Patrol agents to the
Southwest border.
Ms. Reno, could you give the Subcommittee a brief review of the
interim deployment plan for Border Patrol agents and support personnel?
Answer. The INS is in the process of deploying 714 Border Patrol
agents and 100 support staff of the new personnel received in fiscal
year 1997. The deployment plan for the remaining 286 Border Patrol
agents will be completed by the end of April. Chart A provides a list
of the interim deployment locations by Border Patrol Sections and
Stations.
Question. Of the 1,000 new agents approved for fiscal year 1997,
how many have actually been deployed?
Answer. Of the 1,000 new Border Patrol agents, Congress has
approved the deployment plan for 714 Border Patrol agents.
Question. How many of these agents are being sent to the El Paso
Sector for New Mexico?
Answer. The El Paso Sector received 73 of the 714 Border Patrol
agents; 52 of the 73 were deployed to New Mexico stations.
Question. How many Border Patrol agents, investigators and support
personnel are currently deployed in New Mexico? Would you please
provide this information by station?
Answer. As listed in Chart A, 52 Border Patrol agents were deployed
to 3 New Mexico stations (Deming 13, Las Cruces, 13, and Santa Teresa
26). Las Cruces, NM Station received 2 of the 7 support positions
deployed. There are no new investigator or support staff positions
deployed to New Mexico. Filled positions as of February 15 are:
------------------------------------------------------------------------
BPA Investigators Support
------------------------------------------------------------------------
Lordsburg...................... 28 ............. 1
Truth or Consequences.......... 12 ............. 1
Las Cruces..................... 80 4 6
Alamogordo..................... 53 ............. 2
Carlsbad....................... 8 ............. 1
Deming......................... 85 ............. 3
Silver City.................... 2 ............. ...........
Albuquerque.................... 4 ............. ...........
Santa Teresa................... 87 ............. 15
----------------------------------------
Total.................... 359 4 29
------------------------------------------------------------------------
CHART A.--DEPLOYMENT OF FISCAL YEAR 1997 BORDER PATROL AGENT (714) AND SUPPORT (100) POSITIONS
----------------------------------------------------------------------------------------------------------------
Border
Sector/station State Patrol Support Total
agents
----------------------------------------------------------------------------------------------------------------
Del Rio:
Bracketteville......................................... TX 5 ........... 5
Carrizo Springs........................................ TX 5 ........... 5
Eagle Pass............................................. TX 27 1 28
Sector HQ.............................................. TX ........... 5 5
----------------------------------------------------
Total................................................ ............ 37 6 43
====================================================
El Centro:
Calexico............................................... CA 24 ........... 24
El Centro.............................................. CA 12 ........... 12
Sector Headquarters.................................... CA ........... 3 3
----------------------------------------------------
Total................................................ ............ 36 3 39
====================================================
El Paso:
Deming................................................. NM 13 ........... 13
Las Cruces............................................. NM 13 2 15
Santa Theresa.......................................... NM 26 ........... 26
El Paso................................................ TX 21 ........... 21
Sector Headquarters.................................... TX ........... 5 5
----------------------------------------------------
Total................................................ ............ 73 7 80
====================================================
Laredo:
Laredo North........................................... TX 18 ........... 18
Laredo South........................................... TX 16 ........... 16
Sector Headquarters.................................... TX ........... 6 6
----------------------------------------------------
Total................................................ ............ 34 6 40
====================================================
McAllen:
Brownsville............................................ TX 81 1 82
Harlingen.............................................. TX 30 ........... 30
McAllen................................................ TX 28 ........... 28
Mercedes............................................... TX 20 ........... 20
Harlingen.............................................. TX ........... 2 2
Kingsville............................................. TX ........... 1 1
Sector Headquarters.................................... TX ........... 12 12
----------------------------------------------------
Total................................................ ............ 159 16 175
====================================================
Miami: Miami Station....................................... FL ........... 1 1
Detroit: Sector Headquarters............................... MI ........... 2 2
New Orleans: Sector Headquarters........................... LA ........... 1 1
Ramey: Ramey............................................... PR 8 1 9
San Diego:
Brownfield............................................. CA 7 ........... 7
Campo.................................................. CA 6 1 7
Jacumba................................................ CA ........... 1 1
Chula Vista............................................ CA 7 ........... 7
El Cajon............................................... CA 6 1 7
Sector HQ \1\.......................................... ............ 175 26 201
----------------------------------------------------
Total................................................ ............ 201 29 230
====================================================
Tucson:
Douglas................................................ AZ 90 3 93
Nogales................................................ AZ 76 2 78
Naco................................................... AZ ........... 1 1
Wilcox................................................. AZ ........... 1 1
Sector Headquarters.................................... AZ ........... 9 9
----------------------------------------------------
Total................................................ ............ 166 16 182
====================================================
HQ:
Charleston Training Facility........................... SC ........... 5 5
National Firearms Unit................................. PA ........... 1 1
El Paso Flight Operations.............................. TX ........... 2 2
Blaine: Blaine Sector Headquarters......................... WA ........... 2 2
Yuma: Yuma Sector Headquarters............................. CA ........... 1 1
WOR: Regional Office....................................... CA ........... 1 1
----------------------------------------------------
Servicewide Total.................................... ............ 714 100 814
----------------------------------------------------------------------------------------------------------------
\1\ All trainees will EOD at San Diego Sector HQ and further be assigned primarily to the mainlinestations.
Question. Of the remaining agents to be deployed (286), how many do
you anticipate will be deployed to New Mexico?
Answer. During April, INS will re-evaluate each sector's
operational needs and make final recommendations to the Appropriations
Committees on the 286 Border Patrol agent positions remaining to be
deployed. Under the original deployment proposal, New Mexico stations
would have received another 24 Border Patrol agent positions.
Question. The Border Patrol Deployment Plan is scheduled to be
finalized in April. Is the Department on schedule to complete that in
April? Will you give us your commitment to work with the Subcommittee
as the deployment plan is finalized to ensure that there is a equitable
distribution of these important law enforcement resources?
Answer. The INS will submit a proposed deployment plan for the
remaining 286 Border Patrol positions to the Appropriations Committees
in early April. Congress worked closely with INS on the deployment of
1,707 new positions. The Department of Justice is committed to an
equitable distribution of these law enforcement positions and INS will
work closely with the Subcommittees on the finalization of the
deployment of the remaining 286 Border Patrol agents.
Question. Could you please provide the Subcommittee with the final
distribution of the 200 redeployed Border Patrol agents including where
they were transferred from and where they were actually redeployed?
Answer. The INS reached an agreement with the Appropriations
Committees in July 1996 to change the mix of enforcement staffing at 32
Border Patrol stations and to change work assignments within the Border
Patrol sectors to conduct more uniformed, border control duties and
less investigative activities. Under the approved plan, INS has moved
73 Border Patrol positions to the Southwest border and an additional
127 workyears are being redirected to border control activities. The 73
redeployed positions and 127 redirected workyears combined will have
the effect of improving the overall border control capability of the
Border Patrol by 200 agents. Chart B provides the locations of
redeployment.
CHART B.--REDEPLOYMENT OF BORDER PATROL AGENTS--NEW AGENTS AND
REDIRECTED WORKYEARS
------------------------------------------------------------------------
Positions
Border Patrol sector Redirected deployed to Total
workyears border
------------------------------------------------------------------------
Buffalo, NY.................. 0.4 ........... 0.4
Detroit, MI.................. 1.5 ........... 1.5
El Paso, TX.................. 21.6 4 25.6
Marfa, TX.................... 12.4 ........... 12.4
McAllen, TX.................. 4.2 29 33.2
Havre, MT.................... 3.3 ........... 3.3
Miami, FL.................... 3.8 ........... 3.8
New Orleans, LA.............. 1 ........... 1
Tucson, AZ................... 6.8 9 15.8
Yuma, AZ..................... 9.6 ........... 9.6
Houlton, ME.................. .8 ........... .8
Swanton, VT.................. ............. ........... .............
Del Rio, TX.................. 10.9 ........... 10.9
Laredo, TX................... 7.1 ........... 7.1
El Centro, CA................ 6.6 ........... 6.6
San Diego, CA................ 4.6 31 35.6
Livermore, CA................ 20 ........... 20
Mayaguez, PR................. .3 ........... .3
Spokane, WA.................. 7 ........... 7
Blaine, WA................... 4.2 ........... 4.2
Grand Forks, ND.............. .9 ........... .9
------------------------------------------
Total.................. 127 73 200
------------------------------------------------------------------------
Question. Has the Department ``backfilled'' the positions as it
committed to do when the Border Patrol agents were transferred to the
front lines of the border? What is the status of this initiative?
Answer. The INS assigned 93 investigative positions to 30 locations
as backfill for the investigative functions previously performed by
Border Patrol agents in the Redeployment Plan. Vacancy announcements
for the investigative positions were announced in the first quarter of
fiscal year 1997. Selections were made for 76 positions, with the
balance to be selected shortly. Of the 76 selections, 57 (75 percent)
were Border Patrol agents from the interior locations.
Question. What is your current assessment of the law enforcement
staffing situation in New Mexico?
Answer. The table below provides a summary of the current estimated
law enforcement staffing levels for fiscal year 1997.
DEPARTMENT OF JUSTICE LAW ENFORCEMENT STAFFING IN THE STATE OF NEW
MEXICO
------------------------------------------------------------------------
Fiscal year 1997 Estimate
--------------------------------------
Component Agents/
Attorneys Support Total
------------------------------------------------------------------------
FBI.............................. 91 71 162
DEA.............................. 75 85 160
INS.............................. 363 29 392
USA.............................. 23 10 33
USMS............................. 24 10 34
--------------------------------------
Total...................... 576 205 781
------------------------------------------------------------------------
Question. How would the additional Southwest border resources
requested in the President's budget affect New Mexico and your
assessment of the law enforcement situation in New Mexico?
Answer. The Federal Bureau of Investigation (FBI) estimates that an
additional 12 positions (7 agents, 5 support) would be allocated to the
State of New Mexico. The Immigration and Naturalization Service (INS)
proposes to assign an additional 50 Border Patrol agent positions to
New Mexico in fiscal year 1998. The Drug Enforcement Administration
(DEA) and the United States Attorneys (USA) have not yet determined how
fiscal year 1998 requested enhancements would be allocated, however,
any enhancements allocated will be based on the regional drug threat
and/or their ability to demonstrate a direct and significant nexus to
illegal immigration or drug activity emanating from the Southwest
border area. In all likelihood, the State of New Mexico will receive
additional resources from both DEA and USA.
The Department of Justice recognizes that due to the proximity of
New Mexico to the country of Mexico, there is a need for a strong law
enforcement presence and effort in the State. With the increases in
drug trafficking, drug related violence and public corruption along the
southwest border, law enforcement is and must continue to work together
to thwart the threat of these acts. Some highlights of this cooperative
law enforcement effort are summarized below.
--The FBI currently has three task forces operating within the
Albuquerque field office, all of which have Federal, State and
local law enforcement participation. The task forces include:
New Mexico Violent Fugitive Task Force; Gang Task Force; and
Joint Drug Intelligence Group.
--The DEA and the New Mexico State and local law enforcement agencies
have maintained an excellent working relationship. During 1996,
through Operation Pipeline, DEA and the New Mexico State Police
were involved in a total of 69 road stops resulting in the
seizure of 3,213 kilograms of marijuana, 307 kilograms of
cocaine, 10 kilograms of methamphetamine, and $55,000 in U.S.
currency.
Albuquerque Diversion Group continues to be an active participant
in the New Mexico Health Care Fraud Task Force along with many other
Federal and State agencies.
--The USA has been a key participant in working with the other
Federal, State and local law enforcement agencies to foster
greater prosecutions, convictions, and incarcerations. Over the
last few years, greater numbers of immigration and violent
crime cases have been prosecuted in the District of New Mexico.
--For example, the number of immigration cases filed in the District
increased from 103 in fiscal year 1995 to 162 in fiscal year
1996, a 57 percent increase. Of the immigration defendants
whose cases were closed in fiscal year 1996, 93 percent were
convicted, with 78 percent of the convicted defendants
sentenced to prison.
--Regarding violent crime cases, a total of 155 cases were filed
against 172 defendants, representing a 22 percent increase in
case filings and a 25 percent increase in defendants charged
when compared to fiscal year 1995. Of the violent crime
defendants whose cases were terminated in fiscal year 1996, 88
percent were convicted, with 82 percent of the convicted
defendants sentenced to prison.
special immigrant status
Question. Madam Attorney General, in 1990 the Congress enacted a
provision entitled ``Special Immigrant Status for Certain Juveniles
Declared Dependent on a Court.'' This section was intended to be
reserved for certain juveniles who were abused, neglected or abandoned.
For example, in New Mexico, in 1991 a small child was brought
illegally from Mexico by her parents. The child was sexually abused and
beaten by the parents. The Department of Health and Human Services in
New Mexico took custody of the child and petitioned on her behalf for
Special Immigrant Status. She was granted permanent resident status.
The parents were deemed unfit parents and the child was placed in
foster care and eventually was adopted by her U.S. citizen foster
parents. The child was 11 years old when she was granted permanent
resident status.
Clearly, this was the type of case that Special Immigrant Status
was designed to protect. Unfortunately, in New Mexico we have found
that the Special Immigrant Status provision is being abused by certain
juveniles.
For example, in February of 1996, a petition for permanent
guardianship was filed by a relative of the juvenile with a court in
New Mexico. The juvenile, who was on her way to college under a
nonimmigrant student visa, did not even arrive in the United States
until March of the same year. The juvenile, who was just 8 days shy of
her 18th birthday (the age of majority in New Mexico), was later
granted eligibility for Special Resident Status.
In another case, a 20 year old Mexican male entered the United
States as a foreign student. Guardianship was given to his uncle by
consent of his parents in Mexico. The 20 year old became a permanent
resident because the court determined in the petition granting
permanent guardianship to the uncle that the boy was ``eligible for
long-term foster care.''
Finally, in another case, an 18 year old Venezuelan male received
permanent resident status by way of the Special Immigrant Status
provision. He was studying in the United States as a foreign student. A
petitioner of unknown relationship went to the court and petitioned for
permanent guardianship. The attorney stated that the parents in
Venezuela failed to respond to the notice they were provided. On that
basis, the court declared the Venezuelan male a dependent of the court
allowing him to seek permanent resident status.
General Reno, would you agree with me that Special Immigrant Status
should not be given to the individuals just described above, who are
neither abused, neglected, or abandoned?
Will you commit to working with me and with this Subcommittee to
fashioning a solution to close this loop-hole so that Special Immigrant
Status continues to be reserved for those abused, neglected or
abandoned children that the statute was designed to protect, while at
the same time prohibits the practices we are observing in New Mexico
from occurring?
Answer. Yes. I agree with you that individuals like those described
in the examples provided by you should not be granted Special Immigrant
Status. I have directed the INS to evaluate its implementing regulation
and procedures to determine what necessary administrative steps can be
taken to correct the loophole. Should we determine that this loophole
can only be closed through a legislative action, we will submit
recommended legislative language to you and the Subcommittee for
consideration.
Regarding the three cases that you cited, the INS contacted your
office and obtained redacted court records on each case. These records
do not contain enough data (i.e., name, date of birth, social security
number, etc.) that will allow INS to thoroughly investigate the case.
The INS contacted the 2nd Judicial District Court in New Mexico and was
informed that records appointing guardianship are ``sequestered and not
available to anyone other than the persons named in the order.''
Therefore, we are unable to investigate further.
juvenile crime
Question. There currently are several juvenile crime legislative
proposals which have been introduced, both by the President and Members
of the Senate on both sides of the aisle. Juvenile crime seems to be at
the top of everyone's agenda.
What do you believe are the most important issues we should address
in juvenile crime legislation this year?
Answer. Youth violence is a problem affecting us all. We must give
communities the tools and resources they need to take back their
streets and schools, and to reestablish a sense of security in our
country. The President's legislation, S. 362, ``The Anti-Gang and Youth
Violence Act of 1997,'' offers a balanced approach to fighting juvenile
crime. This legislation proposes new laws and new resources to target
gangs, gun crimes, illegal gun markets, and drugs. In addition, the
bill invests substantial new resources in anti-truancy, school
violence, and other similar initiatives aimed at getting or keeping
young people on the track to success. We believe what is needed is a
balance of sanctions, early intervention, and prevention if we are
going to be successful in arresting juvenile violence.
Question. Would you agree with me that the current federal rules
related to ``sight and sound'' separation of juveniles in state
facilities are too rigid and difficult for many communities,
particularly rural ones, to implement? How can we alter the ``sight and
sound'' mandate in the federal Juvenile Justice and Delinquency
Prevention Act to better meet the needs of rural communities?
Answer. The current Federal rules relating to sight and sound
separation were modified by regulations taking effect in December, 1996
by the Office of Juvenile Justice and Delinquency Prevention (OJJDP)
with an eye toward the needs of rural jurisdictions.
Specifically, section 223(a)(13) of the Juvenile Justice and
Delinquency Prevention (JJDP) Act provides that accused and adjudicated
delinquent, status offender and nonoffender juveniles shall not have
contact with incarcerated adults. It is important to maintain a
separation requirement to protect juveniles from harm and influence by
adult offenders. However, it was clear that changes could be made in
the regulatory and statutory requirements that would help rural
communities having difficulty meeting the requirements of the JJDP Act,
while at the same time maintaining protection of vulnerable young
offenders.
Steps have been taken to address the concerns of rural communities
through regulatory changes and the Administration has proposed
additional flexibility in the Anti-Gang and Youth Violence Act, H.R.
810/S. 362. In 1996, the Office of Juvenile Justice and Delinquency
Prevention (OJJDP) undertook a comprehensive review of its Formula
Grants Regulation, 28 CFR Part 31, which guides States' implementation
of the Formula Grants program. Based on public comment, including input
from public interest groups and professionals in the juvenile justice
field, a revised regulation was published on December 10, 1996. It
provides enhanced flexibility to State and local governments in
implementing the core requirements of the Formula Grants program,
including the separation requirement.
The prior regulation required that while juveniles were in secure
custody in an adult facility, any ``sight or sound'' contact with
adults was a reportable violation. In reexamining the regulation, it
became apparent that the States needed clearer guidance with regard to
the definition of ``sight'' and ``sound'' contact. Therefore, sight
contact was defined in the new regulation as clear visual contact
between incarcerated adults who are in close proximity to juveniles,
and sound contact was defined as direct oral communication between
incarcerated adults and juveniles in secure custody. While separation
may be provided through either architectural or procedural means, the
revised regulation provides that ``sight or sound'' contact that is
both brief and inadvertent or accidental must be reported as a
violation only if it occurs in secure areas of the facility that are
dedicated for use by juveniles, including any residential area. It
further provides that the separation requirement of the JJDP Act no
longer applies in instances in which an alleged or adjudicated
delinquent offender has reached the age of full criminal responsibility
and has been transferred, pursuant to State law, to a facility where
the delinquent has contact with adult offenders.
Additional flexibility for rural areas has also been provided in
instances where the locality desires to collocate a juvenile detention
facility on the same grounds or in the same building as an adult jail
or lockup. The prior regulation required that to collocate a juvenile
detention facility with an adult jail or lockup, the two facilities
could not share the same program space (such as recreation areas or
classrooms). The JJDP Act provided that the two facilities could not be
served by the same direct care or security staff. OJJDP's December 1996
regulatory change eliminated the separate program space requirement,
permitting the shared use of nonresidential areas of collocated
juvenile and adult facilities, provided that time-phased use maintains
``sight and sound'' separation between juveniles and adults.
The Administration's pending bill (H.R. 810/S. 362) further
proposes to eliminate the separate direct care and security staff
requirement, provided that all security staff serving the juvenile
population are trained and certified by the State to work with
juveniles. The Administration's bill also provides additional
flexibility for rural areas by extending the authority for adult jails
and lockups in these areas to hold an alleged delinquent from the
current 24-hour exception to 48 hours, exclusive of weekends and
holidays. Further, it removes the condition that, in order to use this
exception, a State has to provide an initial court appearance for every
juvenile in secure custody within the exception time-frame--a condition
in the statute that has prevented many States from using the rural
exception. Finally, the Administration's bill provides that a juvenile
may be held (separated from adult offenders) for any length of time
authorized by State law in a rural adult jail or lockup, with the
consent of the juvenile, the juvenile's parent or guardian, and
concurrence of counsel, and with the approval and oversight of the
judge of the court of jurisdiction. We believe that the regulatory
changes and the modifications proposed in the Administration's bill
will enable all communities to meet the separation requirement, while
continuing to protect the safety and due process rights of juvenile
offenders.
out-year needs of justice department programs
Question. Attorney General Reno, the President's Budget includes
about $5.5 billion for Violent Crime Trust Fund programs in 1998 and
then about $5.8 billion in 1999. However, the President's Budget cuts
Violent Crime Programs from the 1999 level by $1.3 billion in 2000,
$1.4 billion in 2001 and $1.3 billion in 2002. Included in the Violent
Crime funding are ongoing personnel costs for programs like the FBI,
DEA and the Attorney Generals. The Budget would increase spending on
these personnel costs in 1998 and 1999, then potentially force these
agencies off the cliff after 1999.
Presumably some of the additional funds would go to the Federal
agencies. Could you provide for the subcommittee more detail of how the
funds for the Department of Justice will be allocated in the outyears?
Or if you cannot provide that detail, can you tell the subcommittee
what programs will no longer be needed in 2000?
Answer. The Department of Justice (DOJ) Violent Crime Reduction
Trust Fund (VCRTF) totaled $5.179 billion in the fiscal year 1998
President's Budget, the remaining $0.321 billion is requested for other
agencies. The DOJ VCRTF includes: $0.423 billion in Prevention Programs
(e.g., Violence Against Women; Drug Courts; Substance Abuse Treatment
Programs, etc.); $3.312 billion for State and Local Law Enforcement
(e.g., Community Policing-COPS, Byrne Grant Program, Violent Offender
Incarceration Grants, Community Based Grants for Prosecutors, etc.);
and $1.444 billion for Federal Law Enforcement (e.g., General Crime
Support for USA, FBI, DEA, INS and DOJ, Border Control, Criminal Alien
Deportation and Asylum Reform).
The total VCRTF program is projected to increase by $300 million
from $5.5 billion in 1998 to $5.8 billion in 1999 before decreasing in
2000, 2001 and 2002. The reduction is primarily based on the phase out
of the COPS program after 2000 when the goal of hiring 100,000
additional police officers will have achieved. The Administration's
budget anticipates that the remaining VCRTF programs will increase by
about 3 percent due to inflation. The President's budget projects
continued funding for VCRTF programs through 2007.
Question. In S. 15, the Minority Side reauthorizes the Violent
Crime Trust Fund through 2002 at $6.5 billion. However, none of the new
funding is allocated to Federal agencies.
Can you tell the Subcommittee of the impact on your agency if none
of the reauthorized funding goes to federal programs?
Answer. The Department is not anticipating that the DOJ VCRTF funds
would be reduced. The VCRTF funds for federal law enforcement provide
critical resources for assisting the USA's, FBI, DEA, INS and the
Department in investigating and prosecuting criminals and counter
narcotics trafficking, as well as border control activities and
criminal alien deportation and asylum reform. If new funding is not
reauthorized for such Federal programs, the impact would be devastating
to the DOJ Federal agencies. The fiscal year 1998 President's budget
requests $1.444 billion for federal law enforcement, providing funds
for over 5,300 workyears. The Department does not project in the
foreseeable future that such program needs would be significantly
reduced. In fact, the 1998 President's budget projects continued
funding of federal law enforcement efforts from the VCRTF through
fiscal year 2007. Without continued funds, the Department would have to
have a significant reduction-in-force of agents, attorneys and various
support staff, with a concurrent reduction in law enforcement. Many
critical drug and immigration initiatives are funded by VCRTF funds in
1998. These initiatives would be severely curtailed or eliminated.
mexico and extradition of drug traffickers
Question. Attorney General Reno, there has been much discussion in
the past few weeks of the President's decision to certify that Mexico
is ``fully cooperating'' with our narcotics control efforts. I
recognize that Mexico is taking some steps to help us in our efforts,
but I am troubled by the fact that, in certain areas, Mexico has made
very little progress. One of those areas is extradition.
To my knowledge, Mexico has never extradited to the United States a
single Mexican national indicted in our courts on drug trafficking
charges. Can you comment on why that has been the case?
Answer. While it is true that Mexico has not yet surrendered any
Mexican drug traffickers to the United States under the extradition
treaty, the Government of Mexico has authorized the extraditions of two
Mexican nationals--Jesus Emilio Rivera Pinon, who must complete his
Mexican sentence before being surrendered to the United States, and
Tirso Angel Robles, who is in the process of appealing his extradition.
Two other individuals charged with other categories of offenses, who
were returned in 1996, had arguable claims to Mexican citizenship
through marriage that were discounted by the Government of Mexico.
In the past, the traditional Mexican legal system did not allow for
the extradition of its citizens, a policy classically pursued in most
civil law countries in Europe and Latin America. Under the Zedillo
Administration, however, this tradition has come under more careful and
judicious scrutiny, and the process has invoked the seldom-used
provision of Mexican law allowing extradition of nationals in
``exceptional cases.'' Prior to this reconsideration of Mexican policy
and law, the United States saw no reason to submit large numbers of
extradition requests for Mexican nationals. Now that ``exceptional
cases'' are being considered, there is every reason to believe that a
steady increase in the extradition statistics will ensue.
Question. Does the Administration have a list of the ``Most
Wanted'' Mexican drug traffickers indicted in the United States?
Answer. Over the last two years, the Administration has maintained
and presented to the Government of Mexico a continuously updated list
of priority extradition requests. This list includes both Mexican
nationals and non-nationals--fugitives wanted for narcotics
trafficking, murder, sexual assault, and child molestation.
Question. Does the FBI have any intention of placing Amado Carillo
Fuentes (the ``Lord of the Skies'') on the FBI's ``Ten Most Wanted''
List?
Answer. The FBI, in consultation with the Drug Enforcement
Administration (DEA), will strongly consider placing Amado Carillo
Fuentes on the FBI's Ten Most Wanted List as existing fugitives on the
list are captured. Amado Carillo Fuentes is a very dangerous fugitive
and both the FBI and DEA are actively seeking his apprehension.
Question. What specific steps will the Administration take in the
coming weeks or months to work with Mexico on the capture and
extradition of Mexican national drug traffickers?
Answer. In the coming weeks, the Administration will continue and
intensify its consultations with the Government of Mexico on the
compelling nature of our cases against major Mexican drug traffickers.
We have submitted requests for the provisional arrests of several of
these defendants for extradition purposes. We are in the process of
assembling formal extradition packages against these individuals, which
we intend to present to our counterparts in Mexico for their review,
and we will engage in discussions as to the most appropriate
jurisdiction for effective prosecution. The Government of Mexico has
expressed its willingness to undertake this review with a receptive
attitude toward granting extradition in the interests of justice.
We will also be working through highly selective channels of
communication to develop and gather information and leads on the
locations of major traffickers. We will continue to pursue effective
apprehension operations, with equal emphases on success and safety of
our law enforcement personnel. To the extent possible, the
Administration will work to have requests for provisional arrests or
extraditions in place prior to the arrests of wanted fugitives in
Mexico, so that Mexican authorities will have a solid legal basis for
detaining them. Once again, the mutual commitment by the United States
and Mexico has been consistently pronounced, and it is the hope and
intention of this Administration, that these joint commitments will
lead to concrete results in the immediate future.
______
Questions Submitted by Senator Ben Nighthorse Campbell
impact of international crime on the united states
Question. The United States has seen within its borders serious
levels of Russian Organized Crime, Asian gang activity, international
drug trafficking, and money laundering.
On March 6, I discussed this growing problem with Secretary of
State Albright when she testified before this subcommittee. The
Secretary indicated that international crime poses a ``new situation''
for the United States. She also indicated that our country is facing a
``new set of threats.''
There are startling examples of the impact of international crime
from my home state of Colorado:
--An outstanding warrant is pending in Denver for the arrest of Drug
Kingpin Jorge Hugo Reyes Torres, the leader of one of the
largest drug trafficking organizations in Ecuador. Torres is
sought by federal officials for allegedly smuggling tons of
cocaine into Colorado.
--In 1995, one of the most notorious Russian mobsters was found to
have a Colorado driver's license and an address outside of
Denver. The FBI and Interpol reportedly identified this
criminal as the most powerful player in Russian crime in the
United States.
--And, as recently as last month, three residents of Pagosa Springs,
a mountain community near Durango, were indicted by a federal
grand jury on accusations of participating in an international
money laundering scheme.
What steps is the Justice Department taking to address this new and
growing threat of international crime and its direct impact on the
United States?
Answer. While there has long been a nexus between criminal
activities in the United States and illicit enterprises in other
nations, the impact of international crime on the United States and its
citizens has never been greater. The Department of Justice recognizes
this threat and has marshaled its resources against the many facets of
international crime. Chief among these threats, and of particular
concern to the Department, are those activities involving terrorism,
drug trafficking, money laundering, organized crime, and fraud. Many of
the criminal activities originate from countries where the tools of law
enforcement and criminal justice institutions are surpassed by those of
organized crime groups.
The Department's response to international crime is multi-faceted:
The expansion of the Department's law enforcement presence overseas;
the aggressive investigation and prosecution of crimes against U.S.
citizens; the multilateral efforts to use extradition treaties,
immigration laws, and other means to deny international criminals safe
haven anywhere in the world; the promotion and coordination of
international law enforcement efforts among multilateral organizations;
the imposition of economic prohibitions from transacting with major
international narcotics traffickers or any of their front companies;
and training of foreign agents and prosecutors to improve their law
enforcement capabilities.
In 1996, Congress approved a major expansion of the FBI's Legal
Attache program, which extends the reach of U.S. investigative efforts
around the globe. Working with law enforcement officials in their host
countries, FBI personnel in the Legal Attache offices have increased
the number of cases investigated overseas that impact upon the United
States. For the future, we are proposing to open eight new offices and
expand eight existing offices.
As the lead agency in addressing narcotics trafficking overseas,
DEA and its country offices have worked to reduce the flow of drugs
into the United States. These offices have allowed the Department to
target international drug traffickers more effectively. DEA plans to
open a new country office in Beijing, which will address major opium
production in the neighboring Golden Triangle and Golden Crescent
regions. The opening of the Beijing office is pending host national
government approval.
The Department has also placed several attorneys around the world
to work with representatives from other countries on case-related
matters as well as to enhance relations with foreign governments. These
DOJ attorneys frequently assist in drafting legislation, arranging
extradition, and training foreign investigators and prosecutors on
basic rule of law issues.
The Department has also expanded its efforts to investigate and
prosecute international criminal activities against U.S. citizens and
interests wherever they take place. For example, our resolve to bring
terrorists to justice has resulted in many recent convictions. In
September 1996, Ramzi Yousef was convicted with two accomplices for
conspiring to blow up more than two dozen U.S. airliners, and in
October 1995, Sheikh Abdel Rahman and nine of his followers were
convicted for plotting to bomb several locations in New York City,
including the Lincoln and Holland tunnels, the United Nations building,
and the FBI Office. These two examples show how the FBI and other law
enforcement agencies work hand in hand with the Criminal Division's
Terrorism and Violent Crime Section to investigate, arrest, prosecute,
and convict these international criminals.
The Department's ongoing battle against international crime also
includes its aggressive use of immigration laws, extradition treaties,
and mutual legal assistance treaties to prosecute criminals and return
them to their country of origin. The INS has employed immigration laws
to deport international criminals, unlawfully residing in the United
States, back to their countries of origin, while strengthening our
ability to prevent these criminals from entering this country. As
evidence of our multilateral efforts, the number of requests for
extradition and mutual legal assistance handled by the Department's
Office of International Affairs (OIA) has nearly doubled in the last
five years. Hundreds of these requests are made each year by United
States, state, and local agencies seeking fugitives or evidence for
cases within their jurisdictions. With the assistance of the
Department, state and local authorities are able to locate and bring to
trial defendants who have committed crimes in their communities and
then fled from the United States. OIA has also worked with the State
Department to increase the number of international law enforcement
treaties with foreign countries. In 1996, you and your colleagues in
the Senate approved twelve new extradition and mutual legal assistance
treaties, which will advance our goals of denying safe haven to
international criminals.
The work of the United States, however, is not enough. Because
crime is a transnational threat that pays no respect to territorial
borders, the United States has increased its law enforcement
coordination with other nations. As the United States assumes the
presidency of the G7/P8 organization, President Clinton has announced
that international crime-fighting efforts will be at the top of the
agenda. Among the issues that the Administration will promote are
terrorism, high-technology and computer crime, and regional organized
crime. The Department will continue to promote an anti-crime agenda and
negotiate comprehensive multilateral treaties.
The challenge of international crime is one which the Department
will continue to face. I believe that to successfully meet this
challenge and combat the criminal elements that threaten this country
and its citizens, the Department cannot act alone. It must have the
support of Congress, as well as foreign nations around the world.
Question. To what extent does the Justice Department coordinate
with the State Department in this area?
Answer. In the area of international crime efforts, the Department
of Justice (DOJ) has established a successful partnership with the
Department of State (DOS), with whom all overseas activities are
coordinated. As you heard in testimony from Secretary of State
Albright, international crime poses new challenges for the United
States, that we must all face together. In keeping with Presidential
Decision Directive (PDD 42), signed by President Clinton on October 21,
1995, DOJ has worked with DOS and other U.S. government agencies to
develop aggressive and coordinated attacks on international organized
crime.
DOJ attorneys and law enforcement personnel work with their
counterparts in DOS on a daily basis to ensure a coordinated approach
to terrorism, drug trafficking, money laundering, extradition and a
host of other criminal law issues. As DOJ's mission has expanded
overseas, it has received the cooperation and support of DOS.
An example of our work together is the opening of the International
Law Enforcement Academy in Budapest. The Academy represents the
coordinated work of the DOJ, DOS, and other Government agencies to
establish and promote the training of law enforcement officials from
Eastern Europe, Russia, and the Newly Independent States. To date, 377
students from 19 countries have attended the seminar program there and
gained the skills necessary to improve their anti-crime work.
The Criminal Division's International Criminal Investigative
Training and Assistance Program (ICITAP) provides training to
investigators and other law enforcement personnel from foreign
countries. The ICITAP program is funded by the State Department and,
therefore, maintains a close working relationship with State in order
to coordinate its training programs.
As we increase our efforts against international criminal
organizations, all government agencies must work together. I am firmly
committed to the cooperative work of DOJ and DOS, and I look forward to
working with Secretary of State Albright to address the major threat
posed by international crime.
assisting other countries fight crime
Question. Many countries around the world are experiencing rising
crime rates, increasing violence, and a breakdown in law enforcement.
Much of this crime has an impact on the United States, either directly
in our communities or indirectly by destabilizing our friends and
allies.
The seriousness of this issue was addressed by A.I.D. Administrator
Brian Atwood in his testimony on February 27 before the Foreign
Operations Subcommittee. Mr. Atwood stated: ``The reality is that most
nations in conflict simply lacked the institutional capacity to avoid
escalating violence.''
The United States has a wealth of expertise in ``what works'' to
fight crime, drugs, and gangs. Experts who have first-hand experience
in these areas--from law enforcement to community-based organizations--
could be invaluable resources to other countries experiencing these
problems if some technical assistance were available.
The Justice Department has a number of offices and programs which
work in the international crime arena. These include: the Executive
Office of National Security in the Deputy Attorney General's Office;
the Office of International Affairs in the Criminal Division; an
international clearinghouse of justice information operated by the
Department's Office of Justice Programs; the International Criminal
Investigative Training and Assistance Program (ICITAP) which is funded
by the State Department; and the FBI and DEA which are actively
involved in major international crimes and drug trafficking.
To what extent do these programs provide technical assistance and
expertise--from law enforcement to community leaders--to assist other
countries with gangs, drugs, and crime?
Answer. The Department provides technical assistance and expertise
in the international crime arena through many programs. One component
within the Criminal Division that provides such training is the
International Criminal Investigative Training and Assistance Program
(ICITAP). Its mission is to train investigative and law enforcement
personnel in foreign nations.
ICITAP provides worldwide training designed to enhance police
services in foreign nations. It supports United States policy by
providing law enforcement institutional development assistance and
training to foreign countries, based on internationally recognized
principles of the rule of law and human rights. Crafted in partnership
with the host country, ICITAP's programs enable police organizations to
deliver effective police services, and lay the groundwork for the
creation of specialized programs or units to address issues such as
drugs and gangs. Training in gang intervention and investigations, as
well as related seminars and internships are ongoing in South Africa,
Guatemala, Honduras, El Salvador, and Panama.
ICITAP uses a cadre of federal, state, and local police and
criminal justice experts as instructors, consultants, subject matter
specialists, and program managers to implement creative solutions to
pressing crime problems and to help forge ties with foreign law
enforcement officials. ICITAP also partners with other donor nations to
maximize the impact of limited U.S. resources. Since its creation in
1986, ICITAP has conducted projects in 38 foreign countries, and 21 of
those projects remain active today.
In addition, the Criminal Division coordinates training of
prosecutors in specific criminal law areas, including narcotics, money
laundering, and asset forfeiture investigations and prosecutions. The
Narcotic and Dangerous Drug Section (NDDS) provides a variety of
international training and assistance. NDDS has drafted a set of model
laws, along with commentaries, granting authority to enable effective
investigation and prosecution of criminal cases. The Section also has
written a compliance manual for countries seeking to implement
directives of the 1988 U.N. Convention against Illicit Traffic in
Narcotic Drugs and Psychotropic Substances.
NDDS attorneys have given significant presentations at several
international seminars and conferences on many topics, including
complex drug investigations, the effective use of investigative and
prosecutorial techniques, the coordination of multi-agency money
laundering investigations, and current U.S. law enforcement efforts in
combating money laundering. Also, in collaboration with the Asset
Forfeiture and Money Laundering Section, NDDS attorneys taught at two
seminars for Colombian prosecutors on financial investigations, with a
view to implementation of the newly-enacted Colombian asset forfeiture
and money laundering laws.
All training and technical assistance efforts are designed to help
in the creation or strengthening of foreign criminal justice
institutions in a manner consistent with due process and fundamental
human rights.
Question. To what extent do these Justice Department programs
coordinate with the State Department?
Answer. ICITAP closely coordinates with the State Department and,
in particular, its Agency for International Development (AID), on all
overseas criminal justice development programs. ICITAP provides
detailed plans to State and AID in order to explain and justify the
resources committed to each of its programs. Similarly, the other
Criminal Division training projects have worked with, and often been
funded by, the State Department. DOJ and DOS representatives meet
routinely to report on program developments and performance.
ICITAP is a member of the Interagency Working Group (IWG) on Anti-
Crime Training and Technical Assistance, which is chaired by the State
Department's Bureau of International Narcotics and Law Enforcement
Affairs. The IWG coordinates law enforcement assistance for the New
Independent States, Central Europe, and, increasingly, other geographic
areas.
rocky mountain hidta
Question. The Office of National Drug Control Policy (ONDCP) and
the Drug Enforcement Administration are implementing the Rocky Mountain
HIDTA. Colorado law enforcement officials on the State, county and
local levels also will be involved in the HIDTA to wage this new,
coordinated attack on drug trafficking in our region. This new HIDTA
will be headquartered in Colorado, with satellite offices in Utah and
Wyoming.
The growing need for a HIDTA in our region is clear. Investigations
by law enforcement agencies indicate the drug trafficking problem,
centered in Denver, impacts not only the neighboring States of Utah and
Wyoming, but also the rest of the nation. In addition, evidence
suggests that the Denver area serves as a transshipment point between
Los Angeles, Mexico, and the East Coast.
I appreciate DEA's leadership role in implementing the Rocky
Mountain HIDTA. What additional support can the Justice Department
provide to the Rocky Mountain HIDTA?
Answer. The Department of Justice has already committed the Federal
law enforcement agencies and offices to full-time participation in the
Rocky Mountain HIDTA: United States Attorneys for the Districts of
Colorado, Utah, Wyoming, FBI, DEA, INS, and U.S. Marshals Service.
Resources for the Rocky Mountain HIDTA are allocated among six
principal initiatives. These initiatives include a joint drug
intelligence group, a Southwest Border interdiction task force, and a
consolidated Gangs/Violence Interdiction Task Force. DOJ, through the
DEA and the U.S. Attorneys, will continue to take a leadership role in
implementing these initiatives.
The HIDTA's intelligence group and its two primary enforcement
groups are under the operational command of two DEA Assistant Special-
Agents-in-Charge. The United States Attorney in Denver serves as
Financial Agent for the HIDTA Executive Committee, which is chaired by
a DEA Special-Agent-in-Charge. The U.S. Attorneys for Colorado,
Wyoming, and Utah have designated experienced federal drug prosecutors
to serve as lead HIDTA attorneys in their districts. The lead HIDTA
attorney will coordinate the prosecution of HIDTA cases and will help
ensure that HIDTA cases receive all available DOJ resources.
In addition to taking a leadership role in implementing the Rocky
Mountain HIDTA initiatives, DOJ will seek to create a more synergistic
relationship between the Organized Crime and Drug Enforcement Task
Force (OCDETF) and HIDTA programs in this region, as well as
nationally. The OCDETF program funds case-specific task forces while
the HIDTA program funds the administration of large, collocated multi-
agency task forces. The Department supports a cooperative approach
drawing on the strengths of each program. An example of such an
approach has existed in South Florida for some time. There, HIDTA funds
supplement OCDETF investigations and maximize the effectiveness of a
technologically advanced task force working against the highest level
traffickers and money launderers.
Question. What are DEA's plans to expand the scope and
effectiveness of the Rocky Mountain HIDTA?
Answer. Establishment of the Rocky Mountain Intelligence Center is
one of DEA's HIDTA priorities. The project is in the initial stages of
development, with the assignment of personnel and purchase of basic
equipment currently being undertaken. At some point, it will be
necessary to develop the center beyond the planned pointer index
system, into a multi-faceted system that includes deconfliction and
analytical support units, as well as target identification and
assessment programs.
DEA supports the development of an effective intelligence center,
that allows for the participation of all law enforcement agencies in
the Rocky Mountain area and allows DEA to aggressively investigate and
dismantle those major trafficking organizations that are having the
greatest impact on our Nation. Through the intelligence center, we plan
on identifying and targeting those major trafficking organizations
which use the Rocky Mountain area as a drug distribution center. It is
our intent to focus appropriate investigative resources from all
segments of the division to vigorously track these organizations to
their supply sources, both domestic and international. Working with
contiguous HIDTA's where appropriate, we will concentrate our efforts
on each targeted organization until that organization has been
dismantled. DEA plans to continue to intensify cooperative efforts
among HIDTA participants in order to effectively allocate resources and
ensure continuity with ONDCP guidelines, as well as stated regional
goals.
The Rocky Mountain HIDTA also plans to develop a new initiative
which will provide for a comprehensive demand reduction program. HIDTA
members will attempt to develop neighborhood coalitions of Federal,
State and local law enforcement representatives, state attorneys,
members of public and private sector organizations, and residents of
affected communities in order to successfully address drug trafficking
and demand issues. DEA has begun this process through discussions with
D.A.R.E. of Colorado and the Colorado Federation of Parents. We will
begin working with similar organizations in Utah and Wyoming, including
the Boys and Girls Clubs of America. This initiative is currently in
the early stages of development.
security for the g-7 summit in denver
Question. In June, Denver will host the Group of Seven (G-7)
Summit, which will bring together leaders of the seven major
industrialized nations and Russia for three days. The provision of
sufficient security for world leaders is an important federal interest
and, therefore, requires sufficient federal support.
What assistance will the Department of Justice make available for
the Denver region to assist with security and other support costs
related to the G-7 Summit?
Answer. The U.S. Secret Service is the lead Federal agency
responsible for security of the G-7 venue sites, protection of visiting
heads of state, and the protection of the President. The U.S.
Department of State's Diplomatic Security Service is responsible for
the protection of other visiting dignitaries. The FBI is responsible
for the prevention, detection, and investigation of any terrorist acts
affecting the G-7 conference. The FBI will provide assistance to the G-
7 by assigning approximately 80 agents and 8 support employees to the
FBI Command Center. As of February 28, 1997, the personnel and
nonpersonnel costs associated with the G-7 summit on June 20-June 22,
1997 are estimated to be $742,900.
The INS will provide assistance by assigning approximately 51
employees (11 Detention and Deportation, 29 investigative, and 11
Examinations personnel) to support the G-7 Summit. Total personnel and
nonpersonnel costs associated with this Summit are estimated to be
$130,408. Specific equipment needs for this operation have not been
finalized. General needs would encompass radios, body armor, batteries,
and an assortment of other smaller related articles.
Question. Do you believe these current plans are sufficient to
support state, county, and local law enforcement in light of the
Oklahoma City bombing trial and the many needs of the G-7?
Answer. The Department believes the security of the world leaders
attending the G-7 summit is of paramount importance. We began
preparations in 1996 to ensure the safety of the G-7 participants. The
FBI regularly meets with all Denver area law enforcement agencies to
share information and intelligence related to the G-7 conference and
the Oklahoma City bombing trial. We are continuing to work with the
U.S. Secret Service, U.S. State Department, and other Federal, State,
and local agencies to ensure a cohesive and comprehensive plan is in
place to provide an appropriate response to any terrorist incident
involving the G-7 conference or the Oklahoma City bombing trial.
dea and mexico
Question. Congress currently is considering the certification or
decertification of Mexico under the international drug control program.
According to a news report in the March 2 issue of the San Diego
Union Tribune, Mexican authorities are now preventing our DEA agents
and law enforcement officers from carrying their weapons into Mexico.
In response, the DEA reportedly pulled its agents out of cross-training
and intelligence-gathering projects in Mexico along the border.
What is the current status of this dangerous situation?
Answer. The activities of DEA agents are guided by joint U.S. and
Government of Mexico [GOM] ``rules of the game'' and the Mansfield
Amendment (Public Law 94-329), which provides guidelines to DEA
representatives in foreign countries regarding operations, arrests, and
overall enforcement activities. These regulations are designed to
recognize the sovereignty of respective nations to ensure the safety of
agent personnel by limiting their operational exposure.
In Mexico, DEA agents assigned in-country carry firearms based on
an informal agreement from the GOM. In addition, the U.S. Ambassador
has issued written authority allowing Mexico-based DEA agents to carry
weapons.
The United States and GOM have pledged to work to ensure the safety
of the United States and Mexican law enforcement officers in the
Bilateral Task Forces. As long as U.S. law enforcement agents are not
permitted to carry firearms, DEA, FBI, and Customs agents will continue
to refrain from travelling into Mexico to the Bilateral Task Force
facilities. In the meantime, limited cooperation with Mexican
counterparts, however, is being maintained through the visits of
Mexican officers to the United States and through occasional liaison
meetings between United States and Mexican law enforcement personnel.
Question. What steps are the Justice Dept taking with regard to
Mexico and its position on our DEA agents and law enforcement officers?
Answer. The United States Departments of Justice and State and the
U.S. Embassy in Mexico City are engaging in ongoing discussions with
their Mexican counterparts to reach a solution that will ensure the
safety of U.S. agents.
Question. What impact does this stand-off have on DEA's efforts to
carry out its anti-drug mission on and over the border with Mexico?
Answer. In the DEA's view, until the Bilateral Task Forces are
fully staffed, vetted, trained, adequately equipped, funded, and
operational, the United States and Mexico will be unable to develop
effective investigations and successful, compelling prosecutions in
Mexico against the major trafficking organizations.
Question. Why would the Administration certify Mexico under the
Foreign Assistance Act without first receiving assurances from the
Mexican Government that it would allow our DEA agents to carry
firearms?
Answer. Mexico is an indispensable partner in combatting drug
trafficking. In 1996, President Zedillo continued to demonstrate his
strong commitment to combatting narcotics trafficking, which he
recognizes to be the primary threat to Mexico's national security. In
carrying out that commitment, the Government of Mexico continued to
strengthen its national counternarcotics efforts.
President Zedillo's Administration took steps to fight corruption
within the Mexican government. We applaud President Zedillo's quick
response to fire and arrest INCD Chief Jesus Gutierrez Rebollo and
several of his deputies amidst corruption charges and commend President
Zedillo for choosing to respond to this situation in a public way,
despite the risk of embarrassment to him, his Administration, and his
country. The Mexican Attorney General also dismissed a significant
number of federal law enforcement officers who had been accused of
corrupt practices.
The Government of Mexico extradited 13 individuals in 1996, more
than double the number of extraditions in 1995. Among this number, the
Mexican Government extradited for the first time a Mexican national and
a dual national.
In 1996, the Mexican Government enacted major anti-crime
legislation, including a law which criminalized money laundering and a
new organized crime law. The organized crime law authorizes a new
arsenal of investigative and prosecutorial techniques, including the
use of court-authorized electronic surveillance, witness protection,
undercover operations, plea bargaining, and prosecution for criminal
association, and it further permits asset forfeiture in civil cases.
Reforms of the Mexican penal code also included provisions to control
the diversion of precursor chemicals for methamphetamine production,
and the Mexican Government has worked to restrict the importation of
precursor chemicals to a limited number of ports.
Together, the United States and Mexico have worked to establish
border task forces whereby U.S. law enforcement agents would work
alongside Mexican agents to conduct narcotics investigations and share
mutually beneficial investigative information. While obstacles relating
to the U.S. agents' status within Mexico have hampered the advancement
of the Bilateral Task Force effort, we are hopeful that these issues
can be resolved quickly so that the Task Forces may become operational.
Announcements from the recent Presidential Summit confirmed that
together we needed to assure the safety of both United States and
Mexican law enforcement agents.
While we believe that Mexico has attained some significant
achievements in 1996, there is more that needs to be done. We feel that
the solution lies not in punishing Mexico by cordoning ourselves off
from them, but, rather, in working with and supporting President
Zedillo's counternarcotics efforts.
______
Question Submitted by Senator Conrad Burns
division of the ninth circuit
Question. Considering the numerous pieces of legislation that have
been introduced over the years regarding the division of the Ninth
Circuit, I was wondering if you would express what you believe the
Justice Department's opinions were regarding the split of this Circuit.
And if you believe a split is necessary, how should the future Ninth
and Twelfth Circuit appear? If you do not believe a split is necessary,
what is your opinion based upon.
Answer. The Department of Justice does not, at this time, have a
position on either the proposal to split the Ninth Circuit or the
variety of proposed divisions of the circuit. Pending in the House is a
bill--H.R. 908--to establish a commission to study structural
alternatives for the Federal courts of appeals, with a particular focus
on the Ninth Circuit. A number of circuit study commission bills are
pending in the Senate. If, as the Department expects, such legislation
is enacted, the Department will look forward to providing the
commission any and all data and perspectives the Department, as the
Federal courts only criminal prosecutor and most frequently appearing
civil litigator, can provide. If, in the course of our work for and
with the commission, we decide to weigh in on the Ninth Circuit split
issue, we will after much internal work and discussion and at the
appropriate time.
______
Questions Submitted by Senator Ernest F. Hollings
charleston border patrol training facility
Question. I have been quite impressed with the Border Patrol
Training Facility which was established at the former Charleston Navy
Base. The officers down there led by Ron Meyers have a can-do attitude
and they will train 1,430 new Border Patrol Agents there this year. We
still have some minor facility needs, but all that talk of
environmental concerns was hogwash and all in all this has been a total
success.
My understanding is that the President's request for Treasury
includes $11 million this year for facilities at the Federal Law
Enforcement Training Center at Glynco, Georgia, and a similar amount
for the next few years. I'm told that FLETC and the Treasury-General
Government Subcommittees are already requesting a shut-down plan for
Charleston, even though operations have only been ongoing for six
months.
What is your assessment of the Charleston Border Patrol training
facility?
Answer. The Charleston Border Patrol training facility has
succeeded in providing the Immigration and Naturalization Service
immediate facility resources to conduct basic training of newly hired
Border Patrol agents. These additional resources should allow the
Service to deliver the training necessary to achieve its hiring goals
for the next three years or longer, if necessary. Through the hard work
of many Border Patrol and other Department of Justice employees, these
facilities were brought on line within a short time and allowed the
Service to begin and sustain a training rate in excess of traditional
levels.
Despite different missions, similar functions between previous Navy
and current Service tenants allowed the adaptive reuse by the Border
Patrol of many Charleston Naval Station structures with minimal
alterations. Additional alterations of these existing facilities,
however, will be needed to fully meet all Border Patrol facility
functional requirements. Because most facilities on the Naval Station
are older facilities and had been vacant for several years prior to the
Services' occupancy, all current Border Patrol occupied facilities
required selective repair and replacement of existing building systems
to become operational. Continued minor repair of existing facilities
will be needed to sustain operations. Modernization of building systems
would provide a more cost-effective facility plant to operate than
currently exists; however, if done, the cost-benefit of such a
modernization could not be realized for several years. Because they
were constructed recently, the outdoor facilities at the Goose Creek
Naval Weapons Station should require only minimal repair for the
foreseeable future.
Should there be a need to expand the current training mission in
Charleston, sufficient opportunity exists at the locations of both the
outdoor and indoor facilities to acquire additional facilities. Outdoor
training facilities at the Goose Creek Naval Weapons Station are in
close proximity to each other and adjacent to undeveloped property
where additional facilities could be constructed if required. Likewise,
additional vacant facilities adjacent to indoor facilities occupied at
the Charleston Naval Station are currently available for repair and
occupancy if desired.
Question. Isn't this facility required for the foreseeable future
whether we add 1,000 Border Patrol agents per year as is authorized in
the 1996 Immigration bill or 500 per year as you have proposed in this
budget?
Answer. The INS needs a place to train Border Patrol agents, both
now and in the foreseeable future. With the growth that INS has
experienced in recent years, the Service will need to train Border
Patrol Agents in response to both attrition, as well as any new agents
added in the appropriations process in the future. If the Federal Law
Enforcement Training Center at Glynco, Georgia cannot accommodate our
training requirements, INS will continue to rely on the Charleston
Border Patrol Training Facility to meet its needs.
mount pleasant illegal aliens
Question. For the past five years, the administration has made the
Southwest Border region its priority for INS. Five thousand four
hundred additional INS positions have been added from California to
Texas. I understand that Mexico is dominated by crime cartels. But, the
rest of the country has crime too.
Last Summer, our local police in Mt. Pleasant, South Carolina, near
my home arrested five individuals when they were caught speeding on the
Cooper River Bridge and then the police found open alcohol containers
in the car. On further investigation, the police ascertained that these
individuals were illegal aliens. They contacted INS, the nearest office
of which is in Charlotte, North Carolina, and were told to let the
aliens go. They weren't ``criminal'' aliens and so INS wouldn't get
involved. This unfortunate event got the Department of Justice and INS
a lot of bad press in my backyard.
Is it normal practice for INS to only worry about criminal illegal
aliens?
Answer. During the summer of 1996, the Mt. Pleasant, South Carolina
Police Department (MPPD) contacted the Charlotte, North Carolina, INS
office. The Charlotte office is a suboffice of the Atlanta, Georgia,
INS District Office, which also serves the States of Alabama, Georgia,
South Carolina, and North Carolina. MPPD requested that INS assume
custody of the five alleged illegal aliens that they had arrested for
traffic violations. As you pointed out, Charlotte is the closest INS
enforcement office to the MPPD. The office is approximately 200 miles
from Mt. Pleasant, South Carolina. INS special agents did not have
information indicating whether or not the MPPD was arresting the
subjects or had lodged criminal charges on which to detain them for the
five to seven hours it would have taken INS special agents to respond.
Criminal aliens are a higher priority than aliens not convicted of
crimes. Had we known that the MPPD was charging the suspects with state
violations, the INS Charlotte Office would have had time to respond and
to interview the suspected illegal aliens. The INS does not have the
resources to respond to every alleged illegal alien arrest.
Section 133 of the Illegal Immigration Reform and Immigrant
Responsibility Act of 1996 authorizes the Attorney General to enter
into written agreements with state and local law enforcement to allow
them to function as immigration officers in relation to the
investigation, apprehension, or detention of aliens in the United
States (including the transportation of such aliens across State lines
to detention centers). We are currently drafting regulations and a
Memorandum of Understanding to implement the provisions of this
section.
Question. Now in last year's Immigration Act, Congress required
that states have a minimum of 10 INS personnel per state, so we will
have 3 special agents in Charleston. It is my hope that this INS
debacle will not be repeated.
But, I think the Justice Department needs to keep in mind that
there are 50 states, and illegal immigration is not confined to Border
states. Alien detention and deportation issues are important to our
constituents too.
Answer. We understand and appreciate your concern and those of your
constituents regarding the illegal alien problem in the State of South
Carolina. We are committed to enforcing the immigration laws throughout
the United States. The illegal entry of aliens into the United States
is not only a border problem, it also affects communities across the
country. We take seriously our responsibility for enforcing all
immigration laws and regulations that apply to both criminal aliens and
administrative violators. In the past few years, we have strengthened
enforcement personnel and technological resources at the southern
border; however, we have also added hundreds of personnel in the
interior of the United States. We believe the added resources will help
enforcement efforts in the state of South Carolina.
fingerprints/immigration
Question. There has been a great deal of controversy over the
failure of the INS and the FBI to conduct fingerprint checks of
immigrants applying for citizenship. Apparently, as many as 180,000
immigrants were naturalized without checks to ensure they do not have
criminal records. And it appears 71,000 got citizenship even though
they had criminal records.
You have had a chance to review this situation. Is it clear yet why
this happened? Was it simply miscommunication between the INS and the
FBI?
Answer. The INS naturalized over one million citizenship applicants
between August 31, 1995, and September 30, 1996. Out of this group, it
appears that approximately 180,000 persons may have been naturalized
without an FBI fingerprint clearance; however, the FBI did conduct
name-checks on 113,126 of these people. These name checks were
conducted against the FBI's full Criminal Justice Information System
(CJIS) database. Because approximately 66,000 citizens do not appear in
FBI billing records, it is not clear whether the FBI conducted any type
of criminal background check before they were naturalized. The INS has
not yet reviewed the files for these cases, and it is not clear how or
why this has happened. However, INS has taken measures to ensure that a
criminal background check has been conducted on all citizens before
they are naturalized.
Approximately 71,000 persons with FBI arrest records (Idents) were
naturalized during this same period. None of these citizens belong to
the subset of approximately 66,000 citizens who may not have had any
type of FBI clearance. It should be noted that almost half of the
Idents were administrative arrests, and not criminal. Further, not all
arrests result in convictions, and not all convictions would render an
applicant ineligible for naturalization. INS' Naturalization Review
Team in Lincoln, Nebraska, under the oversight or involvement of the
Department of Justice, KPMG Peat Marwick, the Executive Office for
Immigration Review (EOIR), the Inspector General, the General
Accounting Office, and several Congressional Subcommittees, is
reviewing the naturalization decisions for all persons who were
naturalized between August 31, 1995, and September 30, 1996, and who
have felony or potentially disqualifying misdemeanor arrests.
As of May 14, 1997, INS had reviewed 15,536 of these files and
determined that original decisions in 10,030 (64.5 percent) of the
cases were proper (i.e., statutorily defined residency and good moral
character criteria were met by the applicant), that 296 (2 percent) of
the applicants were presumptively ineligible (presuming an applicant
could not produce evidence that a disqualifying conviction had been
overturned on appeal), and that 5,210 (33.5 percent) case files did not
contain sufficient information upon which to validate the original
adjudication and, therefore, would need to be returned to the
appropriate INS field office for further action. This case review
effort is still underway, and the Department will reports its findings
when the review is completed. For those individuals found to be
incorrectly naturalized, INS intends to initiate proceedings to revoke
citizenship.
The FBI and the INS have had significant difficulty matching
records. This is primarily because each agency has its own numbering or
case identification system. The FBI assigns a Process Control Number
(PCN) to fingerprint cards (FD-258) received and placed into its
Billing Database, while the INS assigns an Alien File or ``A-Number''
to aliens when they immigrate to the United States. It is very
difficult to locate an INS record in the FBI Billing Database without
using the FBI-assigned PCN number. The FBI does not assign PCN numbers
to all fingerprint cards submitted by the INS. Only those fingerprint
cards that the FBI places in its Billing Database are assigned PCN
numbers.
In addition, neither the FBI nor the INS possess databases designed
to track the fingerprint clearance process. As a result, both agencies
have had to rely upon existing databases designed for other purposes.
The FBI relies primarily upon its Billing Database, while the INS
relies upon its Central Index System (CIS). Some program modifications
have been made to enhance the ability of these systems to identify
arrest records of individuals naturalized.
The overwhelming majority of INS-submitted fingerprint cards are
recorded in the FBI Billing Database. Fingerprint cards that are
rejected by the FBI upon receipt because they lack biographic and/or
other information are not recorded in the Billing Database. The names
of individuals whose fingerprint cards are rejected later because the
prints are unclassifiable are run through the FBI's Criminal Justice
Information System (CJIS) Database. If an arrest record is located in
the CJIS Database, the IDENT (rap sheet) is returned to the INS with
the unclassifiable fingerprint card. Unclassifiable fingerprint cards
are also returned to the INS when no arrest record is located in the
CJIS Database, but the response is not considered to be a NON-IDENT.
Question. What can we do to go back and check these individuals? I
mean how is Justice going to find criminals that were naturalized?
Answer. As stated above, INS is reviewing the case files for those
individuals known to have had felony or potentially disqualifying
misdemeanor arrests (a subset of the 71,000 idents). In addition, INS
has recently conducted name checks against the FBI's full CJIS database
for the 66,000 individuals that were not shown in the FBI billing
records. This has produced approximately 9,000 candidate idents. If any
of these individuals are confirmed as being naturalized during the
period in question, their case files will be reviewed if the rap sheets
indicate felony or potentially disqualifying misdemeanor arrests.
Question. What steps is the Justice Department taking to ensure
this doesn't happen again?
Answer. The INS has implemented a series of initiatives to improve
and strengthen the U.S. naturalization program. They include the
following: (1) strengthened the current citizenship process to ensure
that no individual is naturalized without the verified completion of a
fingerprint check by the FBI; (2) hired the KPMG Peat Marwick, LLP,
management firm to oversee an INS audit of naturalization cases from
September 1995 through December 1996 (the DOJ Office of the Inspector
General and the GAO will monitor this audit); (3) instituted additional
Service-wide quality assurance steps to ensure that all procedures are
being consistently followed throughout the naturalization process in
all INS offices; and (4) initiated a comprehensive re-engineering of
the naturalization program with the assistance of the Coopers Lybrand
consulting firm.
The objectives of the project are: to ensure the integrity and
security of the naturalization program; to determine applicants'
eligibility for naturalization consistently and accurately under the
law; to enhance the overall working experience of employees; to utilize
human, technological and fiscal resources more efficiently and
productively; to develop a customer-oriented workforce and service-
oriented culture while ensuring that legal standards and protocols are
in place and maintained; to develop and implement an effective system
of standards, measurements and accountability for performance and
results that can be systematically collected and reported; and to
improve the effectiveness of internal and external communication.
The reengineering project will examine every facet of the
naturalization process including the submission of fingerprint cards to
the FBI as part of the criminal background check. The contractors are
being asked to explore technological solutions that will complement the
process redesign efforts.
In addition to the above, the Attorney General recently established
the Fingerprint Coordination Group. I chair monthly meetings of the
Group, which consists of high level officials from INS and the Federal
Bureau of Investigation (FBI). The Group is dedicated to improving the
processing of INS fingerprint cards, the largest single customer of the
FBI's Criminal Justice Information Services Division. Through exchanges
of information regarding each organization's processes, sharing of
technical expertise, increased reliance on automation, and assignment
of personnel to the other agency's facilities, these two organizations
are identifying ways to expedite the criminal background checks
performed as part of the naturalization application process and ensure
that the INS is provided with accurate and timely information on each
applicant. The group's efforts will ensure an integrated approach to
all process improvements and automation efforts. The resulting
improvements will help both INS and FBI reduce current workload
backlogs.
Under the Fingerprint Coordination Group, I am establishing the
Joint Fingerprint Processing Working Group. Within the next 90 days,
this group will present its findings and recommendations regarding:
(1) immediate solutions, such as improving the quality of print
submissions to the FBI, ensuring the authenticity of submitted prints,
and ensuring consistency of the A-number shown on both the FD-258 and
N-400;
(2) short-term solutions, including an examination of the impact of
the FD-258 tracking system and the Machine Readable Data process on
INS-FBI matching efforts, and improvements to the Designated
Fingerprint Services Program, including its training and quality
assurance elements; and
(3) long-range plans, concerned principally with the transition
from manual to electronic print-taking and checking.
Question. You know there is a bit of deja vu in all this. In 1994,
the INS proposed to stop making fingerprint checks through the FBI
altogether. INS claimed this would save $3 million. Senator Byrd and I
wrote you protesting this action, and you directed INS to maintain the
fingerprint check system.
One thing is unclear however. if you read the record of our
hearings in 1994, we expressed concerns that the INS system of taking
the fingerprints--which were then sent to the FBI--was subject to
fraud. Anyone could take the prints and then send them in to INS. The
Department told us that it had created a fingerprint working group
including the FBI, INS and the Inspector General.
Now, four years later, it appears we still have the same problem.
Why?
Answer. Through the recent implementation of the Designated
Fingerprint Service Program, the INS created an innovative way to
conduct business in this area. However, the rule making process
required an extensive number of internal and external reviews since the
proposal affected public and business entities. Before the proposed
regulation was published, reviews were conducted both within the INS
and outside the INS by DOJ and OMB. Following publication of the
proposal, public comment was considered and responded to and the
procedure again reviewed. This process led to the publication of a
final order on June 4, 1996. Following publication, an additional ten
months was required to allow entities the opportunity to review the
proposal, respond if interested in conducting business and be trained
as required.
new state and local assistance programs
Question. Your budget includes two new state and local grant
programs--$49 million for a new Violent Youth Court Program and $95
million for a new state prosecutors program to target gang crime. Could
you provide more specifics on these programs. For example, how many
state prosecutors do you foresee the Federal Government providing and
for how long will such assistance continue?
Answer. Last year, for the first time in seven years, the national
juvenile violent crime and murder arrest rates went down. While these
signs are certainly promising, juvenile crime rates are still
unacceptably high in many cities, towns and neighborhoods. We can and
must do more. The establishment of these two new State and local grant
programs--the Violent Youth Court Program, and the Prosecutorial
Initiatives Targeting Gang Crime and Violent Juveniles Program--are
essential to the Administration's commitment to mount a full-scale
assault on juvenile crime in America. This commitment is comprised of
four essential elements that are designed to target gangs and violent
juvenile criminals, keep the nation's children gun and drug free and on
the right, law-abiding track, and reform the juvenile justice system.
Furthermore, these programs will benefit State and local communities by
preventing and attacking gang-related and violent juvenile crime at the
community level, providing communities the tools and resources to
identify and target their juvenile crime problems.
The Violent Youth Court Program will provide grants to state and
local communities to plan, develop, implement, and administer
specialized, court-based activities focusing on more effectively
addressing violent and non-violent youth offenders as they move through
the justice system. Communities will have the opportunity to request
funding for programs that meet their needs. Funds will be used for
innovative initiatives that will enhance and expedite judicial
activities related to increasing incidents involving youth violence,
allowing better management at the community level of juvenile violent
offenders. These initiatives may include the establishment of juvenile
gun courts that target young firearms offenders; juvenile drug courts
that will provide continuing judicial supervision over young offenders
with substance abuse problems (similar to the integrated administration
used in the adult Drug Courts program); courts of specialized or joint
jurisdiction; and other enhanced strategies aimed at improving
adjudication of juvenile offenders including programs involving the
courts, prosecutors, public defenders, probation officers and
correction agencies. These special courts have a certain coercive power
to correct behaviors and thus improve public safety: court-imposed
graduated sanctions and the courts' ability to hold offenders
accountable are effective in reducing the criminal behavior of those
under their jurisdiction.
The Prosecutorial Initiatives Program will provide direct funding
to prosecutors' offices to support new initiatives targeting gangs,
gang violence, and other violent juvenile crime, including hiring new
gang prosecutors, buying equipment, and conducting state-of-the-art
training. Under this program, the Federal government would provide
funding of $100 million per year over a two-year period, at which time
the local jurisdictions would take over. During the two-year period,
prosecutors would set up the infrastructure needed to pursue,
prosecute, and punish dangerous gang members and other violent juvenile
offenders for their crimes. More specifically, the program is designed
to facilitate better cooperation and coordination between prosecutors
and school officials, probation and parole officers, youth and social
service professionals, and community members in order to increase
identification of high-risk juveniles and, ultimately, speed the
prosecution of violent juvenile offenders. Since each jurisdiction will
determine how their community spends the funds received, including how
many new prosecutors are needed to accomplish these goals, communities
essentially control the decision-making process.
hepatitis c in prisons
Question. The Committee has become aware of the potentially serious
problem of Hepatitis C infections among prisoners in the country
including Federal prisoners. It is our understanding that the
Infectious Disease Coordinator at the Federal Bureau of Prisons is
aware of this problem which can affect not only prisoners but prison
employees who may be exposed to infections during normal prison contact
with infected individuals. Could you tell the Committee your view of
the seriousness of the problem in the Federal Prison System and
describe any steps currently being taken to deal with Hepatitis C among
Federal prisons?
Answer. Studies from state correctional systems indicate a high
prevalence of Hepatitis C infection ranging from 30 percent to 40
percent among incarcerated populations. The majority of BOP inmates
with Hepatitis C infection have acquired it prior to incarceration
through injection drug use. Hepatitis C is transmitted primarily
through exposure to blood and not by food or routine contact.
Occupational-related transmission has been uncommon. BOP uses universal
precautions to prevent exposure to blood borne pathogens such as
Hepatitis C. The use of barrier methods during known or anticipated
exposures to blood or bloody fluids is highly effective in preventing
infection with the Hepatitis C virus. BOP addresses the issue of
Hepatitis C infection in the following ways: (1) training of BOP
employees upon hire and annually on blood borne pathogen occupational
exposure, including the transmission of Hepatitis C virus and the
effective use of universal precautions; (2) provision of protective
equipment for BOP staff to prevent exposure to blood and blood-
contaminated fluids; (3) counseling and medical referral for all BOP
staff with occupational exposures to Hepatitis C virus; (4) clinically-
based testing of inmates with a history of risk factors for Hepatitis C
infection, and (5) promulgation of treatment guidelines for the medical
management of inmates with Hepatitis C infection.
Question. We have been told that the Bureau does not currently have
a policy requiring blood testing and treatment for all prisoners. This
seems unfortunate since mandatory testing could be useful in
identifying not only Hepatitis C but also HIV/AIDS. Could you confirm
for the Committee the Bureau's current policy regarding testing for
prisoners.
Answer. BOP does not require mandatory screening of inmates for
either Hepatitis C or HIV/AIDS. Inmates with a history of injection
drug usage, blood transfusions prior to 1990, or other risk factors for
Hepatitis C or HIV/AIDS are tested upon prison entry and through
clinical evaluations. BOP has the following HIV testing policy for
inmates: (1) random mandatory testing of 10 percent of BOP inmate
population annually with a seroprevalence for HIV infection of 1.3
percent documented for 1996; (2) serial annual testing of a cohort of
inmates who have entered BOP during one selected month each year, and
(3) mandatory HIV testing of inmates upon release to the community.
cops
Question. Recent news reports say that you disagree with the
Administration's position on COPS and the Local Law Enforcement Block
Grant. Is that so?
Answer. There is no disagreement between me and the Administration.
In DOJ's initial budget request I asked for $1.4 billion in funding for
COPS--enough to keep us on track for funding 100,000 additional
community police officers by 2000--and continued funding for the local
law enforcement block grant. Subsequently, however, we decided that--
given our overall budget constraints--it would be more effective to
target limited funds toward juvenile justice and youth violence
initiatives. I asked for a package that reflected those goals. The
budget we transmitted to Congress includes, in addition to the COPS
funding, a youth violence and juvenile justice package that includes a
combination of formula block grant and discretionary funding.
As I testified before the House, I believe the proposed funding for
my Department laid out in the President's budget request is a strong,
flexible and balanced package. I want to work with you and this
Subcommittee to develop the very best ideas to improve this proposal
and achieve your common goals of putting cops on the street, attacking
gangs and youth violence, supporting local law enforcement and funding
solid and proven prevention programs, like those in Boston and
elsewhere that have been so successful at preventing crime by young
people.
effectiveness of the diap
Question. In 1993, Vice President Gore recommended consolidating
the Federal Bureau of Investigation (FBI), Drug Enforcement
Administration (DEA) and the Bureau of Alcohol, Tobacco and Firearms
(ATF). Instead the Justice Department created the coordinating position
of the Director of Investigative Agency Policy or DIAP. The DIAP is
supposed to oversee common policies, stress ``jointness'' in
operations, and reduce redundancy. Director Freeh was appointed to this
position four years ago.
Director Freeh's testimony before the House Appropriations
Committee was televised last week, and he didn't appear too
knowledgeable about the Immigration and Naturalization Service and
investigative agency policies on fingerprints. And, I look at your
budget and we have $32 million to complete the new $130 million FBI
laboratory at Quantico, we have a new $25 million multi-year request to
rebuild DEA's own laboratories, and in the Treasury appropriations bill
we now have a $55 million new ATF laboratory proposed. And, across the
country and in my home state, the FBI is building its own new secure
offices that do not include the DEA.
What is your assessment of the effectiveness of the DIAP?
Answer. On November 18, 1993, I established the Office of
Investigative Agency Policies (OIAP) to increase efficiency within the
Department of Justice (DOJ) and to coordinate specified activities of
the Department's criminal investigative components. FBI Director Louis
J. Freeh was selected as the first Director of Investigative Agency
Policies (DIAP) from among the principals of the participating OIAP
agencies. The DIAP was charged with advising the Deputy AG and I on
criminal investigative policies, procedures, and activities that
warrant uniform treatment or coordination.
Shortly after the appointment of Director Freeh as the DIAP, an
Executive Advisory Board (EAB) was established to assist in the
development and analysis of issues suitable for the OIAP review. The
EAB consists of officials drawn from the ranks of the OIAP member
agencies. These agencies include the United States Marshal Service,
Immigration and Naturalization Service, Drug Enforcement
Administration, Federal Bureau of Investigation, and the DOJ Criminal
Division. Although they are not members of the EAB, other DOJ
components, including the Bureau of Prisons, Attorney General's
Advisory Committee, and the DOJ Office of the Inspector General,
participate in many of the OIAP's efforts. Senior level employees from
the member agencies provide staff support to the DIAP and the EAB in
fulfilling the mission of the OIAP. A Chief of Staff appointed by the
DIAP directs staff activities and serves as liaison among the OIAP
staff, DIAP, EAB, and other organizations.
Over the past three years, the OIAP has proven to be an effective
policy making and coordinating body within the DOJ as well as with
other Federal agencies. Among the achievements of the OIAP is the
development of a number of wide-ranging law enforcement policies,
including a uniform Departmental policy on the application of deadly
force; use of and payments to informants; and disclosure of impeachable
information. An item currently under OIAP review is a Violence Against
Women Act/Firearms Policy.
The OIAP has proven to be an effective means to promote interagency
cooperation. To date, the results are unprecedented and greatly benefit
our Nation's law enforcement officers and enhance the ability to combat
criminal elements. At the OIAP, partisan agency interests have been
greatly diminished and interagency cooperation has become the norm.
Question. Why can't we consolidate Federal crime laboratory
facilities? Do we really need separate FBI, DEA, and ATF laboratories?
I mean how different is ATF's explosive forensic efforts from the
FBI's?
Answer. In October 1995, at the request of Deputy Attorney General
Jamie Gorelick, FBI Director Louis Freeh directed the Office of
Investigative Policies (OIAP) to examine the consolidation of the FBI,
DEA, and INS laboratories. OIAP Resolution 11 served as the guideline
for this examination.
Resolution 11 established the Interagency Laboratory Working Group
(ILWG) to examine the feasibility of consolidating the Immigration and
Naturalization Service Forensic Document Laboratory (INSFDL) and the
Drug Enforcement Administration Special Testing and Research Laboratory
(DEASTRL) into the soon to be constructed FBI Laboratory facility.
After a three month study, ILWG unanimously agreed that collocation and
consolidation of the INSFDL and DEASTRL laboratories into the new FBI
Laboratory would not be cost effective and would not result in any
measurable cost savings to the Federal Government. Also the ILWG
believes that, under consolidation, the INS and the DEA would not be
able to maintain the same quality of service that they are presently
providing their respective agencies.
In the recommendation of the ILWG to the DIAP, the report states
``All members of the ILWG are in agreement that the consolidation would
provide minimal savings in the sharing of equipment. There would be no
savings in terms of personnel costs through consolidation and that
there would be minimal savings in terms of space considerations * *
*.'' In addition, it was the position of the ILWG that ``* * * it is
not possible under consolidation, to maintain the same important
services to the DEA and INS by their respective laboratories, if such
consolidation were to take place.''
The FBI and the BATF both conduct explosives examinations; however,
they differ in that the FBI conducts a greater variety of forensic
examinations. Accordingly, the FBI and the BATF laboratories employ
different examination protocols. In addition to the component
examination and explosives residues examinations, which are conducted
by both laboratories, the FBI Laboratory also has the unique capability
of conducting additional specialized examinations in the support of
explosives cases. These entail such things as forensic metallurgical
examinations, hair and fiber examinations, elemental analyses, nuclear
DNA and mitochondrial DNA examination, etc.
The differences in the examination protocols could be easily
addressed with the adoption of one new set of examination protocols
promulgated through the formation of a Technical Working Group. This
has been done in DNA, Latent Fingerprint, and Material Analysis. A
Technical Working Group in the area of explosives examinations is being
formed in the near future to address this and other issues.
national advocacy center
Question. Your budget includes $8.3 million to open the National
Advocacy Center in April 1998. The Center will be a skills training
center for U.S. Attorneys, other Justice Department attorneys and State
and Local prosecutors. It will train approximately 15,000 personnel,
including over 3,100 State and Local prosecutors. The creation of this
institute realizes the fulfillment of the recommendation of Attorney
General William French Smith's Task Force on Violent Crime made back in
1981. You've been there as a Local prosecutor in South Florida and you
know the need for training and for joint Federal/State training. Could
you explain your view of the need for the Advocacy Center to the
Subcommittee?
Answer. Our national law enforcement priorities are directly tied
with our State and Local partners. In order to ensure that these
priorities are addressed in a comprehensive manner, we are committed to
conducting cooperative law enforcement training. I believe that the
best place to conduct this training is at the National Advocacy Center
(NAC).
The NAC will provide, for the first time, joint training programs
for Federal prosecutors, agency attorneys and Local prosecutors in
areas where they have mutual interests, as well as a state-of-the-art
facility for conducting these training programs.
The NAC has been specifically designed as a training facility for
prosecutors. As it currently operates, the Office of Legal Education
(OLE) conducts trial advocacy training in converted office space here
in Washington, DC, and a great majority of its specialty training at
hotels in cities throughout the nation. It is very difficult to provide
quality education in makeshift accommodations. The NAC will allow us
the flexibility to increase the quality and quantity of training using
the additional capacities afforded by the facilities and technologies
available at the NAC. These include six lecture halls, ten mock
courtrooms, a conference center and a computer training facility, all
equipped with the latest technology. We will be able to produce and
edit our own videotape programs and also perform distance learning
programs from the facility.
Since 1991, when the Congress appropriated the monies to build this
facility in Columbia, South Carolina, we have engaged in a
collaborative effort with the National District Attorneys' Association
(NDAA). A cooperative agreement, which formalized our working
relationship, was executed between the NDAA and the DOJ on July 22,
1996. With this agreement in place, the enormous talent of our Federal,
State, and Local prosecutors will be shared in what, I believe, will be
the best cooperative effort between the Federal government and the
States in many years. Presently Federal, State and Local prosecutors
are working closer together than ever before. Many State and Local
prosecutors are now cross-designated as Federal prosecutors and vice-
versa. With a nationwide corps of Federal, State and Local public-
sector attorneys as a base, we can select the best and the brightest
instructors to cross-train the students of the NAC. Our plan is to work
with NDAA to enhance both of our trial advocacy courses, as well as,
develop and present joint courses on areas such as health care fraud,
telemarketing fraud, violent crime, methamphetamine labs, drug
prosecutions, and juvenile justice issues. The NAC will facilitate our
joint ability to focus on priority legal training needs on a national
scope.
At the present time, the OLE annually trains approximately 11,000
individuals. This total includes Assistant United States Attorneys
(AUSA), Department of Justice Trial Attorneys, United States Attorneys'
offices (USAO) and Department paralegal/support staff, Executive Branch
attorneys, and State and Local prosecutors. With the opening of the
NAC, we plan to increase the number of people trained to 15,000
annually including approximately 3,100 State and Local prosecutors.
The NAC is currently under construction and is scheduled for
completion in January, 1998. We are presently scheduled to begin
classes at the NAC in the spring of 1998. We have requested a budget
increase in 1998 of $8.3 million to cover the cost of moving the OLE to
the NAC, enhancing our training programs and conducting training of
State and Local prosecutors. These increases can be broken down into
three categories: Start up and operations ($2,868,000); Program
enhancements ($3,369,000); and National District Attorneys' Association
(NDAA) operations ($2,097,000).
With your continued support, I believe that the Department of
Justice in partnership with the NDAA, will continue to operate a
premier legal training institute for Federal, State and Local
prosecutors at the National Advocacy Center.
district of columbia situation
Question. The crime situation here in our nation's capital is out
of control. We've just recently had two police officers murdered.
The Department of Justice U.S. Attorneys serve as the prosecutor
here. Your budget proposes an additional 55 attorneys for criminal
prosecutions here, an increase of 26 percent. You've got my support for
this initiative. I was wondering if you could discuss it more fully.
Answer. The United States Attorney's Office for the District of
Columbia (USAO/DC) is unique among U.S. Attorney's Offices nationwide
in its dual responsibility for prosecution of violations of Federal
criminal statutes in the United States District Court and violations of
the District of Columbia Code in the Superior Court of the District of
Columbia. This Office prosecutes most violations of the D.C. Code
committed by adult offenders. (Other violations of the D.C. Code,
including offenses committed by juveniles, are prosecuted by the Office
of Corporation Counsel for the District of Columbia.) The practical
effect of this jurisdictional scheme is that the U.S. Attorney for the
District of Columbia acts as both Federal prosecutor and local District
Attorney for this district.
As the primary local prosecutor in the District, we handled over
26,000 cases in Superior Court in 1996, ranging from shoplifting and
prostitution to murder, kidnaping, child abuse and sex crimes. Criminal
charges were filed in approximately 17,000 of those cases.
There are currently 211 attorneys assigned to the Superior Court
Division of the Office to handle those cases. The request for 55
additional attorney positions for the United States Attorney's Office
for the District of Columbia includes much needed support for our
efforts to adequately address our responsibilities in Superior Court.
The infusion of new staff will allow for more manageable caseloads
(attorneys in some sections handle nearly 200 cases at one time and
schedule five to seven trials each week) and more thorough preparation
of cases by Superior Court attorneys, as well as expansion of the work
of the Division in a number of new initiative areas including,
community prosecution, domestic violence, Operation Ceasefire, gang
prosecutions and ``cold case'' murder investigations.
In addition, this Office prosecutes a number of juveniles charged
with homicide who are certified for prosecution as adults.
Community Prosecution
The number one priority for the criminal side of the USAO/DC in
1998 is the office-wide adoption of a community prosecution model. We
established the Community Prosecution pilot project (CP) in the Fifth
Police District on June 3, 1996. Nineteen Assistant United States
Attorneys work together as a team to handle the investigation and
prosecution of both local and Federal criminal matters occurring in the
Fifth District (5D). In addition, two prosecutors are located in an
office in the 5D police headquarters to be easily accessible to the
police in the District and to the neighborhood's residents.
We believe that the project has been a great success. The CP
project has done a remarkable job of focusing a variety of resources on
a particular geographic area of the city in a new and dynamic way. We
also believe that our cooperative efforts with the 5D community have
begun to reap real rewards. We intend to expand CP to each of the seven
police districts in the District of Columbia, and have established a
committee to plan how and when to implement this model office-wide.
However, the CP model is very resource intensive. Rather than
processing criminal cases in an ``assembly-line'' fashion, this model
contemplates careful review of each case in the larger context of the
affected community. Thus, final implementation of a city-wide community
prosecution approach is dependent upon enactment of the requested
increase for 1998. The budget requests 39 new Assistant positions
specifically for expansion of the CP project.
Domestic violence
Each year, over 6,000 criminal cases involving some form of
domestic violence are referred to the USAO/DC for prosecution. These
cases involve not only violence against women, but spousal and partner
abuse, intrafamily child abuse, sibling abuse and elder abuse. The U.S.
Attorney's Office and the D.C. Superior Court, along with numerous
other organizations and agencies, signed a Domestic Violence Plan which
envisions a multidisciplinary and comprehensive approach to combating
domestic violence in the city.
Toward that end, this Office has created a Domestic Violence Unit
within the Superior Court Division which will be staffed with trained,
dedicated personnel who will vertically prosecute all of the Office's
domestic violence cases, including violations of the Violence Against
Women Act. The Unit is currently staffed by four misdemeanor-level
prosecutors who carry caseloads of approximately 200 cases pending
trial. The Office has delayed expanding the unit to include felony
cases because of staff shortages. Approximately 20 felony domestic
violence cases come to the Office every month. The fiscal year 1998
President's Budget request includes an additional five prosecutors to
specialize in domestic violence. This will allow the Office to begin
vertical prosecution of felony cases and to accommodate the monumental
increase in misdemeanor domestic violence prosecutions that has
developed over the last year.
Operation Ceasefire
This comprehensive law enforcement initiative established by the
USAO/DC with the Metropolitan Police Department (MPD) and the Bureau of
Alcohol, Tobacco and Firearms (ATF), is designed to significantly
reduce the occurrence of gun-related violence within the District of
Columbia. The Ceasefire partners have joined forces to: decrease the
number of illegal firearms on the streets of the District of Columbia
by increasing efforts at interdiction and seizure; increase the
penalties for firearms related offenses; improve the intelligence base
for law enforcement by requiring a debriefing as a condition precedent
to plea negotiations; and educate young people about the dangers
associated with firearms through outreach programs in schools and other
organizations.
Since the inception of Operation Ceasefire, firearm seizures have
increased to record levels. In addition, legislative initiatives have
increased the statutory penalty for pistol possession from a
misdemeanor to a felony. Due to inadequate staffing at the U.S.
Attorney's Office, however, the initiative has fallen short of its
goals with respect to creating an intelligence bank and educating young
people about the destructive power of firearms. The fiscal year 1998
President's Budget requests three additional attorneys for this effort.
Gang Prosecutions
We have determined that the increase in violent crime in the
District of Columbia over the past decade is due largely to the rise of
gangs and gang-related violence. Gang investigations and prosecutions
constitute a highly specialized area of law enforcement. Such
investigations are extremely complex, resource intensive, and long
term. Effectively investigating and prosecuting a violent gang often
requires the efforts of at least one full-time attorney on that
project, working with an investigative team of local and Federal law
enforcement officials. The fiscal year 1998 President's budget proposes
the addition of five attorneys specifically for this purpose. Those
resources would be used to create a Gang Prosecution Unit or to assign
gang specialists to each of the Office's geographically based sections,
if we move to office-wide implementation of the Community Prosecution
model. They will be tasked with the identification, analysis,
investigation, and prosecution of violent gangs throughout the City. We
believe that, with these resources, we can target twelve of the most
violent gangs in the District of Columbia for prosecution and make
headway into combating the violence spawned by gang activity.
Unsolved Homicide Case Investigation Squad
Over the past ten years, Washington, D.C. has experienced a
tremendous increase in violent crime, and, for several years, has had
the highest per capita murder rate in the country. Less than 60 percent
of these murders have actually been solved by arresting and prosecuting
a suspect. To work on the problem of ``cold cases,'' the FBI and the
MPD created the ``Cold Case Squad'' consisting of ten FBI agents and
eight MPD homicide investigators whose mission is to analyze,
investigate and solve old, difficult cases. This squad has been
enormously successful in solving these case and, in the process, has
generated an enormous amount of investigative work to be handled by
prosecutors in the Office's Homicide Section. However, we have been
unable to devote sufficient resources to the initiative to allow us to
play a more integral role in the investigation and prosecution of these
cases. We believe that the involvement of a prosector is essential in
order to secure cooperating defendants, an essential element in many of
these prosecutions, and to facilitate greater cooperation between
Federal and local law enforcement agencies in this important endeavor.
The fiscal year 1998 President's Budget request includes the addition
of three attorneys to the staff of this Office to allow for the
creation of a ``Cold Case'' Squad for this purpose.
Question. On the same topic, where do we stand relative to the
Justice Department taking over the city's prison system? Isn't that the
option that the President has come out in support of?
Answer. Under the President's National Capital Revitalization and
Self-Government Improvement Plan, the Federal Government would take
responsibility for housing the District felons sentenced to a term of
incarceration. In preparation for this shift, Representatives of the
Office of Management and Budget (OMB), Department of Justice (DOJ), and
District of Columbia (D.C.) Government are developing the Memorandum of
Understanding (MOU) between the Federal Government and the Government
of the District of Columbia on criminal justice matters. The MOU will
set forth the expectations and responsibilities relating to the changes
proposed in the District of Columbia criminal justice and judicial
system.
lorton
Question. Is the proposal for the Bureau of Prisons to operate the
Lorton complex or build new prisons, and how would this be financed?
Answer. Recent Congressionally mandated studies confirmed that most
of the facilities at the Lorton Complex have outlived their life-cycles
and need to be replaced, but several others at Lorton remain in good
working condition and can be re-used. The proposal permits both
renovation of a small portion of the Lorton Complex and construction of
new facilities at Lorton and other locations as necessary. The
absorption of sentenced D.C. inmates would increase the BOP population
by approximately 10 percent. However, our system is critically
overcrowded in its medium and high security facilities, and 72 percent
of the D.C. felons require medium or high security facilities. Thus,
the BOP could absorb sentenced D.C. felons only after Lorton is
renovated and new facilities are constructed at Lorton and other
locations.
The renovation and new construction costs would be financed through
new resources provided by Congress and operations funding will be
requested for BOP during the transition period.
subcommittee recess
Ms. Reno. Thank you.
Senator Gregg. Thank you very much, Madam Attorney General.
Ms. Reno. And I will call and make an appointment to come
up and talk to you about terrorism.
Senator Gregg. Great.
Ms. Reno. Thank you.
Senator Gregg. The hearing is recessed.
[Whereupon, at 11:40 a.m., Wednesday, March 12, the
subcommittee was recessed, to reconvene subject to the call of
the Chair.]
DEPARTMENTS OF COMMERCE, JUSTICE, AND STATE, THE JUDICIARY, AND RELATED
AGENCIES APPROPRIATIONS FOR FISCAL YEAR 1998
----------
THURSDAY, MARCH 13, 1997
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 1:52 p.m., in room S-146, the
Capitol, Hon. Judd Gregg (chairman) presiding.
Present: Senators Gregg, Stevens, Domenici, Inouye,
Bumpers, and Lautenberg.
DEPARTMENT OF COMMERCE
Secretary of Commerce
STATEMENT OF HON. WILLIAM M. DALEY, SECRETARY
ACCOMPANIED BY:
RAYMOND G. KAMMER, JR., ACTING CHIEF FINANCIAL OFFICER/
ASSISTANT SECRETARY FOR ADMINISTRATION
MARK E. BROWN, DIRECTOR, OFFICE OF BUDGET
opening remarks
Senator Gregg. This is great. The Secretary is early, and
that is wonderful. We appreciate that. I would hold the hearing
pending the arrival of Senator Hollings, but I understand he is
on the floor, so he probably will not be coming, in any event,
until later. In order not to inconvenience the Secretary, who
has been kind enough to show up here not only on time, but
early, and give us his time, I think we should get started. Mr.
Secretary, the floor is yours.
summary statement
Secretary Daley. Thanks very much, Mr. Chairman. Let me
introduce the two people who are with me. Ray Kammer, who is
our Acting CFO and Assistant Secretary for Administration, and
Mark Brown, Commerce Department Budget Officer, are joining me
today.
Let me go through my remarks, Mr. Chairman. I appreciate
the opportunity to appear on behalf of the President's fiscal
year 1998 $4.22 billion budget request for the Department of
Commerce. Our budget represents and supports our programs that
are at the foundation of our economic growth, job creation, and
our global competitiveness. It reflects the President's vision
for our Nation as we approach the 21st century and builds on
the fine work of my predecessors, Mickey Kantor and Secretary
Brown.
The fiscal year 1998 budget request for the Department of
Commerce is an increase of $466 million over the fiscal year
1997 level. Our budget growth is in three main areas: the
decennial census, ongoing weather modernization efforts, and
technology investments.
Outside those three critical areas, the Department's budget
stays flat from fiscal year 1997, and even with this increase,
our budget remains the smallest of any Cabinet agency. And
perhaps most important, it is fully in line with the
President's commitment to a balanced budget in the year 2002.
Our 1998 allocation recognizes the role which Commerce
plays in helping to spur our economic growth. To fulfill the
priorities of this Department, we will, No. 1, aggressively
promote export promotion and trade law enforcement. On the
global economic stage, our Department works to open markets,
promote exports, and enforce our existing trade agreements. We
will advocate on behalf of American firms while heading off
unfair trade practices.
With our new trade mission criteria in place, we will once
again help the private sector capture growing business
opportunities abroad in the face of fierce foreign competition.
Also, I would like the chairman and members of the committee to
know that I am committed to being an active chairman of the
Trade Promotion Coordinating Committee [TPCC] and will work to
ensure that the TPCC plays a central role in improving trade
finance and export promotion activities, beginning with the
TPCC steering group meeting, which I will hold before the end
of the month.
No. 2, technology for economic growth. Technology and
innovation, the elements of our winning economy and the keys to
the global economy of tomorrow, are still our top priorities.
This administration has long considered the private sector a
partner in keeping us on the cutting edge, and gone are the
days of a decade ago when our competitors put technology which
we developed to better use than we did.
No. 3, expanding opportunity for all Americans and all
communities. Being strong and ambitious abroad means little if
we cast a blind eye toward the workers, businesses, and
communities here at home. Commerce will continue to work with
the economically distressed communities and promote minority
entrepreneurship to establish businesses and jobs that are the
cornerstones of our neighborhoods and communities.
Performing the best census in our Nation's history,
Commerce will be generating economic data analyses that are
thorough market studies of an ever shifting global economy. The
2000 census is the most important of those statistical
analyses, and not just because it will add to our competitive
advantages and decide everything from congressional
representation to budget apportionment. The census goes, in my
opinion, to the very heart of what Government does. It is in
many ways the most direct contact which people will have with
their Government. We can serve America well, reestablishing the
reasons for the faith in our Government, and prove wrong those
who are cynical about bipartisanship by working together to
conduct a decennial census that is accurate, fair, cost
effective, well-managed, and free of partisan politics.
I look forward to working with you, Mr. Chairman, and this
committee and the entire Congress to fulfill that mandate.
Our resource management and environmental stewardship.
Commerce has a critical role in resource management and
environmental monitoring and prediction responsibilities. This
budget request will allow America to manage our resources to
compete for the future. Most people think that natural
resources at Commerce means only fisheries, but in addition to
this multibillion dollar industry that employs thousands, our
resource and weather work helps industries like shipping,
airlines, and agriculture, all of which are multibillion dollar
exporters and employers in their own right, to operate safely
and efficiently.
Like the rest of the Federal Government, the Commerce
Department is doing more with less. Over the past 6 months, the
Commerce staff has been reduced by 3 percent, continuing a 4-
year trend in personnel decreases. The number of political
appointees will be reduced by nearly one-third by the end of
this year, and management layers have been eliminated and more
staffers are working in field offices.
To help our streamlining efforts, Commerce has several
innovative management initiatives underway. While not
principally a regulatory agency, we remain focused on ensuring
that all regulations in the Department maximize benefits while
placing the smallest burden on those whom we regulate. The
Bureau of Export Administration has taken a new look at its
regulations, as has the National Oceanic and Atmospheric
Administration, which is revising and updating its marine
resource regulations, eliminating over 400 pages of them, and
EDA has eliminated over 200 of the 370 regulations.
I am determined to continue this reform effort to make sure
the same efficiency and productivity that America's private
sector has embraced finds a home at Commerce.
I hope with your help, Mr. Chairman, to establish the
Patent and Trademark Office as a performance-based
organization. This would allow Commerce to run the PTO more
like a private-sector business operation, with flexible
procurement, simpler personnel rules, and accountability
through a CEO. Doing this requires a legislative approval, but
in the hope of helping this process along, we have submitted a
new reprogramming proposal to the committee and your House
counterparts that would separate PTO policy functions from
operations.
I would also like to take a look at the Advanced Technology
Program to see how it can be strengthened. I believe ATP is a
critically important program that provides enormous benefits to
our Nation's long-term economic prosperity. ATP projects play a
special role in fostering technological developments with long-
term payoffs and widespread benefits to the economy. The
President's budget provides strong support to this program.
Since becoming Secretary, I have heard a number of
questions which have been raised by you and by others about the
budget process, about the ratio of new projects to old, about
big companies putting grants outside a consortium, about
whether applicants first go to the private capital markets for
funding, and also whether States which lack strong R&D bases
should have a better chance of participating in this program. I
would like to take a look at these questions in regard to the
fiscal year 1998 budget and ask my staff to consult with public
and private experts and ATP participants to prepare an analysis
for me. I would be glad to have the advice of the committee on
these issues and would like to get back to you within 60 days
with our conclusions.
Because I also have concerns that there is duplication
among the various divisions of ITA, I have asked for a
reorganization of the ITA to accomplish the following: reduce
administrative costs, eliminate redundant functions, strengthen
our priority programs, such as the Trade Compliance Center, and
move forward with more export assistance and trade advocacy
resources out of our headquarters and into the domestic and
field offices, and overseas offices. I would also like to put
the criteria that drive the Malcolm Baldrige National Quality
Award, which rewards the best in private-sector management
practices, to work at our Department, beginning with two of our
most publicly accessible and visible agencies--PTO and the
National Weather Service.
prepared statement
Also, Mr. Chairman, finally, with an eye on the fiscal year
1999 budget, I have ordered a comprehensive management review
for the entire Department. A team from my office will examine
all of our programs to guarantee that Commerce is giving
America a real return on the dollars which the taxpayers invest
with us, our work and our workers. In the end, the same
productivity and practicality that has helped our Nation take
the lead in the global economy should be applied to the
Commerce Department.
Thank you, Mr. Chairman. I look forward to answering your
questions.
[The statement follows:]
Prepared Statement of William M. Daley
Mr. Chairman and members of the Committee, I am happy to appear
before you today, to discuss the President's vision for the Nation's
future and to talk about how the Department of Commerce is a critical
part of that future. I'll also describe how our budget for fiscal year
1998 will help make the President's vision become a reality.
I'll outline our budget request in a moment, Mr. Chairman, but
first I want to talk about the vital importance of the economic growth
and job-creation priorities which Commerce supports, and which are so
central to this Administration's vision for America's future.
In his State of the Union message, the President stated: ``Over the
last four years, we have brought new economic growth by investing in
our people, expanding our exports, cutting our deficits, creating over
11 million new jobs, a four-year record.'' The Administration and the
Congress should be proud of these accomplishments, but you and I both
know that we should not pause in our efforts to ensure that our Nation
retains its pre-eminent position in the global marketplace. The
President continued: ``We face no imminent threat, but we do have an
enemy. The enemy of our time is inaction.''
I agree with that statement, Mr. Chairman, and at the Commerce
Department we are doing our best to help the private sector expand the
Nation's economy even further. The overriding goal of the Department of
Commerce is an action-oriented one, and it is stated clearly in our
Mission Statement: ``To promote job creation, economic growth,
sustainable development, and improved living standards for all
Americans''. We do this by working in partnership with business,
universities, communities, and workers.
Last year, Commerce programs provided significant benefits for the
Nation's economy and contributed to our world leadership roles in
trade, technology, and science. The economy has been strong for the
last 4 years: the private sector grew at an annual rate of 3.3 percent,
exports are at a record high, and nearly 11.8 million jobs have been
created. Much of this growth came in small- and medium-sized
businesses, which continue to be the focal point for Commerce's trade
development, export assistance, and technological development programs.
Commerce's emphasis this year has been on streamlining and focusing
our programs to provide maximum support to American communities,
businesses, and families in more effective ways--``one-stop-shops''--
and using new approaches--World-Wide-Web sites, and CD-ROM
technologies. We're stressing that kind of customer focus all across
Commerce, and I'll be providing examples today of how we've been able
to re-shape our programs in order to serve the Nation as a whole, and
our specific customers, more directly.
The fiscal year 1998 budget request for the Department of Commerce
is $4.22 billion, an increase of $466 million over the fiscal year 1997
level of $3.76 billion. Even with this increase (much of which is
required for Decennial Census preparations), Commerce's budget remains
the smallest of any Cabinet agency. Full-Time Equivalent (FTE)
employment in fiscal year 1998 will increase to 38,298 over the fiscal
year 1997 level of 34,937, also largely for Decennial Census needs.
This budget request is fully in line with the President's
commitment to a balanced budget in 2002. The fact that the President
has proposed this increase, even within the very tight constraints
necessary to meet the President's commitment, is testament to
Commerce's effectiveness as a catalyst for the Nation--spurring
economic growth and development, technology and infrastructure
investment, and environmental and resource stewardship. And I fully
agree with the President's position on the balanced budget amendment--
I, too feel that the Nation would suffer if the Federal government's
critical flexibility to respond to pressing needs and to provide
essential programs and services were held hostage. By working together,
we can attain the goal of balancing the Federal budget by 2000 without
a Constitutional amendment.
The Commerce Mission which I mentioned a moment ago is supported by
three interdependent themes which encompass our programs: Support for
the Nation's Economic Infrastructure, Support for the Nation's Science,
Technology, and Information Initiatives, and Support for the Nation's
Resource Management and Stewardship Responsibilities. In pursuing our
mission, Commerce will be following several priorities, which I'll be
focusing on in the months ahead:
--Aggressive Export Promotion.--Commerce has programs which promote
exports, identify new market opportunities, advocate for U.S.
firms, and emphasize small and minority-owned firms and
enforcement of existing trade agreements.
--Technology for Economic Growth.--Innovation is a key source of our
economic growth, and Commerce supports the private sector in
accelerating the application of critical technical innovation.
--Expanding Opportunity for All Americans and All Communities.--
Through EDA and MBDA, Commerce strengthens the ability of
communities to have strong local economies and participate in
the global marketplace.
--Performing the Best Census in Our Nation's History.--Commerce
produces demographic and economic information which is the
basis for Congressional apportionment and the allocation of
Federal funds. Commerce data provide insights into the American
marketplace and the changing nature of our economy and people.
And I support our plan for Census 2000 as the only way to hold
down costs and improve the accuracy of the Decennial Census.
--Resource Management and Environmental Stewardship.--Commerce has
critical resource management and environmental monitoring and
prediction responsibilities, affecting billions of dollars of
economic activity each year.
--Accountability and Results-Oriented Management.--We must ensure
that the public investments in Commerce Department programs are
helping to build long-term economic growth. Commerce has made
valuable contributions to our current economic prosperity.
--Building Partnerships with America's Businesses and Communities.--
Commerce works with businesses and communities not just through
our programs, but also through a constant dialogue of listening
and exchanging ideas.
Let me now discuss our key bureau programs and their requests for
the coming year. I also want to share with you some real-life examples
of how our programs are accomplishing their goals and are helping
American businesses and communities.
The International Trade Administration (ITA) remains at the
forefront of the Administration's efforts to boost the economy and
support more high-wage, high-skilled jobs, by increasing the sales of
American goods and services in the world marketplace. ITA's request of
$272 million will continue support for the Administration's Big
Emerging Market initiative, support for small- and medium-sized
businesses through the Export Assistance Centers and for larger firms
through the Advocacy Center, and fund our responsibilities as a
participant nation in the Uruguay Round and NAFTA.
Advocacy for American exports is one of the prime responsibilities
of the Commerce Department, and these efforts are paying off
dramatically on behalf of the Nation's businesses and workers. Some $65
billion (including $38 billion in American content exports) were
generated from our advocacy efforts in 1995 and 1996.
As Secretary of Commerce, I chair the Trade Promotion Coordinating
Committee, which focuses the Federal government's response to foreign
competition. My first meeting as Chair will take place in the next few
days. During my tenure, I will work to ensure that the TPCC remains an
effective vehicle for coordinating these crucial programs supporting
our economy.
So much of our Nation's $835 billion in exports come from small and
medium-sized companies. Rocket Man, Inc., of LaGrange, Kentucky is a
16-person company that produces mobile beverage systems used at
amusement parks, festivals, and sporting events. In 1993, Rocket Man
realized there was an export potential for their products, and
contacted ITA. When they began exporting, sales grew 300 percent
between 1993 and 1994, and 225 percent the following year. ITA helped
find overseas distributors, refine an export strategy, set prices, find
language interpreters, and refine their information needs. The company
president said of ITA's support: ``It's invaluable, instead of having
to make mistakes on my own. When you have someone you can call, it can
bring [essential information] up [to] companies like ours with little
or no experience, where otherwise it would take years'' for small and
medium-sized companies to develop on their own.
ITA has also helped Petrotech of Belle Chase, Louisiana, which
designs and manufactures microprocessor controls for turbomachinery.
Petrotech's president told us how ITA's New Orleans office helps his
120-person company, especially in the face of foreign competition: ``We
battle in practically every sale against the customer, the customer's
government, the competitors, and the competitor's government * * *. ITA
helps us get the answers to questions on the legality of sales, sending
proposals, and making quotes * * * [Commerce's] data base about area
exporters is astonishing, and provides a networking catalyst not
available elsewhere.''
I am considering ways to reorganize ITA, to reduce administrative
overhead, address concerns about political appointees, and put more
personnel in the field.
The Bureau of Export Administration (BXA) helps implement the
Nation's foreign policy and national security goals by enforcing export
controls over dual-use goods and technologies. BXA's request of $43
million includes $2 million to fund their new responsibilities under
the Chemical Weapons Convention (CWC) treaty and $1 million for
implementation of the Presidential initiative on encryption.
The Administration strongly supports ratification of the CWC, in
the best tradition of bipartisan foreign policy, and wants to ensure
that our Nation retains its world leadership role in controlling these
weapons. We believe the U.S. should be one of the original members of
the treaty when it enters into force. The CWC will help further the
cause of global peace, and if ratified, it will go into effect on April
29, followed by a 30-day implementation period.
In my view, failure to ratify the treaty is not a realistic option.
It was proposed and negotiated under the Reagan and Bush
administrations, and all of our G7 partners have ratified it. The CWC
treaty enjoys widespread international support, as well as the backing
of the U.S. chemical industry--the Chemical Manufacturers' Association
and other major trade groups. From an economic perspective, our
Nation's chemical industry would be subject to trade sanctions that
apply to non-member pariah states. Commerce will play a lead role in
minimizing burdens on industry and maximizing protection of company-
confidential information. Based on our excellent working relationship
with the chemical industry, I am confident that they trust us to
represent their, and the Nation's, best interests.
BXA has been of great help to the 80-year old Entwistle Company (of
Ft. Worth, Texas, and Hudson, Massachusetts), designers and
manufacturers of ordinance parts. Larry Hove, Entwistle's Vice-
President, said: ``Through a chain of events, we sold a few million
dollars worth of products that we wouldn't have sold if we hadn't
participated [at a defense show in Paris] * * *. The value [of BXA] for
me is that I have someone who I can talk to who has a global view of
what's happening in the defense world. We don't have people on the
ground in any place.''
The Economic Development Administration (EDA) assists communities
across the country in recovering from economic difficulties, most often
by establishing the infrastructure that will enable them to generate
and retain jobs, and thus create self-sustaining economies. EDA also
maintains the flexibility to respond to high-priority or unexpected
needs, ranging from natural disasters to the closing of military bases.
EDA has undertaken significant management reforms and has undergone a
comprehensive reorganization to ensure efficient and effective program
implementation. EDA's $343 million request includes funding for the
Public Works grant program, which will yield thousands of new jobs in
distressed communities. In this session of Congress, the Administration
will submit a legislative proposal to re-authorize EDA's programs.
EDA helped develop the West Virginia Wood Technology Center in
Elkins, completed in 1993, which provides training in log and lumber
grading and inspection, profile knife grinding, kiln drying, and
related technologies to workers in a 5-state region. The Center's
success has helped the host county's unemployment rate drop two-thirds.
Seven companies are expanding into new product markets, and at least
one (and up to seven) out-of-state companies are relocating into the
county to take advantage of the skilled labor force.
EDA is one of the Commerce bureaus that is moving ahead on finding
ways to measure the impacts of its programs in new ways. EDA has
developed and implemented a performance measurement system for its
programs which, over time, will generate outcome information on the
economic impact of their projects in distressed communities. The
measures, which include job creation and private sector leveraging,
will evidence the return on the Department's investments in the
economic growth of the nation.
The National Telecommunication and Information Administration's
(NTIA) request of $54 million will support a $14 million increase to
the high-priority and highly-competitive Telecommunications Information
and Infrastructure Assistance Program, which supports computer access
and literacy to serve educational, medical and other social needs in
every state. NTIA's funding request also provides for the United
States' participation in the International Telecommunication Union
Plenipotentiary Conference, and for a new initiative supporting
telecommunications privacy.
The National Technological University in Ft. Collins, Colorado, is
a private, non-profit, accredited institution providing graduate
degrees in 14 engineering disciplines, using faculty of 47 U.S.
universities. NTU was formed in 1984, and is the first university in
the world to operate a regular education service on a
telecommunications satellite. Its use of telecommunications and video
technology allows engineers to earn degrees and keep abreast of new
developments in their fields without stopping work to go back to
school. Dr. Lionel Baldwin, President of NTU, said: ``Commerce has been
the only part of the Federal government that has participated in any
significant way * * *. NTIA provided critical start-up funds for
equipment to launch NTU and continued this support during the initial,
very rapid growth period.''
The Minority Business Development Agency (MBDA) seeks $28 million
to continue addressing the critical needs of the Nation's minority
business communities. In 1998 MBDA will continue its reinvention
strategy which calls for the coordination and mobilization of public
and private resources and building business capacity within local
communities across the country. MBDA's 1998 request includes funds to
support both new and existing programs--a revamped management and
technical assistance effort including service delivery through
Internet, and projects developed jointly with the Small Business
Administration. Last year, a major revision was made to the Minority
Business Development Center (MBDC) program. MBDA now grants ``bonus
points'' to local applicants in the competitive award process and
requires a 40 percent cost share.
Spatial Data Integrations, Inc., of Louisville, Kentucky is a
minority-owned company which provides mapping and digital data
conversion services to government, utilities, and private sector
businesses. As a contractor and subcontractor for the Department of
Defense, for example, they produce topographical and hydrological maps,
and specialize in describing the relationships between items on those
maps. They have been bidding on projects for the local transit
authority and utility companies, as a way to expand business. Audwin
Helton, company President, has said that the local Business Development
Center helped him develop business and financial plan that he ``could
take to the bank''. With this help, the company has expanded from 4 to
13 employees. He said: ``They've helped me with proposal writing and
basic business advice which I still seek out regularly. They treat
everyone with respect.''
Field Lining Systems of Glendale, Arizona, is a minority-owned
company that supplies and installs linings for tanks, ponds, and
landfills. They buy information about business leads from MBDA's
Phoenix Business Development Center at a rate that this small company
can afford, and then use this information for bidding on jobs in nine
western states, including Alaska. They came out of Chapter 11 in 1991,
have been growing ever since, and hope to expand into the Mexican
market.
Also in his State of the Union address, the President said: ``To
prepare America for the 21st century, we must harness the powerful
forces of science and technology to benefit all Americans.'' The United
States remains the world leader in many aspects of science, technology,
and information, and the Department of Commerce is instrumental in
helping the Nation maintain that leadership role. The $9.2 million
funding request for the Under Secretary for Technology/Office of
Technology Policy (US/OTP) will support the Experimental Program to
Stimulate Competitive Technology (EPSCoT) initiative, and a new series
of economic and technology development programs in support of the
Administration's foreign policy efforts. EPSCoT seeks to foster
regional technology-based economic growth by creating stronger linkages
among companies, universities, and governments in States traditionally
under-represented in Federal R&D funding.
The National Institute of Standards and Technology (NIST) requests
$692.5 million for fiscal year 1998. This will allow for several new
competitions in the Advanced Technology Program (ATP), which stimulates
promising, but high-risk, enabling technologies that can form the basis
for new and improved products, manufacturing processes, and services.
This funding will also maintain our nation-wide network of
Manufacturing Extension Partnership (MEP) service providers, which
enhance the global competitiveness of thousands of smaller-sized
manufacturers. The Malcolm Baldrige National Quality Award program has
been a national success, and will be expanded to cover education and
health care, two large and critical areas of the national economy which
are not currently served by the award.
The NIST laboratories are a key part of the Department's technology
programs. These labs develop and supply companies, universities,
hospitals, and other organizations with essential measurement know-how.
They develop otherwise unattainable tools that ensure confidence in the
growing number of measurements demanded by the technically complex
affairs of commerce, science, engineering, health, safety, defense, law
enforcement, and the environment. ``NIST quality'' measurements are
part of a universal technical language linking U.S. companies and
institutions to the rest of global economy. As part of its extensive
ongoing program evaluation process, NIST conducts impact studies of the
measurement-related infrastructure it provides to the U.S. economy.
These studies are one mechanism the Department will use to demonstrate
its performance under the requirements of the Government Performance
and Results Act, a vital law that I'll discuss in more detail later on.
In one of these studies, U.S. makers of coordinate measuring
machines (including: Brown & Sharpe Mfg. Co. of North Kingston, Rhode
Island; Giddings & Lewis Inc. of Fond du Lac, Wisconsin; and The L.S.
Starrett Co. of Athol, Massachusetts) credit NIST with saving them 5-10
years in early-stage research. Firms also attributed annual production-
efficiency gains--ranging from 10-30 percent between 1985 and 1988--to
NIST's pioneering work on computer-based, error-compensation methods.
The technology enabled them to produce lower cost designs without
sacrificing performance. In all, the effort is estimated to have
produced first-level benefits totaling more than $93 million. Generated
by an initial NIST investment of $430,000 over 10 years, this total
does not include scrap reduction and other secondary benefits realized
by manufacturers because of the increased accuracy of their inspection
equipment.
The legislative mandate of the ATP is to promote ``commercializing
new scientific studies rapidly'' and ``refining manufacturing
practices.'' This offers a tremendous scope of opportunity to spur
America's creative technology energies. The objective of some projects
is to develop technologies that enable lower cost, higher quality, or
faster-to-market products. The ultimate objective of others is to
develop the know-how to provide new-to-the-world or radically improved
products and services. The ATP has a high potential impact on U.S.
economic growth because, unlike other Federal technology programs, it
makes investments explicitly for this reason rather than for some other
National goal.
One example of this is Nanophase Technologies Corporation of Burr
Ridge, Illinois, a 2-person start-up company that received an ATP award
to develop an innovative process for producing ultra-fine ceramic and
metal powders at the nanometer scale for applications ranging from skin
care products to high performance engine parts. Their ATP research
enabled the company to attract support from major industrial
organizations and venture capital firms, who furthered commercial
development. The company has launched new products, and negotiated an
agreement with E. Merck for international distribution of one early
project this year. The early applications are projected to yield more
than $20 million in annual revenues within three years, and more
products are in development. The company has opened the world's first
facility devoted to commercial-scale production of nanocrystalline
materials, and expects to employ several hundred workers within the
next two years. ``All of this represents huge progress and success for
NTC,'' says Robert Cross, CEO and President of the company, ``and it is
directly the result of the challenge and support of the Advanced
Technology Program.''
I also want to take a look at the ATP program to see how it can be
strengthened. I believe ATP is a critically important program that
provides enormous benefits to our Nation's long-term economic
prosperity. ATP projects play a special role in fostering technological
developments that have long-term payoffs and widespread benefits to the
economy--the kind of initiatives that would otherwise not be funded by
the private sector. The President's budget provides strong support for
this program.
Since becoming Secretary, I have heard a number of questions
raised--by you as well as by others--about the program and its funding.
I am committed to examining questions that have been raised--about the
budget process, about the ratio of new projects to old ones, about big
companies winning grants outside of consortia, about whether applicants
first go to private capital markets for funding, and about whether
States lacking strong R&D bases should have a better chance of
participating in this program. I want to look at all of these
questions, and I've asked my staff to consult with public and private
experts and ATP participants and prepare an analysis and
recommendations for me. I would be very glad to have the advice of this
Committee on these issues (and will be back to you within 60 days with
my conclusions).
Before I complete my discussion of NIST this morning, I want to say
that I am very impressed by the quality movement in the private sector.
Through the Malcolm Baldrige Quality Award, I have already had the
chance to meet some of the best and brightest in the private sector. It
is clear that Quality Management works, and I want to apply those same
principles to the Department of Commerce as much as possible. The
advice that one of the leaders of the quality movement in the private
sector gave me was to start by creating some ``islands of quality'' and
then build on them. I've selected two organizations in the Department
to be our first ``islands of quality''--the Patent and Trademark Office
and the National Weather Service. Both of these agencies deal with the
American public on a daily basis, so their quality improvements should
immediately benefit our citizens.
The Patent and Trademark Office (PTO) promotes industrial and
technological progress in the U.S. by administering the laws relating
to patents and trademarks, strengthening the protection of intellectual
property rights, and advising on the trade-related aspects of
intellectual property. In fiscal year 1998 the PTO requests a budget of
$656 million, all of which is derived from user fees. The PTO's
appropriation request, however, provides that $92 million in patent
fees will be retained in the Treasury for deficit reduction.
Fogarty Research and Development of Portola Valley, California,
designs and develops medical devices, and has acquired 60 patents on
its products. Company founder and president Thomas Fogarty, M.D.,
depends on PTO to bring critical time and cost savings, and valuable
technical opinions, to his products and production methods. He says:
``By our interaction with PTO, we can learn ways that we can change the
design or the claim and make it protectable * * *. I could potentially
have 2-3 engineers working on a project accumulating bills at the rate
of $30,000.''
The Economics and Statistics Administration (ESA) seeks $52
million, a modest increase that will pay large dividends in improving
the statistics that are essential to tracking and understanding the
Nation's growing and changing economy. ESA's priority is to implement
the next steps in the Bureau of Economic Analysis's (BEA) strategic
plan for improving the quality of GDP and other economic data and for
re-engineering its antiquated computer systems. Although BEA has made
good progress in implementing its plans in recent years, it has done so
by eliminating important (but lower priority) statistical programs.
Much work remains and further cuts would compromise the quality of our
most basic measures of economic performance.
In decrying the ``lack of investment in our statistical
infrastructure'' in recent years, the National Association of Business
Economists said in a recent press release that the statistics produced
by BEA and Census ``are vital to the functioning of our market economy.
Businesses make decisions about where to locate a plant, how much to
produce and how much to pay their workers based on [the] data * * *.
Participants in financial markets make investment decisions which in
turn affect interest rates, the stock market and the value of the
dollar. These data also serve as critical inputs into the formulation
of monetary, fiscal and trade policy. In short, the quality of our
economic statistics impacts the lives of every American.''
The Census Bureau measures the demographic and economic character
of the Nation. The Census Bureau's fiscal year 1998 request totals $661
million. In 1998, we will accelerate the implementation of our plan for
a 2000 Census that is cost effective and accurate--a ``one-number''
census that is right the first time. In addition to partnerships with
State and local governments, easy-to-read and return forms and the use
of cutting-edge technology, I support the use of statistical sampling
in 2000 in order to hold down costs and increase the quality of the
Decennial Census. Sampling has been endorsed by some tough audiences--
the National Academy of Sciences, GAO, and our own Inspector General.
The Bureau has other cyclical census activities, and additional
portions of the request will be devoted to conducting the Economic
Censuses, which are performed every five years. The vital economic data
they produce are the foundation for all of our economic statistics for
the next five years. As with BEA, the Census Bureau has had to
eliminate important (but lower priority) activities to live within
funding constraints. Further cuts in the Economic Censuses would
seriously compromise the quality of this endeavor.
Census data give insight into our Nation's local markets. For
example, the Latin American Economic Development Association (LAEDA) of
Camden, New Jersey, uses Census data to help train local entrepreneurs
in commercial real estate and small business creation, and it focuses
on the development of effective business plans and the key role that
Census data play in them. LAEDA has increased its 9-week training
programs from 2 to 3 per year, because of increased demand. Alfonso
Castillo, Director of Training and Technical Assistance, said: ``People
walk away [after completing our training program] with a good idea of
what data are available, how it can be used, and how it will help their
business. It has worked very well''.
B&B Organic Compost & Soils, Inc. of Durham, North Carolina, with a
patented method of converting stumps and wood waste to organic topsoil,
also benefits directly from Census data. The firm is expanding by
granting franchises on its process around the country, and charges
royalties on the basis of local population data. Company founder and
president Bill Andrews says that Census staff are ``super nice'', and
the data he gets from them are available in a hurry and just what he
needs.
NOAA remains the largest component of the Commerce Department, with
a request of $2 billion for fiscal year 1998. This net figure contains
a number of offsetting priority increases, as well as decreases in
programs that are attaining their goals and therefore can be eliminated
or continued at reduced levels. Nation-wide modernization and
restructuring of the National Weather Service continues, with the
initial deployment of the Advanced Weather Interactive Processing
System (AWIPS) and operational streamlining of activities under the NWS
Modernization and Associated Restructuring initiative. These
initiatives will produce more timely warnings of severe weather and
accurate weather forecasts. Restoration of American fisheries and the
protection of species in danger of extinction will continue to be a
priority. One major change included in the NOAA budget for fiscal year
1998 is the way in which capital assets, such as environmental
observing systems and facilities, are budgeted.
I'm pleased to be able to share with you some illustrations of how
NOAA programs are helping to save lives and property, and to preserve
our natural environmental. During the major blizzard last year, for
example, we provided early and accurate forecasts, so State officials
were able to implement emergency plans promptly, and commercial
airlines were able to relocate their planes out of harm's way. We
issued warnings about Hurricane Fran 31 hours before landfall, and
flash flood warnings 6 hours before they occurred. And although last
year saw a higher-than-normal number of tornadoes, we are able to
provide warning lead times of more than 15 minutes, so the number of
lives lost was well below the average.
By implementing controlled access measures for some fisheries,
we've reduced accidents and property loss, increased the economic value
of fish by making fresh products available for longer periods. We've
provided scientific support to the Coast Guard in 70 oil or chemical
spills, and partnered with State and local agencies to restore 40,000
acres of coastal habitat.
The Hatteras Village Aqua Farm in Hatteras, North Carolina is a
clam-breeding company established in 1984. Initially the company sold
their clams to wholesalers, but gradually broadened into direct sales
to restaurants (1992), their own retail store (1995), and last year,
they opened their clam beds to tourists, so that customers could gather
their own clams. A NOAA grant to North Carolina State University has
helped the University study this type of approach to clam breeding and
has helped the company with marketing their unique concept.
Biotechtronix, Inc., of Pendleton, South Carolina, develops
chemical testing instruments for the commercial marketplace--
applications in food, environmental, and chemical companies. This
technology is a result of biodegradable material research funded by
NOAA, which revealed the relationships between chemical elements and
color sensors. Using those research findings, the company developed and
was able to market a more sophisticated device.
Lincoln Electric System of Lincoln, Nebraska, generates or buys
power to serve that city of 200,000 people. Summertime consumption of
power can often outstrip the System's own capacity, so System staff
arrange to purchase the additional power needed, at the lowest possible
cost. Chief Engineer Phil Euler says: ``We have several models, all
using statistics of weather provided by NOAA, to help us determine our
customers' electric needs and the most economical ways of meeting them.
Our customer accounting group uses weather data in explaining to
customers why bills are higher this month than last * * *. Our
technical assistance group uses weather data to advise on the design of
buildings and how big an air conditioner and heating unit are needed.
We use weather data in setting budget billing by normalizing power
[customer] consumption and removing the weather extremes.''
Commerce focuses on providing effective management and stewardship
of our Nation's resources and assets to ensure sustainable economic
opportunities. This requires us to see resources in new ways, and to
update our responsibilities in relation to them. In the past,
Commerce's definition of ``resources'' and our management
responsibilities focused on tangible items, and our role was seen as a
hands-on one. NOAA, for example, has direct management responsibilities
for fish stocks, and must preserve and protect endangered species. But
now we recognize that the Federal portion of the radio frequency
spectrum (which NTIA oversees), and intangible items such as
intellectual property rights (which PTO protects) and the capabilities
of former military bases (which EDA helps local communities to harness)
are also key resources. Our role with these resources is a stewardship
(rather than a hands-on management) one.
Commerce has several innovative management initiatives underway.
While not principally a regulatory agency, we must remain focused on
ensuring that all regulations of the Department are designed and
implemented to maximize societal benefits while placing the smallest
possible burden on those we regulate. BXA has taken a new look at its
regulations, and has rewritten many of them, simplified and clarified
others, and dropped the remainder. NOAA is revising and updating its
marine resource regulations, eliminating 400 pages of them. EDA has
eliminated over 200 of its 370 regulations.
I am committed to reducing the number of political appointed
positions at the Department by the end of fiscal year 1997. We will
develop a specific plan to achieve this goal in a manner that ensures
the efficient and effective operation of the Department.
We are implementing the Government Performance and Results Act
(GPRA) seriously in Commerce, and when the law is fully implemented at
the start of the next fiscal year, we will have a Strategic Plan and
useful performance measures in place. The initial plan we've already
provided to OMB has been declared to be one of the best that was
developed across the Federal government. NOAA's own Strategic Plan, for
example, serves as a vital management tool within that bureau and as a
positive example to other agencies. We look forward to consulting with
this Committee and others which are interested in our programs later
this Spring, and ensuring that the GPRA Strategic Plan we send up in
September gives you additional useful insight into the effectiveness of
our programs on behalf of American families, businesses, and
communities.
We have launched a pilot program under the Vice President's
Performance Based Organization (PBO) effort which is designed to make
the Federal government more flexible and autonomous, and make managers
accountable for measurable results. As in a private business, a PBO is
designed to achieve clear accountability for operating results. A key
PBO characteristic is that the organization is granted considerable
administrative and regulatory flexibilities in return for increased
measurable performance. One Commerce pilot is being developed under
this initiative--the Patent and Trademark Office--and others are under
consideration, including the National Oceanic and Atmospheric
Administration's seafood inspection program.
The Vice President has encouraged us to establish PTO as a PBO.
Ultimately, through legislation, we hope to run the operational
elements of PTO in a manner similar to the way a private business
operates. PTO would have a much more flexible procurement system, a
simpler and more flexible set of rules for managing personnel and
accountability through a CEO with a performance agreement that contains
specific, measurable objectives. The authorizing committees were
engaged and supportive of the idea of a PTO PBO in the last session of
Congress.
In the meantime, we can make progress toward this goal of a PTO PBO
through administrative actions. We have just submitted a reprogramming
proposal to this Committee and to the House Appropriations Committee
including an administrative reorganization which would: separate policy
functions from operations; establish three business lines in PTO--
patents, trademarks, and information dissemination; reorganize the
patent examining group into industry sectors; and consolidate some
administrative functions.
This administrative reorganization would be a significant advance
toward accomplishing a more business-like operation, but we would still
need the legislation to: grant additional personnel flexibilities;
exempt PTO from FTE ceilings; create an Undersecretary for Intellectual
Property to oversee the policy functions of patents and trademarks; and
establish a Chief Operating Officer.
I am very enthusiastic about putting PTO operations on a more
business-like footing. I hope that this Committee is able to give our
reprogramming proposal favorable treatment.
The Commerce Administrative Management System (CAMS) will replace
existing financial and administrative systems, and will provide the
Department with an integrated, user-friendly, flexible financial and
administrative system to support program managers, improve
productivity, and reduce costs. The Department took delivery of the
central part of the system--a new off-the-shelf Core Financial System
(CFS)--in August 1996, and we marked a key milestone in CAMS
implementation when the Census Bureau began operating several parts of
the CFS in October. Census plans full bureau-wide implementation of the
CFS by October 1998. NOAA began using a critical component of the CFS
in August 1996, and they plan to begin implementing other parts of the
CFS in their Washington-based offices this Summer, with full NOAA-wide
implementation of the CFS by fiscal year 1999. Other bureaus are
planning CFS implementations in fiscal year 1998 and beyond.
Converting software and information in preparation for the year
2000 poses a real and serious threat to business processes throughout
the world. If left unchanged, systems will stop functioning or produce
erroneous results when they begin to process 20th century dates. The
scope of this problem is great, ranging from everyday purchases of
consumable office supplies, to our ability to report economic and
statistical data used in critical ways throughout the Federal
government and private industry, to the control of long-term weather
forecasting systems.
The shifting nature of today's economic world is challenging, and
these challenges translate into opportunities for our programs and our
management systems. Commerce can meet these challenges, and will
continue forging ahead to promote economic growth for all Americans.
______
Biographical Sketch of William M. Daley
William M. Daley, the 32nd Secretary of Commerce, was nominated by
President William J. Clinton on December 13, 1996, and confirmed by the
Senate on January 30, 1997.
Described by President Clinton as a man of ``rare effectiveness,''
Secretary Daley served as Special Counsel to the President for the
North American Free Trade Agreement, coordinating the successful
campaign to guide passage of the historic trade accord through
Congress.
In accepting the nomination, Mr. Daley said he was committed to
working ``in partnership with American businesses, from Fortune 500
companies to small enterprises, in our inner cities and rural America,
to help our nation face the challenges and seize the opportunities that
lie ahead.''
Mr. Daley said, ``the Commerce Department is where America's
potential and promise come together, where our future jobs are created
and our economic growth is nurtured through trade, technology and
information.''
Secretary Daley has set a broad and aggressive agenda that ranges
from doubling the number of small business exporters to modernizing the
weather service to making the 2000 census the best in our nation's
history to maintaining U.S. leadership in advanced technologies.
Secretary Daley, a long-time Chicago civil and business leader, was
a partner in the law firm of Mayer, Brown & Platt. He was president and
chief operating officer of Amalgamated Bank of Chicago from 1990 to
1993, after joining the bank as vice chairman in 1989. He also
practiced law with the firm of Daley and George of Chicago.
Secretary Daley has served on corporate boards and been active in
many Chicago community and civic projects. His professional honors
include the St. Ignatius Award for Excellence in the Practice of Law in
1994 and the 1994 World Trade Award presented by the World Trade Center
Chicago.
Secretary Daley was admitted to the Illinois bar in 1975. He holds
an LL.B from John Marshall Law School, Chicago; a B.A. from Loyola
University; and an honorary degree of Doctor of Laws from John Marshall
Law School.
Secretary Daley and his wife Loretta have two daughters and a son.
Committee allocation
Senator Gregg. Thank you, Mr. Secretary.
First, let me make a general statement because this issue
is on the front burner right now, and that is, the pressures
which we have in this committee, which are rather inordinate
relative to funding Commerce, Justice, State, and many of the
independent agencies which are before this committee, are going
to become much more severe. It appears for a variety of reasons
the administration has decided not to pursue substantive
entitlement reform. The decision of the administration not to
do that falls not only on the entitlement accounts, which are
very important accounts and, in my opinion, need to be
fundamentally reformed for our children's future, but more
importantly, falls on the discretionary accounts.
We are going to receive an allocation in this committee
which is dramatically less than what the demands of various
agencies will be, and that allocation is going to be a function
of the fact that this administration has not been coming to the
table, the White House specifically, on the issue of
entitlement reform. That is going to flow to you folks.
I just want to state that as an opening remark, and it is
unfortunate because programmatic activity that might otherwise
be funded will not be.
Trade missions
On a secondary issue, I wondered if you could just tell the
committee where you stand with the trade missions. I understand
you have taken an initiative to put to bed some of the concerns
relative to the political nature of the membership of the
missions. I commend you for that, and I would be interested if
you could outline that for us.
Secretary Daley. Mr. Chairman, when I first was nominated
by the President back in December and began a round of
discussions with Senators, Members of the House, and with the
business community, I heard two things regarding the trade
missions: one, the importance of them as a part of our trade
promotion and two, the critical importance to be aggressive on
behalf of American businesses, where there are opportunities
for American businesses that the Government should be involved
in advocating on behalf of them, specifically major contracts
around the world that foreign governments, our counterparts,
have either a specific ability to award that contract or are
major players within it.
At the same time, questions have been raised about these
trade missions. I asked for a 30-day stay on all trade missions
effective the day I was sworn in to do a comprehensive a
review. I had Under Secretary Stuart Eizenstat, Clyde Robinson,
Deputy Chief of Staff Andy Pincus of my staff do the review. I
announced the results of that review with some of the reforms
and improvements to the program on March 3. Specifically, let
me run through a couple of things we announced.
No. 1, the first reform we did was to announce that we
would have a project officer in charge of each of these
missions. That person would be responsible from the beginning
to the end to develop a mission statement to define what the
purpose of that mission was going to be, what we wanted to
accomplish, what were the criteria for the participation in the
trip, and what were the criteria so that the business community
would be able to see it in writing up front. Second, we would
disseminate this through the Federal Register, the Internet,
and through the media to make them aware so that they could let
companies know that this mission was going to take place.
The third thing we wanted to do is to make sure, and one of
the ways is through this increased dissemination of the
knowledge of these trips, that medium-sized and small-sized
businesses could have an opportunity to take a look at these
trips and see if it was worthwhile for them to participate.
We also wanted to make sure that there would be no partisan
politics in any sort of selection, that the career officers or
a panel made up of a majority of career officers will make the
decision as to who participates in these trips. Also, any of
the documents except those that may contain certain proprietary
business information or security information would be public so
that there would be a transparent and an open process from
beginning to end. After the trips, there will be a report so
that the public, Members of Congress, and the business
community would know what were the goals up front, what was the
mission, what was to be accomplished on these missions, and to
do a postmission report so that we could see if we accomplished
what we thought we would, and make the budgets of those trips
public.
There are lots of different trips and trade missions that
the ITA is involved in. Obviously, the ones that get the most
attention are the ones that the Secretary or the very senior
people go on. We support numerous missions throughout the world
on behalf of American businesses. We also support many of the
State trip missions that are done by Governors and State
economic development organizations.
So I think these improvements to the system that were in
place are going to help our missions, which are an important
part of our trade advocacy and our export promotion.
Senator Gregg. I congratulate you for that effort. I am a
strong supporter of the concept of missions, and I hope that
the last year or so has not undermined that support, because
they are very worthwhile and very appropriate. They do help us
do business abroad. We are a global economy, and we need to
have that sort of aggressiveness from the Commerce Department.
I think it is good that you are setting a standard for trying
to make them more clearly nonpartisan and nonpolitical but,
rather, substantive.
reducing Political appointees
What percentage of the folks who are Aassistant Secretaries
in the International Trade Administration [ITA] are political
appointees? I know you are reorganizing the Department and
reducing political appointees, and we expect you will be doing
that in ITA.
Secretary Daley. I also announced at my confirmation
hearing in January that, in addition to the moratorium on trade
missions, that I was going to reduce by the end of 1997 the
number of political appointees within the Department by 100,
which is about one-third of the appointments to positions.
There are about 256 political positions in the Department. By
the end of 1997, we will have gotten to 156.
ITA accounts for about 55 of the political appointees in
the Department. We have just begun the consultation with the
Under Secretaries to try to figure out the most effective means
to downsize the political appointees. The two areas that will
probably take the bulk of this hit will be in the Secretary's
office and ITA because therein lie many of the political
appointees that probably should be cut.
These numbers that I laid out have been rather historical,
so they go back many, many years as far as the number of
political appointees in the Department. It is nothing that just
arose over the last couple of years.
ATP
Senator Gregg. On another subject, last year in the report
of this committee and the final language of the bill, we
directed the National Institute of Standards and Technology
[NIST] not to initiate new programs for advanced technology
programs, and yet they have done that. My question is: Why?
Secretary Daley. My understanding, Mr. Chairman, as I spoke
with Chairman Rogers is that there was language on the House
side and on the Senate side that did not end up in the final
piece of legislation. As you know, we feel strongly that this
program is very important, and we moved forward because of
interest on behalf of the business community and a belief that
this is a strong program. We have gone out to the business
community within the last 30 days. We are getting a response.
Obviously, the grants have not been awarded yet. The process
has started, and we feel strongly about this program and look
forward, as you can see from the budget, to hopefully increase
it over the years.
My understanding is that the language prohibiting any new
grants was not in the final bill, and so the decision was made
on our part to move forward with new grants.
Senator Gregg. Well, we will certainly make every effort to
make it clear this time, assuming there is any money at all. We
can redebate that issue, but we have been through it so many
times, let us not take the committee's time.
status of AWIPS program
Where do we stand with the advanced weather interactive
processing system [AWIPS] program, in your opinion?
Secretary Daley. We have moved forward with 21 pilot
systems, which are in the process of being activated right now.
If all goes well with the program, we will institute another 18
by the end of the year, around the fall. We have made a
commitment to the House and to you that this program will be
capped at $550 million. We will live within that. I know it has
been a long process that has gone over budget and is behind
schedule, but we think the program is together.
The inspector general agrees with us. He has raised issues
about this in the past, but he believes that the program is on
course now, and we feel strongly, as we have from the
beginning, that it will be a major plus to our ability to
forecast and protect not only property but lives as we move
forward.
the 2000 census
Senator Gregg. Now, the big problem, obviously, with the
agency--the big issue not problem--with the agency, is the
question of the census; whether we do a statistical analysis or
a head count. You had a hearing with Governmental Affairs,
yesterday, was it?
Secretary Daley. Tuesday morning.
Senator Gregg. I have talked to Senator Thompson, and we
are going to have to reach some cloture on this. I am not sure
that there is any great need to revisit the issue right now. We
have talked about it. Just for the record, the hope is that we
can take the politics out of it and reach cloture on the issue
of what is the best way to proceed. That is my goal and Senator
Thompson's goal, and I know that is your goal.
But, in any event, we have to make a decision here, and I
think we will proceed under the assumption that before this
bill is completed, there will be a decision made on whether we
are going to go statistically or head count. We will try to
make the call here so that people can start planning.
Secretary Daley. I would appreciate that, Mr. Chairman. As
you know, we feel very strongly, as I stated to Senator
Thompson, that statistical sampling is the way to go for a more
accurate and more cost-effective census. But I wholeheartedly
agree with you, and once again stress, I think, the importance
for all of us to try to work together in this because it is
important for the success of the census that the American
people have the faith that this is obviously very important and
is being done in a way that is not part of a partisan wrangling
and is managed well.
This is the largest peacetime mobilization in our country.
It is a massive endeavor. Questions have been raised about it.
We have serious questions about this. That is why we are taking
it so seriously.
If I have the honor to be here 4 years as Secretary of
Commerce, this will be the most important thing that I assume
will be on my watch. So I feel very strongly that it has to be
done right, and I appreciate your words about the census.
PTO revenue diversion
Senator Gregg. Senator Lautenberg.
Senator Lautenberg. Thanks very much, Mr. Chairman.
I am delighted, Mr. Secretary, to see you here. What I have
seen thus far indicates that you are not going to let any of
the good pace that has existed in the Department for these past
years decline in any way. It looks like you have a proactive
agenda, and I am pleased to see that.
Every time we hear from Commerce, it is always refreshing
and surprising to note the variety of things that you have to
concern yourselves, your Department about, whether counting
folk, watching out for weather changes, fighting the
international marketplace and making sure American companies
have a chance to compete fairly, encouraging technology, a
variety of things that are very interesting. I am sure that you
will bring the right kind of energy and skill to the job.
Patent and trademark
I have a couple of questions regarding the PTO. Some of the
functions that it serves now are being considered, in my
understanding, for movement from PTO to another part of the
Department of Commerce. Also, there is the question of
diversion of fees. PTO's revenues are derived exclusively from
fees that it earns for granting and issuing patents and
registering trademarks.
As I understand it, if we divert some of the revenue stream
away from the Department, we have a very likely possibility of
extending the period for patent pendency to almost twice what
it presently is. If anyone on your team there has any comments,
please feel free to jump in.
I think that would be a disaster. America's ability to
compete now and in the future depends very much on our ability
to get technology that we are so good at out into the
marketplace, turned into viable products for people. And if we
put any impediments in the way of getting these patents
considered promptly, I think we run the risk of hindering our
competitive edge, delaying developments to maintain our
competitive edge, as well as adding nothing to the viability of
our leadership.
I would like to get your position, Mr. Secretary, on how
you feel about the revenue diversion from the Patent Office. I
know that the administration has been looking at it covetously,
if I may say. Balancing the budget is the principal occupation
here. I think it is important, but I think other things are
important as well. So let me not bias your view. [Laughter.]
Secretary Daley. We do obviously have great concern about
the Patent Office in the sense that we share the same concern
about these sorts of delays that may occur. We do feel
confident that for the year 1998 the revenue request, which is
only about 1 percent less than what it was last year will not
have any deleterious effect on the operations in 1998.
Obviously, when we begin to go beyond that, there is the
concern about delays in our ability to grant patents. Bruce
Lehman runs a great shop. We are taking a look at it to try to
strengthen this to take the PTO and make it a performance-based
organization. There is legislation that obviously you have been
involved with that has been introduced and marked up in the
House, H.R. 400. We have talked to the committee and the
Members, the sponsors of that legislation about their concerns
also about the funding needs for PTO. We share the same
concerns you have.
As I said, for 1998 we think we are able to keep the fine
service that we have given our taxpayers. We have talked to
Chairman Hyde on the House side about that legislation to see
if we can work out some arrangement for out-years. But we
believe a PBO, performance-based organization, will make PTO
operate better, keeping the policy functions within the
Department, and be able to run basically the backroom
operations in a more businesslike manner. But we share the same
concerns you have, sir.
Senator Lautenberg. Mr. Secretary, however, based on the
expected revenue stream and, again, if there is a diversion,
would it be correct for me to say that you have not been able
to put the full complement of examiners that you need in the
Department in place, that prospects for keeping staff at a full
performance level are decreasing? What does that do to the
process of moving patents along?
Secretary Daley. Well, obviously, we would have to look at
the personnel situation. We would have to look at some of the
plans which we already have for purchase of new equipment and
more modern technologically advanced equipment that would help
the process along and shrink the pendency periods. All of those
would be issues that we would have to reexamine if these funds
are not there and see if we could manage ourselves better
through that. Obviously, it is a major sum of money.
Senator Lautenberg. Mr. Secretary, I do not want to put you
at odds with the President, but if, in fact, it appears that
the Patent Office will not be able to have the complement of
skilled personnel that it needs, the diversion of funds will
present an obstacle to good, efficient service, then I would
say this: You would have to make that as clear as you possibly
can so that we can focus on the costs of not doing it fully,
not funding it fully, because it is not without some pain.
I come from a State that has the third highest patent
production in the country. We are ninth in size, but we are a
highly technological place. And we need to be able to move
these things along, I think. Again, it is not only New Jersey,
but it is very much the country that depends on our capacity to
be able to get things patented and registered, protect the
efforts with rewards that ought to be there. And if we do not
have it, it presents a situation, one that I am prepared to
take up the struggle for. I hope that you will be able to make
the case--again, not wanting to put you in a difficult
position.
Secretary Daley. I appreciate not wanting to get me at odds
with the President after 5 weeks on the job.
Let me just mention one thing that has been noted to me,
Senator, and that is the revenue stream as it exists under our
budget plan. In 1998, the revenues will be $656 million; by the
year 2000 it would rise about 40 percent to $900 million. So it
is a rather substantial rise. But we do share the same concerns
you do, and the people at PTO obviously do, trying to keep some
of these potential increases under control.
Senator Lautenberg. You have looked at my legislation to
make the Patent Office a Government corporation.
Secretary Daley. Yes.
Senator Lautenberg. Have you reviewed it enough to comment
on it at this juncture?
Secretary Daley. I would like to refrain from commenting
specifically on it yet, Senator. I have just begun to be
briefed on it and would like to work with you and your staff to
try to provide comments on it.
Senator Lautenberg. I would look forward to that. Thanks,
Mr. Chairman.
Senator Gregg. I am going to exercise the prerogative of
the Chair, if that is all right, and recognize the chairman of
the committee, who is kind enough to join us. Although we do
work by first-come, first-served, if you have questions----
Senator Stevens. I have no specific questions right now. I
was just trying to get a feel of what was coming off here.
Thank you very much.
Senator Gregg. Senator Inouye.
Senator Inouye. Thank you very much, Mr. Chairman.
Before I proceed, I believe that this is the first meeting
that Senator Hollings has missed since he has become a member
of this subcommittee, and he has asked me to convey his regrets
and apologies. But as you know, he is very busy at this moment.
Senator Gregg. He is amending the Constitution; that takes
a higher priority. [Laughter.]
Senator Inouye. But, Mr. Secretary, he wanted to be here,
and he sends his best wishes to you, sir.
Secretary Daley. Thank you.
Tourism
Senator Inouye. I have several questions. If I may, I would
like to submit them in writing. But I will ask a couple of them
at this point.
Tourism is the world's largest industry. I think last year
it brought in about $3.8 trillion and hired more than 250
million people. We are considered about the wealthiest in the
world, and yet we spend less per capita than just about every
country in the world. Vietnam spends more than we do, and
Burma, of all places, spends more than we do. Russia, which is
supposed to be on the verge of bankruptcy, I think spends about
10 times what we do. The Irish spend about 14 times what we do.
I am wondering if we cannot recognize the importance of
this industry and give it a little boost.
Secretary Daley. Senator, I know we had this conversation
in one of our meetings, and I appreciate your bringing it up
again.
I had the opportunity about 2 weeks ago to speak at the
Travel and Tourism dinner. There were about 1,400
representatives, a very enthusiastic group. They brought up
some of the same concerns. I reiterated to them this
administration's commitment in looking for opportunities which
we can promote. Obviously, it is the industry which does, as
you say, employ a tremendous number of people. It also provides
tremendous entry level opportunities for people today. The
tourism industry has also been very supportive of the
President's plans to try to move people from welfare to work.
There are real opportunities there.
As you know, there was a White House conference last year
on travel and tourism, and we are looking for ways to implement
some of the recommendations from that.
I made the suggestion in our trade mission review that we
make sure that those members of the travel and tourism industry
take a look at some of these missions to see if there are
opportunities for them to join me and other missions that go
out of our Department. We must make sure that we can spread the
word about the opportunities for people around the world to
come here. Obviously, it is a big business, and we share the
same concerns you do.
I am very much committed to spending time on this issue
because it is a major employer. It was described to me as kind
of the Rodney Dangerfield of sectors. Other sectors get much
more publicity than the travel and tourism industry does, but
there are few that employ and give the opportunities for job
advancement from entry level to the senior positions in the
travel and tourism industry.
Public broadcasting facilities, planning, and construction
Senator Inouye. It gives me some hope now.
For the past 25 years, as you know, the Congress and this
Nation have supported public broadcasting, and one of the
important programs in public broadcasting is what we call PTFP,
facilities programming. I note that your fiscal year 1998
budget does not include any funding for this program, and for
fiscal year 1997, though we appropriated $15 million in grants,
none of these grants has been awarded. And yet I gather that
you have already received over 220 applicants.
Why is this being held up?
Secretary Daley. To be honest with you, Senator, I do not
know the answer as to why it has been held up. I do know that
we have not moved forward with the $15 million program. We
obviously have tremendous support. The administration supports
public radio and television to make sure it is available to
all. Right now public television is available to about 90
percent of the population and public radio to about 85 percent.
So there has been pretty much total saturation. I do not know
the answer, and I will get back to you as to why those grants
have not been awarded.
Senator Inouye. I would appreciate that. I thank you very
much. And, Mr. Chairman, if I may, I would like to submit some
written questions.
Senator Gregg. Absolutely. Of course.
Senator Inouye. Thank you, sir.
[The information follows:]
Awarding 1997 PFTP Grants
The filing deadline for the 1997 grant round was February
12, 1997. A total of 220 applications is received. We
anticipate awarding the fiscal year 1997 grants in mid-August
1997.
Senator Domenici. Mr. Chairman, might I inquire, are we at
a point where the Secretary has already testified?
Senator Gregg. Yes; the Secretary was kind enough to give
us his thoughts, and now he is taking questions.
Senator Domenici. Well, first, Mr. Secretary, I hope you
are still enjoying your job. [Laughter.]
Secretary Daley. I am.
Senator Domenici. I have not had a chance to meet with you.
On two occasions, you were so gracious and were scheduled to
come to my office, and I had to break the appointments. I try
my best. Perhaps when a couple more months pass, you will not
need to talk to me. You will have everything you need, and you
will not hear----
Senator Gregg. The day you do not need to talk to Senator
Domenici is the day you are in big trouble.
Secretary Daley. I will probably be out of a job then.
Budget restraints
Senator Domenici. No; I tell you, I do not know what our
chairman said, but I want to tell you something that I really
believe. I thought there was a chance to get a budget agreement
with the President. However, after what I have heard over the
last 36 hours, I do not think there is a chance of getting an
agreement with the President.
Now, I note with interest that your Department's budget has
a 12.5-percent increase--12.4 percent I think is the right
number. Well, as much as I like you and would hope you would
have a great 4 years, I want to tell you there is hardly a
chance that you are going to get a 12-percent increase. In
fact, I am looking at the prospect now that the discretionary
accounts may be lucky to get a freeze. It is not fair to just
tell you that, and it is not fair to say that here in front of
all these people without telling you a little more.
The problem is that the President's budget does not cut
discretionary spending until the last 2 years of his 5-year
budget. Second, the President does not have very many
entitlement restraints in his budget--very, very small amounts.
In fact, what he thought he had has already been cut one-fourth
by the Congressional Budget Office in its reestimate of the
President's budget request.
Now, I am preaching the Gospel to you. You already know the
Gospel, Mr. Chairman. I think it is good to make sure some of
these people take back to this administration the fact that we
do not have very many ways to go. I wish there were a lot of
ways to go.
Senator Gregg. Before your arrival, Senator, I made the
same statement, but I think it resonates a little better coming
from the chairman of the Budget Committee.
Senator Domenici. Well, I do not want to be repetitious.
Senator Gregg. No; please continue. It is excellent.
Senator Domenici. I tell you, when we do not have a chance
to take the part of this budget that is out of control and do
something about it, and we are being asked to increase almost
every single domestic program around, except maybe Veterans,
NASA, Transportation, and a few others, then I think it is
right to tell you, even though you are not responsible for any
of that, what at least this Senator sees as the reality of it
all.
I will not go any further, but I will say in addition that
it is interesting that if we were to freeze spending, then your
accounts are going to be in the same bucket with accounts that
are very popular, like the Justice Department and the FBI. You
understand what that means. Those are not going to be frozen.
They are going to go up. Who is going to freeze the DEA and the
FBI? So what happens? It means you have got to take it out of
some of these other programs that are in this subcommittee's
jurisdiction. That is the problem when we have them up against
each other competing for funding.
BXA encryption
Now, that is enough of that. Could I ask about encryption
for a minute, or do you want to comment? I should not cut you
off.
Secretary Daley. I will convey your comments. Obviously,
Senator, we would hope that there can be an agreement reached
and obviously that we could move on and get back to good
relationships.
Senator Domenici. Well, for those around here who wonder
where I have been--I will not say more about the President's
budget--they may find out here. My time might have arrived to
say more about it. I thought we were working on something, so
since we may not be, the public may learn a little more about
that budget.
On encryption, would you provide the justifications used by
the administration for limiting the export of stronger
encryption software products?
Secretary Daley. Senator, this has been an ongoing
situation in trying to balance obviously the competitive needs
of American businesses to export a product that we are the
leaders of the world with, and at the same time, legitimate
national security and law enforcement concerns. And we think we
have come up with a pretty good plan, a key recovery plan,
which can work. There have been four licenses granted, and we
think that, after much discussion with the industry, we have
come up with a plan. It is not a perfect plan, but it is an
attempt to try to balance both of these important needs and
concerns.
As you may know, President Clinton appointed David Aaron
the Ambassador of Cryptology to discuss with other nations what
sort of protections and their concerns on this issue. He has
gotten pretty good response in his discussions, no specific
actions, but my understanding is we plan to provide briefings
on our key recovery plan next week on the Hill for the Members.
Senator Domenici. I have five questions on the subject. I
will submit them for the record. Will you answer them as soon
as you can?
Secretary Daley. Yes, sir.
Senator Domenici. On the census, I think we have clarified
that the Bureau of the Census is going to collect information
on minority- and women-owned businesses. Have you all the money
now in hand, or do you still need more money from the Small
Business Administration? Do you know?
Secretary Daley. I do not know the answer to that.
Senator Domenici. Can you get us an answer? We think they
have been bothered enough on contributing to the census.
Secretary Daley. My understanding is we will have to
reprogram some funds in 1997.
Senator Domenici. Can you tell us for the record how much?
Secretary Daley. Yes.
[The information follows:]
Work is continuing on the Survey of Minority-Owned Business
Enterprises (SMOBE) and the Survey of Women-Owned Business
Enterprises (SWOBE) in fiscal year 1997. In fiscal year 1997,
the Administration proposed that SWOBE be funded by SBA, and
SBA is submitting a reprogramming to this effect. Census will
continue to do the SWOBE on a reimbursable basis. SMOBE is
funded by the Census Bureau for both fiscal years 1997 and
1998. Both surveys are done in conjunction with the five year
Economic Censuses. For fiscal year 1998, funding for SWOBE is
requested as part of the SBA budget request and SMOBE is part
of the Census budget request.
proposed termination of PTFP program
Senator Domenici. I have a number of additional questions,
but I wonder, Mr. Chairman, are you interested in proceeding
with some dispatch?
Senator Gregg. Please, if you want, we have plenty of time
for you, Senator. Whatever you desire is fine with me.
Senator Domenici. Well, let's talk for just a minute about
the Public Telecommunications Facilities Program. Do you have
that somewhere there?
Secretary Daley. Yes.
Senator Domenici. The budget justification documents
indicate that the administration proposes to terminate the
Public Telecommunications Facilities Program, stating that the
support for public television and radio broadcasters will rest
with the Corporation for Public Broadcasting.
Could you explain that to us?
Secretary Daley. My understanding is we have provided
support to make public radio and television available to all.
Public television is available to about 90 percent of the
population, and public radio to about 85 percent. So we are
eliminating a $15 million program, but obviously support public
radio and television in other forms.
Senator Domenici. Well, the problem for my State, and I
think the State of the distinguished Senator from Alaska, who
chairs the Appropriations Committee, I think we have some of
the sort of last of the Mohicans. We have some, especially
among our Indian people, that have not yet been able to do
this. We think that they deserve some consideration, and I
assume in marking up the bill we will have to take that into
consideration.
I should not be one who is complaining if you finally get
down to terminating something, but I do raise the concern.
status of the Trade Compliance Center initiative
What is the status of the Trade Compliance Center
initiative?
Secretary Daley. This was announced last summer by
Ambassador Barshefsky and Secretary Kantor. We are committed to
strengthening the center to make sure that we have one facility
where we can gather all these agreements that have been reached
to make sure that in this one organization we are able to find
out whether or not these agreements are being lived up to and
the American business community would have a place to come to
to try to get an analysis of the agreements. It is moving
forward.
Our commitments that have been made as far as personnel
will be reached by the end of this year. Our commitment is to
have 25 people in the compliance center operating. Our first
task is to try to gather the data base and to input the
information on our trade agreements. We are committing $2.5
million and 25 people to the center.
Patent and trademark fees
Senator Domenici. Well, this is my last question, and this
one concerns me greatly. It has to do with the patent and
trademark fees. Has anybody asked about that?
Senator Gregg. Senator Lautenberg brought that up. Yours
may be a different topic.
Senator Domenici. Well, I guess I am interested in knowing
how the Patent and Trademark Office is going to deal with
reduced resources that are going to result under the
President's proposal, which we understand is to hold $92
million in surcharges in reserve in 1998 and $119 million in
reserve thereafter, which, in effect, means that the President
would spend the surcharges on some other program.
Now, I am not sure this is right, but those who pay the
fees say they are told by their PTO officials that this
proposal will cancel plans to hire 500 new patent examiners and
will more than double the patent waiting time, which already, I
understand, is at 20 months.
Secretary Daley. My understanding, Senator, is that
obviously there is concern that using some of the surcharge for
deficit reduction has been going on for a couple of years. The
current request, which is $656 million, is only 1 percent less
than last year, so for 1998 we think there will be no
deleterious effect upon the operations.
We have concerns. We have a higher increase, I believe, in
PTO, but we share the same concerns. We are moving forward with
legislation and working with the Hill to create a PBO,
performance-based organization, out of PTO which will,
hopefully, make it more effective. We are also discussing with
Senator Lautenberg and House members who have bills similar to
that which we are trying to accomplish which do address the
surcharge question. We will try to work with Congress to come
up with a way to guarantee that the same level of performance
that we have been giving to the American people remains. It is
a major concern to us also.
Senator Domenici. Well, I hope you understand that
sometimes in the bowels of these big departments like yours,
little entities that are very, very vital--and this PTO is
one--that has to be run well. It has to have sufficient
talented people. I for one can think of a lot of places I would
like to see with less personnel than the Patent Office that has
already taken 20 months on average to process a patent. This is
vital. So I assume you are worried if you are concerned about
keeping that a first-class operation.
Secretary Daley. Yes, sir, we are. And as I say, we are
confident for 1998 there will be no negative effect. There will
have to be management issues addressed, whether it is personnel
or whether it is purchases of new equipment that have been
planned if we do not additional funding. But as of right now,
we feel confident that the same level of professionalism can
continue.
Senator Domenici. Is the Bureau of Labor Statistics in your
Department?
Secretary Daley. No, sir; it is in the Department of Labor.
Senator Domenici. I have some additional questions. I will
submit them. Thank you very much, Mr. Chairman. Thank you, Mr.
Secretary.
Secretary Daley. Thank you, Senator.
Management issues
Senator Gregg. We have about 31,000 people who work at
Commerce. Is that right?
Secretary Daley. Yes, sir.
Senator Gregg. How do you translate policy where you have
had fairly--this is not unique to this administration--but you
have a fairly consistent turnover in the leadership of Commerce
down to the operating level and staff level of an agency that
large? What is your game plan for getting that sort of
responsiveness, finding out where it works, and where it does
not?
Secretary Daley. After 5 weeks of being there, Senator, it
is one of the challenges that I see. Obviously, you do it
through the structure. We have a structure with about five
Under Secretaries, most of whom have been in this Department
now for just about all the 5 years. We will be announcing,
hopefully, shortly, a Deputy Secretary who will basically take
the role of a chief operating officer to be involved in a lot
of management issues, many of which have been questioned by the
Hill when there have been questions about the Department.
It is probably the single biggest concern of someone like
me coming into a Department that has such diverse pieces within
it, how you communicate with your employees and how you make
sure that the missions that they are charged with by the
Congress are lived up to. So we will be bringing over a new CFO
and Assistant Secretary for Administration. Ray has done a
wonderful job, but he wants to go back to his home at NIST. And
also a new chief information officer to help us try to
communicate, quite frankly, with our employees. But it is the
single biggest management problem.
I have made a point of stressing to the Under Secretaries
and the Assistant Secretaries that policy alone is not how they
will be judged, but they will be judged on what sort of
management techniques they use and how effective they are in
making sure that the level of service to the American taxpayers
and citizens is second to none and is the same level that
builds businesses that we so often interact with and are so
good at communicating with their customers, that we are more
reflective of them than maybe what we have been. It is the
biggest challenge I have.
Senator Gregg. Well, I think it is. I know it is your
biggest challenge, and obviously it will be the biggest reward.
Secretary Daley. Also, Mr. Chairman, I have also begun a
series of meetings and conversations with a number of the
business leaders who have been successful at restructuring
organizations and communicating better with their employees and
making sure that they communicate better with their customers
in trying to learn from their experiences to see if we can
duplicate any of that in the Department.
Senator Gregg. Senator Bumpers, did you have any thoughts
or questions?
effect of PTFP in Arkansas
Senator Bumpers. Mr. Chairman, I would just like to add my
voice to those of Senator Inouye and Senator Domenici about the
Public Telecommunications Facilities Program.
Mr. Secretary, when I was Governor of my State, public
television only covered central Arkansas when I became
Governor. I took a vow we were going to have it all over the
State by the time I left office. Just another politician's
broken promise. But, in any event, I did all I could do, and we
began to get some money from the PTFP program. And, of course,
not too long after I left office, we did, in fact, have 13
transmitters. The whole State was covered.
This has been a particularly helpful program to us.
Arkansas has received about $1 million under this program since
1992. In New Hampshire about $600,000. And those are small
amounts of money the way we talk about money around here, but
those small amounts do a tremendous amount of good for small
States such as mine.
Weather station closings
The second thing I want to say is I am terribly troubled
about closing all these weather stations, and I am particularly
troubled about the one in Fort Smith, AR. Last year the
chairman was very generous in helping me get money for a new
weather station to serve Fort Smith. They had a terrible
tornado there. The damage was something like $200 million, and
they got almost no warning.
And so after talking with the Weather Service a number of
times and after the tornado had occurred, they agreed to use
some money they had, if Congress had no objection, to put a new
doppler radar in, which, hopefully, would cure that problem.
Fort Smith is in a very unique position, and that is 20
miles from my home town. And I can remember when I was raising
my family being totally dependent on Fort Smith television and
Fort Smith weather to tell us when to go to the storm cellar.
People who do not live in tornado alley do not know how
terrifying that can be.
Fort Smith suffered one of the worst tornadoes in history
of the State back in 1980, somewhere along there. They are
right in the middle of tornado alley, and as I say, it was
just--it was last April, and they had this terrible tornado,
with almost no warning whatever. And we had all that
sophisticated doppler radar in Tulsa.
So while they are in the process of putting up a new
doppler radar there, which they hope to have operational on an
experimental basis by the end of this month, we have got 160
local weather stations scheduled for closing. The Fort Smith
local station last year did not have the authority to push the
button, and yet they had 150 spotters. And Fort Smith,
incidentally, is surrounded by mountains on the southwest side;
tornadoes always approach cities in Arkansas from the southwest
moving northeast. And when I think about the tornadoes we had 2
weeks ago, people got as much as 31 minutes' notice.
Of course, how much notice you get all depends on the form
of the tornado. I understand that. But everybody got between 11
minutes and 31 minutes notice in that terrible tornado that
went across my State about 10 days ago--sorry, 2 weeks ago this
coming Saturday. But Fort Smith got none last year. They are
absolutely convinced. People in that city are probably more
paranoid than anybody in the State about tornadoes.
Last year spotters from all over the area were calling in
to the Fort Smith station saying, I saw a tornado on the ground
here, and I saw a tornado on the ground there and so on. And
yet they were not allowed to push the button to alarm and alert
people there because that had been left to the jurisdiction of
the Tulsa station.
So, Mr. Chairman, I am saying that as much for your benefit
as I am Secretary Daley's to say I think we need to look long
and hard before we close those local stations. It is a three-
man station, but if it would save one life over the next 20
years, it would be money well spent, as far as I am concerned.
Those are my sentiments, Mr. Chairman.
Senator Gregg. OK. Obviously you are concerned about
adequate tornado warnings--something this community takes very
seriously. We appreciate that. Did you want to comment?
Secretary Daley. We obviously share the same concern,
Senator. There have been public comment periods. We share the
same sensitivity. We are very proud of the fact that the
warnings gave people in most areas sufficient time in this last
tornado, and my understanding is that Nexrad will be built in
Fort Smith. I do not know the time this will be finished and
operating next month.
Senator Bumpers. We are very grateful for that. Don't
misunderstand me.
Senator Gregg. Well, we appreciate your being here. I did
notice, in going through the numbers, that the National Oceanic
and Atmospheric Administration [NOAA] number was increased by,
I think, $103 or $107 million. I have a sense--and you do not
need to comment on this--that that was done out of a bit of
gamesmanship. This committee, as everybody knows, is very
committed to having a strong NOAA. The problem is, of course,
when those things happen, this committee is going to put the
money back. We are going to make sure that NOAA is adequately
funded. But it comes out of other accounts in an arbitrary way
rather than in a way that might be consistent with policies
which you might be most comfortable with. My suggestion would
be that your pencil pushers go back and take a look at that and
figure out where they want that money to come from.
Secretary Daley. My understanding, Mr. Chairman, is that
NOAA is increased by $79 million in our 1998 budget.
Senator Gregg. We have it down at $103 million. We will
have to check that. If that is the case, we will be happy to
correct our thoughts on that.
Secretary Daley. Fine.
Additional committee questions
Senator Gregg. I would ask unanimous consent that questions
given to me by a variety of Senators also be included in the
record. I believe there is no objection.
[The following questions were not asked at the hearing, but
were submitted to the Department for response subsequent to the
hearing:]
Questions Submitted by Senator Pete V. Domenici
encryption
Question. Secretary Daley, as you are well aware, we must do all we
can to help American companies compete in the global marketplace. With
the emergences of new telecommunications technologies and the
Information Superhighway, we are now finding a small store in New
Mexico is no longer limited by its location. In fact, by using the
Internet this shop owner can sell his or her product to people around
the world. I am truly excited by the advances in telecommunications
because these technologies are opening up new economic development
possibilities in rural states like New Mexico. For these reasons, I
have cosponsored Senator Burns' Pro-Code Encryption bill. This bill
proposes to eliminate Commerce regulations which currently limit
American software companies ability to export strong encryption
software products. I support this legislation because it enables
American software companies to compete in the global encryption market
and will help legitimize the Internet as a secure means of conducting
commerce.
Would you provide the justifications used by the Administration for
limiting the export of stronger encryption software products?
Answer. Encryption software can be used to maintain the secrecy of
information in ways which could harm national security, foreign policy
and law enforcement interests. Encryption products, when used outside
the United States, can jeopardize our foreign policy and national
security interests. Additionally, when used by international criminal
organizations, such products can threaten the safety of U.S. citizens
here in the United States as well as abroad. The control of encryption
software products is essential to promote our national security and to
advance our foreign policy objectives, including protecting the lives
and property of U.S. citizens.
Question. Understanding the law enforcement concerns regarding
stronger encryption, do you believe this policy is effective in curbing
the criminal uses of stronger encryption? If so, can you provide
specific examples?
Answer. Encryption products will more and more be found operating
within a larger communications network. A global network in
telecommunications already exists and we can see the outlines of a
larger global information infrastructure emerging being built upon
this. Criminals will use this network as they use telephones today. If
the basis of this network is recoverable encryption for e-mail, home
banking and for transfers of data, then law enforcement will continue
to have the access it has today, to electronic surveillance as a key
tool for carrying out its public safety mission and combating criminals
and terrorists.
Question. With almost 500 different software products with stronger
encryption capabilities being sold in over 28 different countries, how
do you expect your policy to be effective in curbing the criminal uses
of stronger encryption? If so would you please explain your answer?
Answer. We disagree with the implied conclusion in this question
that the encryption genie is out of the bottle. First, many of the
surveys which allege widespread foreign availability of strong
encryption are based on marketing claims and advertisements.
Advertising is not always the best source of information on products.
Second, we do not yet see the broad use of encryption products,
although this may change in the next few years, but for now the use of
strong encryption is not widespread. Finally, one important goal for
our policy is to make sure that the growing trend in the market to use
recoverable products in building infrastructures for electronic
commerce is consistent with public safety and national security. A
policy to reinforce this market trend will help channel criminal use of
encryption and protect public safety.
Question. Is it not true that your current policy is compromising
our multinational companies ability to communicate and transfer
sensitive data over the World Wide Web without fear of economic
espionage? If not, please explain your answer.
Answer. We currently allow very strong encryption to be transferred
to U.S. companies and their overseas subsidiaries to avoid the problems
of espionage and theft of intellectual property you refer to, and our
new policy promotes the use of strong, safe encryption by U.S. firms.
This is why we have no strength limitation on the types of recoverable
encryption products or the kind used by most corporations which can be
exported.
Question. Understanding a supercomputer can break a 56 bit
encrypted message within a day, how can you be confident your current
policy is sufficient to protect American industries conducting business
over the World Wide Web?
Answer. Unfortunately, there is no easy technological fix to the
encryption problem, and ``supercomputers'' cannot easily break 56 bit
encryption products. Even if one accepts the ``test'' which resulted in
the breaking of 40 bit encryption in five and a half hours by a sort of
brute force as reliable, our estimate is that it would take more than a
year to break 56 bit encryption and 11,000 years to break 64 bit
encryption. This is why our policy emphasizes the need to use strong,
recoverable encryption to protect the privacy and intellectual property
of America in a manner which is consistent with public safety and
national security.
survey of minority-owned business enterprises [smobe] and survey of
women-owned business enterprises [swobe]
Question. I have been approached by numerous minority and women
business owners who are very concerned with a Bureau of the Census plan
to discontinue collecting data on minority and women owned businesses.
In contacting your Department to express this concern, I was informed
that these data would in fact be collected in the 2000 census. However,
I was disturbed to learn that the Bureau of the Census was seeking
additional funds from the Small Business Administration to finance this
portion of the Census. Is the Bureau of the Census still seeking
additional funds from the SBA to continue collection of these data?
Answer. Work is continuing on the Survey of Minority Owned Business
Enterprises (SMOBE) and the Survey of Women Owned Business Enterprises
(SWOBE) in fiscal year 1997. In fiscal year 1997, the Administration
proposed that SWOBE be funded by SBA, and SBA is submitting a
reprogramming to this effect. Census will continue to do the SWOBE on a
reimbursable basis. SMOBE is funded by the Census Bureau for both
fiscal years 1997 and 1998. Both surveys are done in conjunction with
the five year economic censuses. For fiscal year 1998, funding for
SWOBE is requested as part of the SBA budget request and SMOBE is part
of the Census budget request.
consolidation of statistical agencies
Question. The current CPI debate has made us aware of the crucial
role economic statistics play in policy making, both in the public and
private sector. I think we all agree on our desire to produce high
quality statistics across the board, not just in price measurement
alone.
There have been suggestions that one way to improve the efficiency
of U.S. economic data compilation is to form one main statistical
agency which would be in charge of all federal government economic
releases. Both Canada and the U.K. have similar organizational
structures.
What is your opinion of such proposals?
What are the benefits of having data collection scattered amongst
the Commerce Department's BEA and Census Bureau, the Bureau of Labor
Statistics, the USDA and many others?
Answer. There is certainly room for more active coordination among
the Nation's statistical agencies, and consolidating these agencies
into a single entity is one way to achieve that coordination. But mere
box shuffling will not accomplish the goal of better statistical
performance. Too many proposals in the last Congress were driven by the
desire to eliminate individual departments and agencies and not by the
goal of creating a better statistical system.
I do not support the creation of an independent (as opposed to
consolidated) statistical agency, as recently proposed by the National
Association of Business Economists (NABE), because I fear that such an
agency could quickly turn into a political orphan. An independent
agency would lack representation at the Cabinet table, which could
limit its ability to secure adequate resources. Moreover, an
independent agency would lack political and administrative oversight
and accountability. There are other, and more preferable, ways to bring
the agencies together if that is the goal.
What will truly improve the Nation's statistical system are
adequate resources to continue improvements to the quality of our
business statistics, more attention to sound management practices
throughout the agencies, and greater cooperation by the various
agencies.
The Census Bureau and the Bureau of Economic Analysis share the
same constituency that the Commerce Department exists to serve, the
American business. The data produced by these agencies is a vital
component of the competitiveness of U.S. businesses both large and
small. It is not surprising that STAT-USA, the information
dissemination arm of the Economics and Statistics Administration, is
logging tens of thousands of calls a month. Where better for these
agencies to reside than the Department that is solely committed to
increasing the competitiveness of American business in today's global
economy.
In sum, the Congress, the Commerce Department, NABE and other
organizations and businesses share the same goal of improving the
organization, management, priorities and funding of our statistical
agencies. I hope that we can work together to pursue these ends.
Background.--The Administration and the heads of the various data
collection agencies have opposed consolidating the current statistical
agencies into one main group. As a substitute plan, the Administration
sent a legislative bill to the 104th Congress which would permit data
sharing among the agencies. It is entitled the ``Statistical
Confidentiality Act'' and will be resubmitted in the 105th Congress.
NABE has been the most recent group to call for a consolidated
statistical agency.
economic statistics initiative
Question. Mr. Daley, the Department of Commerce is continuing an
initiative started in the Bush Administration (then known as the
``Boskin Initiative'') that has as its goal the improvement of the
quality of data collected that are essential to businesses and policy
makers. Although CPI bias makes most of the headlines today, there is
clearly a need for continued improvement in all of our economic
statistics so they better reflect the increasing role that technology
and services play in our economy.
With the Department's budget, both the Bureau of the Census and the
Economic and Statistical Analysis would receive increased funding under
such an initiative.
Does the Administration's 1998 budget request specifically continue
the ongoing economic statistics improvement initiative within the
Department of Commerce?
Answer. Yes. The Administration's fiscal year 1998 budget request
seeks to get the Mid-Decade Strategic Plan initiatives of the Bureau of
Economic Analysis (BEA) back on track.
Following its landmark Mid-Decade Review, BEA reprogrammed its work
in fiscal years 1995-96, shedding some important, but lower priority
programs to make a down payment on the most critical of its Mid-Decade
initiatives. As a result, it made significant progress in implementing
its strategic plan for improving the national, regional, and
international economic accounts.
For fiscal year 1997, however, no new funds were appropriated, and
BEA has exhausted the opportunities for making additional cuts in
existing programs without jeopardizing its core statistics. Thus, BEA
has been unable to undertake any of the major new projects proposed in
the fiscal year 1997 budget and is concentrating its efforts instead on
building upon last year's improvements. It has, for example, extended
the improvements made to GDP in fiscal years 1995 and 1996 to its GDP
by industry estimates and will soon extend them to its capital stock,
gross state product, and international estimates.
Now that we are at the point of completing the improvements already
in the pipeline, our users are growing restless, waiting for us to go
further in implementing our strategic plan. The National Association of
Business Economists, which has been a staunch supporter of BEA's plan
and of the improvements to date, has nonetheless noted that ``lack of
investment in statistical infrastructure has left us with a system that
does a better job of measuring the industrial economy of the past than
the information economy of the present.'' Business Week has published
articles and editorials chiding BEA for not moving faster with quality
adjustments for high-technology goods and for its failure to develop
estimates of the value of computer software. The funding we have
requested for fiscal year 1998 will permit BEA to begin work on these
and the other major new initiatives which had to be placed on hold last
year, as outlined in our budget request.
Question. You have requested an increase of $313 million for work
on the Census 2000. Will this amount allow you to avoid the errors
inherent in the 1990 census? (Aside: The original 1990 census had a
problem with undercounting).
Answer. The Bureau has requested an increase of $270 million for
work on the Census 2000. The fiscal year 1998 request is an integral
part of the Bureau's plans for Census 2000 that will produce a more
accurate and less expensive Decennial Census with a one-number census
that is right the first time. The requested increase will allow us to
work on the following activities that have been improved or
reengineered to correct problems we experienced in the 1990 census:
Address List Development.--The requested funding level will allow
the Bureau to begin compilation of the Census 2000 address list in
areas where the U.S. Postal Service does not deliver mail using house
number/street name addresses; basically, in small towns and rural
areas. The Census Bureau expects to complete this listing in fiscal
year 1999, which will allow local and tribal governments to review the
addresses for their jurisdiction beginning in January 1999.
Partnerships with local and tribal governments in reviewing the address
list is a critical component in obtaining a complete and accurate
address list and, ultimately, in obtaining an accurate census.
Field Data Collection and Support Systems.--The requested funding
level will allow the Bureau to open, set up, and staff temporary field
offices called regional census centers (RCC's) and census field offices
(CFO's). These temporary offices are needed to accomplish the improved
address listing work.
Testing, Evaluation, and Dress Rehearsal.--The requested funding
level will allow the Bureau to deploy the full range of Census 2000
activities in the dress rehearsal. Analysis of these operations in a
dress rehearsal setting is vital for refining multiple mail contacts,
telephone assistance, effective advertising, community-based outreach,
and other operations, especially those designed to improve the accuracy
of Census 2000 relative to 1990.
Census Marketing, Communications and Partnerships.--The requested
funding level will allow the Bureau to perform extensive work with a
contractor(s) to develop the Census 2000 advertising campaign. The
campaign is being designed to reduce the number of households that do
not respond to the questionnaire mailings and require costly follow-up
visits by targeting people who might not respond otherwise. Experience
from the 1990 Census shows that when awareness of the Census increases,
response rates are higher. In addition to looking at how messages
should be strategically placed on radio, in magazines, on TV, and other
media, the Census Bureau will hire ``partnership specialists'' who will
work with state, local, and tribal governments, as well as with
community organizations, businesses, churches, schools and local media
to make people more aware of Census 2000 and to encourage response to
the census. Information obtained from the dress rehearsal will be used
to refine the campaign for Census 2000.
Question. What has been accomplished by the Census Bureau under the
economic statistics initiative to date? What are your primary programs
going forward? (Aside: In fiscal year 1998, Census will start to
implement a re-classification of industrial codes).
Answer. Within available funding levels, we have implemented cost
efficiencies in order to redirect funds to improve some of our
remaining economic statistics programs. We have:
--Provided significant staff support for the development of the North
American Industry Classification System (NAICS), the first
total revision of the Nation's industrial classification system
in more than 50 years. Canada, Mexico, and the United States
formally adopted NAICS on December 10, 1996. The 1997 Economic
Census is the critical first step in implementing the NAICS in
the Census Bureau's economic programs.
--Expanded coverage for the services sector by increasing the number
of industries covered by the Service Annual Survey, as well as
by providing receipts information for additional 4-digit
service industries, new data for tax-exempt firms in selected
service industries and receipts-line information for some
presently covered industry groups.
--Implemented the Annual Capital Expenditures Survey, the
Government's first statistically rigorous survey of business
investment, and initiated a reorganization of our investments
program to eliminate duplicate requests while ensuring that
data user needs are fully met.
--Developed a monthly trade statistics release that now covers both
merchandise trade and trade in services.
--Implemented alternative data collection techniques for the
Manufacturers' Shipments, Inventories and Orders Survey as well
as developed large company information profiles to increase and
improve future survey cooperation.
--Provided estimates of nonresidential reconstruction through an
``add on'' to a Department of Energy survey of commercial
buildings.
--Worked jointly with the Bureau of Labor Statistics (BLS) to improve
business list information through BLS-SSEL (Census' Standard
Statistical Establishment List) business list match operations.
--Improved the quality of our data on exports to Canada as well as
reduced the reporting burden on American exporters by
exchanging trade data with Canada (using Canadian import data
for U.S. export data and vice versa).
--Implemented a system to provide establishment data to the Bureau of
Economic Analysis (BEA) to be matched with BEA's foreign direct
investment data to enhance significantly the analytical
usefulness of the Government's data on foreign direct
investment.
--Began implementation, in conjunction with the U.S. Customs Service,
of the Automated Export System (AES), a system to automate
totally all export reporting.
--Participated with other Government agencies in the development of
legislation that provides for data sharing among Federal
statistical agencies. The legislation was introduced in the
104th Congress.
--Implemented a new sample for the Advance Monthly Retail Sales
(MARTS) survey which nearly doubles the sample for the
automotive group. With the new sample, we have reduced
revisions for retail sales and the automotive group. Next fall,
we plan to select another new sample based on the results of
the 1992 Economic Census.
--Improved the estimates of private nonresidential buildings for the
Value of New Construction Put in Place series resulting in an
additional $25 billion for total private nonresidential
buildings in 1995. In addition, we changed the methodology for
calculating the monthly price index for single-family houses
under construction. These revisions bring our series in line
with BEA's series on fixed investment which was included in
their recent benchmark revision.
Many activities remain to be done, including:
--Continue improvements to key economic indicator data, specifically:
--Increase the sample size for the advance monthly retail trade
survey to further reduce sampling error and monthly
revisions.
--Reevaluate the scope, content and conceptual measure of wholesale
trade, and implement improvements to the program based on
the current characteristics of wholesalers, their
operations and practices. Current measurement concepts have
not kept pace with changes taking place in wholesale
distribution industries.
--Continue improvements to the construction statistics program in
the areas of nonresidential building construction
expenditures and pricing information, as well as research
into techniques and methods to measure construction at
manufacturing and industrial sites. These initiatives
address serious deficiencies in the measurement of
nonresidential construction; we currently are missing $20
billion of activity in this sector.
--Continue improvements in the coverage of the services sector, the
fastest growing segment of the economy, by: (1) implementing an
annual survey of the information sector--data currently
available only every 5 years; (2) implementing annual surveys
of the insurance and real estate industries--data currently
available only every 5 years; and (3) introducing coverage of
corporate financial data; there is currently no data available
for the service industries.
--Implement fully NAICS in the current economic programs. Additional
funding is critical given that in fiscal years 1995 through
1997, we requested $11.5 million for NAICS but received
appropriations of only $1 million. Lack of funding would
jeopardize implementing NAICS into current economic surveys.
--Reduce respondent burden by expanding use of electronic reporting
and administrative data; by modernizing and augmenting our
computerized business register file as the first phase of re-
engineering the collection of data by better matching data
requests to company record keeping practices, and by developing
new sampling methodologies that spread reporting burden more
equitably among small firms. Failure to implement innovative
methods that reduce reporting burden would jeopardize our
history of high response rates.
Question. How much of this year's additional, overall funding
request would go toward the economic statistics initiative?
Answer. The current economic statistics request for the Census
Bureau does not include any additional funds for improvements in
economic statistics. Rather, all funds would be used towards funding
base economic statistics programs. However, the fiscal year 1998
request does include funding for the 1997 Economic Censuses and Census
of Governments. These mandatory censuses form the backbone of economic
data for the next five years. They are cyclical in nature, and are not
program increases.
Question. Within the $6 million increase requested for the Economic
and Statistical Analysis division, how much would be devoted to the
economic statistics initiative?
Answer. Within the $6 million increase requested for the Economic
and Statistical Analysis budget, $3 million will be devoted directly to
the statistical improvement work outlined in BEA's Mid-Decade Strategic
Plan and $1.3 million will be used to complete the migration of BEA's
computer systems to the state-of-the-art local area network environment
embodied in BEA's Information Technology Strategic Plan. An additional
$1.8 million will be devoted to adjustments to base reflecting the
increasing costs for personnel and equipment that will allow us to
maintain our pared-down base program unharmed.
Question. In your Mid-Decade Strategic Plan, you laid out an
ambitious agenda for improving the quality of output and price
measures. Which of these initiatives do you hope to pursue in fiscal
year 1998?
Answer. Our fiscal year 1998 budget request would allow the Bureau
to move ahead aggressively with the next steps in its strategic plan,
which include improving our measures of high-tech goods and financial
services, implementing the new North American Industry Classification
System, developing estimates of the value of investments in computer
software, and addressing newly emerging or growing gaps in
international finance and trade in services.
Despite a lack of funds, BEA has thus far made substantial progress
on our plan for improving the accounts, and our work has been well
received. In fiscal years 1995-96, by reprioritizing our work, we
implemented several major improvements in the quality of output and
prices outlined in our Mid-Decade Strategic Plan. For example, we
introduced annually updated, chain-weighted indexes for real GDP and
prices, and quality-adjusted and updated price indexes for
semiconductors and hospital care, which have won high praise from
academics, business economists, and the business press for addressing
many of the same issues now plaguing the Consumer Price Index (CPI).
Indeed, BEA has come to be regarded as the world's leader in this area:
The Federal Reserve recently switched to BEA's ``chain-index'' method
for its index of industrial production, the Bureau of Labor Statistics
(BLS) is going to start publishing alternative measures of changes in
the cost of living ``similar to that used in the chained-price indexes
in the National Income and Product Accounts,'' and a number of G-7 and
other countries are looking to BEA for leadership and advice in moving
to chain indexes.
In fiscal year 1997, BEA has been unable, without additional
funding, to undertake any of the ambitious new projects that were
proposed in its fiscal year 1997 budget request. However, as noted
earlier, we have been able to make good progress in following up on
projects already in the pipeline.
Unfortunately, we have not been able to accomplish as much as we
could have were additional funding available. The Administration's
fiscal year 1998 budget request would get BEA's Mid-Decade Strategic
initiatives back on track. Without such funding, BEA's efforts will
increasingly focus on marginal extensions of earlier efforts. In the
meantime, the gaps in coverage will only grow larger, as existing
problems worsen and new problems emerge as the economy grows and
changes.
As I recall, the original economic statistics improvement
initiative was envisioned to cost $230 million over a five-year period
(fiscal years 1992-1996) with most of the funding going to agencies of
the Department of Commerce, the Departments of Labor and Agriculture as
well as to the National Science Foundation.
Question. Could you provide for the record, an update on the
Administration's plan to carry out this program, including the funding
provided to date, the current estimate of the total cost, and funding
projections for the next five years?
Answer. During the period fiscal years 1992-97 the Bureau of
Economic Analysis, part of the Economic and Statistical Analysis budget
account, requested appropriations some of which were a repeat request
for funds turned down in prior years totaling approximately $39 million
for its economic statistics initiative. During this period, however,
only $2.6 million has been appropriated and another $6.3 million
provided via reprogrammings and transfers. For fiscal year 1998, we are
requesting a permanent increase of $6.2 million, which, except for
cost-of-living increases, should go a long way toward enabling BEA to
maintain the level of improvements necessary to keep up with the
rapidly growing and changing U.S. economy in the foreseeable future.
The funding projected for next five years for ESA maintains the fiscal
year 1998 requested increase of $4.3 million for the Economic
Statistics Improvement initiative. The outyear amounts for this
initiative will be reevaluated based on need with each budget request
cycle.
trade compliance center
Question. Mr. Secretary, in the Fiscal Year 1997 Commerce, Justice,
State, and the Judiciary Appropriations Act, Congress provided $2.5
million to establish a Trade Compliance Center within the Department.
At the time, I thought this was a good idea, and I have advanced some
of my own initiatives to improve our ability to assist businesses
working across the border and to monitor trade activities.
Could you tell the Subcommittee the status of the Trade Compliance
Center initiative?
Answer. On July 24, 1996, former Commerce Secretary Mickey Kantor
and Acting U.S. Trade Representative Charlene Barshefsky announced the
creation of the Department of Commerce's Trade Compliance Center (TCC)
under the direction of a new Deputy Assistant Secretary for Agreements
Compliance. Over the past ten months, great strides have been made to
develop this new organization and activity. To date, the Trade
Compliance Center has developed and implemented an ambitious program
plan, bringing together an initial staff, conducting upwards of 30
specific investigations of alleged trade compliance problems,
developing techniques and approaches to comprehensively monitor foreign
compliance with select trade agreements, and developing a prototype
database system which will eventually include text of all major
bilateral and multilateral trade agreements and other information
relevant to monitoring and evaluating foreign compliance with trade
agreements.
Question. What specific activities will the Trade Compliance Center
carry out for the Department?
Answer. The new Trade Compliance Center (TCC) has been designed to
systematically, comprehensively, and proactively monitor and evaluate
foreign compliance with trade agreements and other standards of
behavior to ensure that U.S. business and labor receive the full
benefits of these international trading regimes. Major projects
underway include:
Monitoring Projects.--The TCC is responsible for developing
methodologies and implementing techniques to systematically monitor and
report on foreign compliance with specific trade agreements. Since each
agreement is unique, the TCC intends to establish an appropriate
monitoring regime for approximately one trade agreement per month. In
1997, the TCC is developing ongoing monitoring projects to track
foreign compliance with (1) the World Trade Organization agreements on
Trade Related Investment Measures (TRIM's), (2) Trade Related Aspects
of Intellectual Property (TRIP's), (3) WTO accession agreements,
including a possible accession agreement for China, and (4) the OAS
agreement on corruption.
Investigations.--To date, the TCC has reviewed 30 specific
compliance cases. The TCC expects to open two to three new cases per
month. The TCC also investigates and analyzes specific compliance
problems, working with American business and labor to resolve
compliance disputes, analyze compliance complaints, support USTR
analyses and investigations, and develop compliance priorities and
propose effective solutions. A fully staffed TCC expects to open as
many as 100-150 compliance case files per year.
Data Base.--In cooperation with the Department's National Institute
of Standards and Technology (NIST), the TCC is developing and
implementing a prototype database and computerized information
retrieval system which will allow the U.S. Government and the private
sector to expand greatly the Nation's ability to deal with market
access and compliance issues. This includes, for the first time ever, a
comprehensive, on-line database of bilateral and multilateral trade
agreements and other information relevant to monitoring and evaluating
foreign compliance with trade agreements.
Question. Does the Department expect to spend the full $2.5 million
on the Center this fiscal year?
Answer. Yes. ITA has allocated $2.5 million and 25 FTE for the TCC
for fiscal year 1997, consistent with the direction of the
Appropriations Committee. After payment of its allocable share of ITA
and DOC overhead costs, TCC will have a net operative budget of $1.78
million.
Question. Does the Department engage in the practice of ``taxing''
such funds as so many agencies do to fund other departmental activities
at the expense of the program Congress is trying to support? If so,
what is the rationale for such ``taxing?''
Answer. The Department of Commerce does not ``tax'' programs to
fund other Departmental activities. Funds appropriated to ITA are used
to carry out program activities, including paying the expenses for
executive direction, administration and costs associated with services
obtained from the Department in order to operate the various programs.
Funding for each of these three categories is included in the
appropriated amounts available for each of ITA's four program line
items. These three categories of costs are not separately funded in
ITA's appropriation.
Question. Does the Department expect to achieve the full
anticipated staffing level of 25 full-time equivalent positions (FTE's)
this fiscal year?
Answer. Ninety percent of the fiscal year 1997 TCC operating budget
of $1.78 million will be spent covering personnel compensation and
benefits, basic office supplies and infrastructure. This will allow for
the hiring of 25 full-time employees, acquisition of basic supplies and
equipment for these employees, and modest costs associated with
configuring and wiring office space to accommodate the TCC's new data
base and computerized information retrieval. Due to the timing during
the year in which the hiring occurred, TCC will use approximately 20
FTE in fiscal year 1997. Fiscal year 1998 anticipated FTE usage is 25.
Question. How many FTE's are currently devoted to the Trade
Compliance Center?
Answer. As of March 30, 1997, there are 17 individuals employed in
the Trade Compliance Center. Additional staff members are expected to
be brought on board in May or June.
Question. Would you please provide the Subcommittee with a brief
report when the Trade Compliance Center is in place?
Answer. The TCC is in place. The TCC is charged with developing a
computerized database of trade agreements, associated documents,
analytic data and other information useful to the Government and the
private sector in monitoring and evaluating foreign compliance with the
trade agreements. The TCC is also responsible for developing
methodologies and techniques to systematically monitor and report on
foreign compliance with specific trade agreements. Additionally, the
TCC is charged with investigating and analyzing specific compliance
problems.
To date, the TCC has developed and implemented an ambitious program
plan, conducting upwards of 30 specific investigations of alleged trade
compliance problems, developing techniques and approaches to
comprehensively monitoring foreign compliance with select trade
agreements, and developing a prototype database system which will
eventually include text of all major bilateral and multilateral trade
agreements and other information relevant to monitoring and evaluating
foreign compliance with trade agreements. Working together with the
National Institute of Standards and Technology (NIST), the TCC has
developed a database prototype consisting of 25 trade agreements and a
limited number of associated documents. The TCC now plans to have a
database consisting of 25 to 50 trade agreements and some additional
material available to the public via the Internet before the end of
this year. Enhancement of the database with additional information and
functionality will come as the TCC reaches its full staffing level.
increases in patent and trademark fees
Question. Your testimony proposes changes to separate policy
functions of the Patent and Trademark Office (PTO) from business
operations.
How will this help the PTO deal with the reduced resources that
will result under the President's proposals to hold $92 million in
surcharges in reserve in 1998, and all $119 million in reserve
thereafter, which in effect means the President would spend the
surcharges on other programs?
Answer. Enactment of PBO legislation would provide us with better
tools to function within our budget levels. Under the Vice President's
Performance Based Organization (PBO) effort, the PBO would be more
flexible and autonomous, and make managers accountable for measurable
results.
In the meantime, we can make progress toward this goal of a PTO PBO
through administrative actions. We have just submitted a reprogramming
proposal with this in mind. This administrative reorganization would be
a significant advance toward accomplishing a more business-like
operation.
Question. Those who pay these fees say they are told by PTO
officials that the President's proposal would cancel plans to hire 500
new patent examiners and would more then double the patent waiting time
from the current 20 months. Is this true? If so, is it right? If not,
what do you expect would occur.
Answer. In the background information that follows, the surcharge
amount for 1997 should be $115 million for a total of $717 million. For
1998, the change from 1997 is thus a $31 million increase.
In light of the Administration's priority to reduce the budget
deficit, $92 million in patent surcharge funds are proposed as deficit
reduction offsets in 1998. To function within this budget level the PTO
is not currently planning to hire new patent examiners in fiscal year
1998. In fiscal year 1999, under the current planning assumptions, the
PTO would only hire patent examiners to replace those who have left
through attrition. This means that under current assumptions, patent
pendency will rise from 20.8 months in fiscal year 1996.
The Administration believes that this is the correct course of
action in the context of the higher and bipartisan priority of reducing
the Federal deficit and balancing the budget.
Background.--In 1997, PTO will collect $602 million in fees and
another $119 million in surcharges from patent applicants, for a total
of $721 million, of which PTO is allowed to spend only $663 million. In
1998, the budget would allow the PTO to collect a total of $748 million
(a $27 million increase from 1997) from applicants, but would allow PTO
to spend only $656 million, a $7 million decrease from 1997. The
surcharge, enacted as part of OBRA in 1990, was ``sold'' as having the
patent community fully fund the operations of the PTO. Now, patent
seekers pay more than the costs of PTO, similar to the SEC, and the
excess could be considered a tax.
closure of the national weather service southern region headquarters
Question. Secretary Daley, I have been contacted by constituents
who are concerned with the decision by the National Oceanic and
Atmospheric Administration (NOAA) to close its National Weather Service
(NWS) Southern Region Headquarters. This weather center is responsible
for managing weather warning, forecast, and observation programs for
New Mexico and nine other states.
My concern stems from the important services this office provides
New Mexico and the National Weather Service in forecasting and weather
warning support. Understanding that this region is the most
meteorologically active region in the United States and that over 50
percent of all severe weather events occur in this region, I believe
this closure would pose a significant degradation of service provided
by the National Weather Service. In addition, I believe Congress made
it very clear that any reductions which were required to meet budgetary
goals should be applied first to staffing levels at the NWS central
headquarters according to a streamlining plan for the NWS central
headquarters office.
What are the current plans for the National Weather Service
Southern Region Headquarters?
Answer. The fiscal year 1997 appropriation for NWS base operations
has resulted in a reduction of $27.5 million from the fiscal year 1996
enacted level. Of that amount, $10.5 million was to be taken out of NWS
headquarters and central operations in the National Capital area (NCA).
NOAA has developed a plan consistent with this Congressional guidance.
In addition, and as a result of the remaining shortfall, NOAA will
accelerate the planned closure of the Southern Regional Headquarters
(SRH) to the end of fiscal year 1997. Under the current plan, NOAA will
transfer program management and administrative responsibilities to the
Eastern Region Headquarters (ERH) in Bohemia, New York, and Central
Region Headquarters (CRH) in Kansas City, Missouri.
To begin the transition process, NOAA will transfer program
oversight to the ERH and CRH during the third quarter of fiscal year
1997. Administrative functions and staff will remain in Fort Worth for
the remainder of the fiscal year to transition budget, financial, and
administrative functions. The remaining SRH staff will be responsible
for completing the required closeout and transition functions. NWS will
also reassign two employees from SRH to CRH for a period of two years
to serve as a transition focal point for hurricane issues and one
person will be added to the ERH staff to help with the regional
transition. In addition, NWS will transfer one employee from SRH to the
State Emergency Management Office in Austin, Texas, for a period of two
years to serve as a transition focal point for emergency management
issues. A summarized schedule of sample activities and tasks is as
follows:
--announce regional realignments (April);
--compile vacancies, reassignments, voluntary separations (March-
June);
--reconfigure Central and Eastern Region Communication Networks
(April-June);
--reassign NOAA administrative support responsibilities;
--delegate budget and personnel authority to CRH and ERH (May);
--implement new regional boundaries and transfer hydrometeorological
program (July);
--arrange for transfer of space to GSA (July-September); and
--closeout administrative functions (October).
A more detailed transition plan has recently been submitted to
Congress, entitled ``Report on Transition of Southern Region
Headquarters and Regional Realignment.''
Question. What are the current plans for streamlining the National
Weather Service other than closure of Southern Region Headquarters.
Answer. As part of the Strategic Plan for the Modernization and
Associated Restructuring, the NWS intends to streamline all aspects of
its program operations. Under this plan, NWS will streamline its
headquarters operations, centralized operations and support and field
operations to optimize efficiency and effectiveness. More importantly,
the local warning and forecasts of the NWS will reap the greatest
benefit from the Modernization through improved warning lead times for
severe weather and better accuracy and timeliness for local forecasts.
The details of these plans are outlined in the National Implementation
Plan (NIP) which is updated and submitted to Congress on the annual
basis.
As a result of lower funding levels in fiscal year 1997, NWS plans
to implement a number of additional streamlining activities.
Specifically, NWS will (1) accelerate reductions in headquarters,
central operations and support staffing levels and; (2) re-engineer
certain program operations. NWS will accelerate planned reductions in
headquarters employment levels by 113 positions by the end of fiscal
year 1997. These reductions will advance, up to four years, the NWS
strategic plan goal for streamlining its headquarters personnel levels.
NWS will also streamline other headquarters activities. Starting in
fiscal year 1997, the NWS will overhaul its use of headquarters
management support contracts focusing on only those contract tasks that
directly support NWS operations. The NWS will also re-engineer program
operations by reducing non-operational travel and central
administrative support, and outsourcing support for central computer
operations. In total, these streamlining actions will result in over
$11 million in permanent savings to NWS base operations.
NOAA has also identified approximately $9.7 million in pay-related
inflationary costs and $5 million in buyout/RIF costs that must be
absorbed by the NWS in fiscal year 1997 bringing the total budget
reduction to $42.2 million. In order to offset these costs, NWS reduced
staffing levels outside NCA including the National Centers for
Environmental Prediction (NCEP), further reduced National Buoy Center
sensor development activities, and reduced allocations to the NWS
Regions and NCEP.
Question. Is there currently a streamlining plan in place for the
NWS Central Headquarters.
Answer. Yes, as part of the overall personnel streamlining plan,
the NWS has developed a plan for streamlining personnel operations at
NWS headquarter offices.
Question. If there is in fact a streamlining plan for the central
office, would you provide me with a detailed summary of those plans?
Answer. Due to the extent of the fiscal year 1997 accelerated
personnel reductions, each NWS headquarters office is revising its
staffing plans to support future ``modernized operations.'' Upon final
approval by the Administration, a detailed summary of these plans will
be provided to Senator Domenici's Office.
public telecommunications facilities program [ptfp]
Question. Secretary Daley, the Administration's fiscal year 1998
budget proposes to terminate funding for the Public Telecommunications
Facilities Program (PTFP), which provides grants to public radio and TV
stations for equipment. The PTFP program was funded at $15.25 million
in fiscal year 1997. As recently as fiscal year 1995, PTFP received $29
million.
Mr. Secretary, I have been a longtime supporter of the Public
Telecommunications Facilities Program because it is an important source
of funding to rural states like New Mexico. PTFP grants enable local
broadcasting stations to provide quality programming to populations
that are generally underserved.
The budget justification documents indicate that the Administration
proposes to terminate the PTFP program, stating that the support for
public television and radio broadcasters will rest with the Corporation
for Public Broadcasting. Could you please explain how the
Administration envisions that such support--for actual facilities and
equipment--will continue through CPB?
Answer. The Department of Commerce understands that there is no
legislative guidance for Corporation for Public Broadcasting (CPB) to
provide funds for public broadcasting facilities and equipment. CPB, if
given such authority, will be required to develop their own mechanisms
and the necessary expertise in these areas.
Question. Do you think that public broadcasting infrastructure in
New Mexico and throughout the country can be sustained without federal
support?
Answer. In the past, there has been demonstrated demand for Federal
support for public broadcasting. Based on the CFB Presidential request,
we would expect the agency to sustain this support.
Question. I have supported past efforts to provide distance
learning opportunities to rural areas and some such projects have been
successfully supported in New Mexico with PTFP funding. For example,
the Hispanic Educational Telecommunications System received its first
grant in 1995. $1.1 million was awarded to equip nine schools.
The Northern New Mexico Network for Rural Education received a
grant of about $756,000 to link additional sites with this system and
the American Indian Higher Education Consortium, which was also
equipped through PTFP. I know additional tribal schools in New Mexico
would like to link to this network.
Mr. Secretary, you talk about the importance of partnerships. The
PTFP grants are partnerships because state and local matching funds are
provided under this program. Why aren't these partnerships a priority
for the Administration?
Answer. Partnerships formed through PTFP projects have been an
important element for the program. They have been a sign of community
support for the public broadcasting stations and distance learning
facilities that are funded through PTFP. If Congress supports the
termination of PTFP, we hope that public broadcasting stations will
strengthen their relationships with non-federal partners as they find
new ways to sustain their facilities.
Question. The budget documents also indicate that the termination
of PTFP is proposed due to changing national priorities. I note that
the budget also proposes a $14.5 million increase for the President's
information infrastructure grants program. I know that the
``information superhighway'' is a priority for the Administration, but
is it realistic to assume that rural areas will be served on the
``information superhighway'' in the near term?
Answer. The Information Infrastructure Grants program is helping to
develop a national information infrastructure that is accessible to all
citizens, in rural as well as urban areas. In 1996, almost 90 percent
of the program funds went to projects serving rural America or
traditionally underserved Americans living in urban areas. Since its
inception, the Administration has requested more funding for the
Information Infrastructure Grants program than Congress has
appropriated. The additional funds will allow the program to fund more
models of information infrastructure and reach more areas of the
country in order to further encourage replication and infrastructure
development across the Nation, particularly in underserved areas.
Question. Is it your assessment that information infrastructure
grants will truly meet the need for basic infrastructure to serve rural
areas as the PTFP program has succeeded in doing through its support
for public broadcasting stations?
Answer. The information infrastructure grants program could not
provide enough funds and is not designed to ensure that every rural
community's basic information infrastructure needs are met. The program
funds model projects that show these communities how they can develop
effective information infrastructure and apply technology to improve
and expand valuable services to the community. By evaluating these
model projects and disseminating their results, the program helps other
communities to learn from the program's grant recipients as they
develop their own information infrastructure.
Background.--The Administration has proposed both reductions and
terminations for the PTFP program, largely focusing its attention on
the information infrastructure grants program.
For New Mexico alone, $1.45 million in grant applications are being
submitted for fiscal year 1997 funding with most from schools. Overall,
some $50 million in applications are likely to be submitted for fiscal
year 1997 funding which is at $15.25 million.
u.s. innovation partnership
Question. The Department of Commerce recently announced the
formation of the U.S. Innovation Partnership which was formed to foster
economic growth through the development of new technologies. I am
interested in this new partnership's plan to begin developing new
programs to stimulate technology investment and access to new
technology in rural America. I believe this partnership could be
helpful in my initiative to bring Internet related businesses to rural
towns in New Mexico. I believe the Internet poses significant new
possibilities for rural economic development, however, if rural towns
do not have necessary telecommunications infrastructure for data
transmissions, our efforts will be in vein.
What agencies and various entities are participating in the U.S.
Innovation Partnership?
Answer. The U.S. Innovation Partnership (USIP) is a widely-
inclusive organization with involvement from both the public and
private-sectors. The USIP builds on the recommendations of the Carnegie
Commission's report ``Science, Technology and the States in America's
Third Century'' and the ``State-Federal Technology Partnership Task
Force Final Report,'' which was produced in collaboration with the
National Governors' Association, the National Conference of State
Legislatures, the White House Office of Science and Technology Policy,
the Carnegie Commission on Science, Technology & Government, and the
American Society of Mechanical Engineers.
The USIP involves many public and private-sector representatives
from organizations such as the States Science and Technology Institute,
the American Society of Mechanical Engineers, small businesses,
universities, and national laboratories. Currently, USIP participation
includes the following 20 governors and 13 Federal agencies:
Participating Governors
Governor Roy Romer, Colorado; Governor John G. Rowland,
Connecticut; Governor Carl T.C. Gutierrez, Guam; Governor Benjamin J.
Cayetano, Hawaii; Governor Bill Graves, Kansas; Governor Angus S. King,
Maine; Governor Parris N. Glendening, Maryland; Governor John Engler,
Michigan; Governor Marc Racicot, Montana; Governor E. Benjamin Nelson,
Nebraska; Governor Bob Miller, Nevada; Governor Christine T. Whitman,
New Jersey; Governor Gary E. Johnson, New Mexico; Governor George E.
Pataki, New York; Governor James B. Hunt Jr., North Carolina; Governor
Tom Ridge, Pennsylvania; Governor Lincoln Almond, Rhode Island;
Governor Gary Locke, Washington; Governor Cecil H. Underwood, West
Virginia; Governor Jim Geringer, Wyoming.
Participating Agencies
Department of Agriculture; Department of Commerce; Department of
Defense; Department of Education; Department of Energy; Department of
Labor; Department of Transportation; Environmental Protection Agency;
National Aeronautics and Space Administration; National Institutes of
Health; National Science Foundation; Small Business Administration;
White House, Office of Science and Technology Policy (OSTP).
Question. How do you anticipate this new partnership will foster
economic growth?
Answer. The mission of the USIP is to achieve new economic growth,
high quality jobs, and globally competitive businesses by effectively
leveraging U.S. science and technology leadership and resources through
partnerships among states, the Federal Government, industry, and
universities. The USIP has adopted a number of strategies to fulfill
this mission including: build national excellence in manufacturing by
supporting development and commercialization of new products and
processes; build strategic partnerships among state governments, the
Federal Government, industry, and universities; strengthen the national
(versus Federal) science and technology system; and define and enhance
the role of the states in the national science and technology system by
maximizing the return on investment of public and private sector
investments in technology and by creating the necessary climate and
mechanisms to promote and facilitate innovation in the public and
private sectors.
The USIP is still in the process of establishing its work plan. The
following are examples of initiatives that are currently being
developed by the USIP to foster greater innovation and economic growth
in the American economy:
Experimental Program to Stimulate Competitive Technology.--Over the
past several years, the National Science Foundation's Experimental
Program to Stimulate Competitive Research (EPSCoR) has demonstrated how
the states, the Federal Government, and universities can work together
to increase the capacity of educational institutions to attract and
utilize public research funding. A similar effort is needed to expand
that capacity to move the resulting research into the marketplace.
The U.S. Department of Commerce's Technology Administration has
proposed to develop the Experimental Program to Stimulate Competitive
Technology (EPSCoT). This program will foster development of the
indigenous technology assets of states through better integration of
local, state, regional, and Federal investments in technology-based
economic growth. The USIP plans to involve states up front, in the
design stage, of Federal technology efforts; therefore, details of this
program will be worked out with representatives from state and local
governments, regional organizations, universities, and industry. The
fiscal year 1998 budget request to Congress is $1.65 million. It is
envisioned that this effort will help to establish technology
development, diffusion, and infrastructure creation practices in the
EPSCoR states, which are largely rural, that will then serve as models
for other states.
Expanding the Angel Capital Electronic Network.--The USIP seeks to
involve more states in the ACE-Net, which creates a nationwide
Internet-based system of matching ``angel''/wealthy individual
investors with business savvy and innovative entrepreneurs around the
country. Angels currently invest between $10 to $20 billion each year
in new ventures. However, the process of matching individual investors
with appropriate business opportunities is extremely difficult and time
consuming. ACE-Net uses Internet technology to bring investors the
comprehensive information they need to find investment opportunities
throughout the United States quickly and conveniently. This project is
being led by the U.S. Small Business Administration. More information
is available at: http://ace-net.unh.edu and http://
www.sbaonline.sba.gov.
Entreworld--Increasing Business Access to Technology Information.--
USIP partners will expand existing Federal science, technology, and
economic development information sources on the Internet to include
state program information and to be more user friendly to private
sector entrepreneurs. Through a partnership with the Ewing Marion
Kauffman Foundation's Center for Entrepreneurial Leadership, the USIP
will provide easier access for technology entrepreneurs to Federal and
state technology information through the foundation's nationally-known
website for entrepreneurs, http://www.entreworld.org.
Idea to Market Demonstrations.--USIP partners will jointly develop
and support new models for moving the ideas of individual inventors,
university professors, and researchers at national laboratories to the
commercial marketplace more quickly and with greater economic impact.
The USIP will review practices that stifle innovation and identify
incentives that help to stimulate the flow of ideas from individual,
university, and Federal labs to the commercial sector. The USIP will
foster demonstrations aimed at developing nationwide capacity to
support the movement of technology-based ideas to successful market
introduction.
Reciprocity Among States for Innovative Environmental
Technologies.--Regulatory reciprocity among the states will simplify
the process of compliance and reduce the cost for companies or
inventors to bring environmental technologies to market. The USIP
supports new initiatives as well as existing efforts to negotiate
reciprocal acceptance among state regulatory bodies of new technologies
validated and tested by any one of them. Current initiatives include a
six state memorandum of understanding to develop reciprocal data,
testing, and eventually permitting arrangements for new environmental
technologies and a ten state effort to explore the implementation of
International Standard Organization (ISO) 14000 standards, an
international performance-based environmental management system.
Question. What particular goals have been established with regards
to stimulating and providing access to technologies in rural Areas?
Answer. While the USIP does not have particular goals for
stimulating and providing access to technologies in rural areas, it is
anticipated that many of the activities undertaken by the USIP will
benefit rural areas. The ACE-Net provides a tool for entrepreneurs
located in rural areas to access angel investors throughout the country
through the use of the Internet. Likewise, the Entreworld initiative
will better link individuals, businesses, and governments, wherever
they are located, to Federal, state, and local science and technology
resources on the Internet in a format that is oriented to
entrepreneurs. And, the EPSCoT initiative specifically seeks to
stimulate the role of technology in states that are traditionally
under-represented in R&D funding, which often have largely rural
economies.
The Economic Development Administration (EDA) of the U.S.
Department of Commerce is also involved with the USIP in the area of
stimulating and providing access to technologies in rural areas. The
EDA provides economic development assistance to distressed areas. In
such areas, the EDA helps rural communities incorporate technology as a
tool for their economic development by providing funding assistance for
communities to plan technology-led economic development and create
technology-based infrastructure.
Question. Will this partnership be working to improve the
inadequate telecommunications infrastructures in rural towns?
Answer. A number of USIP partners are involved with
telecommunications infrastructure issues. The Commerce Department's
Telecommunications and Information Infrastructure Assistance Program
(TIIAP), which is a highly-competitive, merit-based grant program that
brings the benefits of an advanced national information infrastructure
to communities and rural towns throughout the United States, provides
the most direct means of addressing the issue in the short-term. The
EDA also provides funding assistance to communities to plan and build
telecommunications infrastructure.
One of the USIP's original task forces was co-chaired by Larry
Irving, Assistant Secretary for Communications and Information at the
U.S. Department of Commerce, who oversees the TIIAP program, because
USIP representatives identified telecommunications infrastructure as an
important issue that should be addressed by the USIP. This task force
allowed state leaders to work closely with Federal officials to
identify the most important issues facing the States in the area of
information infrastructure.
Additionally, at a number of regional meetings held by the USIP,
local officials discussed how new information infrastructure resources
could be more user friendly to entrepreneurs, people working in small
businesses, rural users, and to local governments. The USIP is
currently developing proposals in the areas of information
infrastructure and electronic commerce as well as continuing to engage
Federal, state, and local officials on these issues.
______
Questions Submitted by Senator Ernest F. Hollings
census budget
Question. This year's appropriations for the Year 2000 census
totals $84 million. In the fiscal year 1998 budget you have submitted,
you are requesting $374 million, an increase of $290 million. Within
two years you are proposing over $2.2 billion. Assuming sampling, the
total cost of the census will be $4 billion.
My understanding is that even these numbers may be understated and
that the Census has recently come up with new estimates. Could you tell
us how much more you think it will cost based on these WESTAT labor
surveys?
Answer. The Bureau is currently assessing the cost effects of the
WESTAT study recommendations. We will share our findings with the
Congress as soon as the assessment is complete.
Question. In constant dollars, that is adjusting for inflation, the
1960 census cost $11 per housing unit. In 1970 it had gone up to $19
per unit. In 1980 it increased to $20 per household and $25 per
household in 1990. I guess that means we are looking at over $35 in the
year 2000.
Why is the cost for the decennial census increasing so much after
adjusting for inflation?
Answer. A major goal in planning Census 2000 has been cost
reduction. Although the 1990 census cost $25 per housing unit in 1990
dollars, we expect Census 2000 will cost less per housing unit, in 1990
dollars, despite a steady decline in public cooperation and the fact
that wage rates for temporary field staff have increased faster than
the rate of inflation.
Many factors other than inflation affect the cost of a decennial
census: an increase in the number of housing units; declines in mail
response rates/public cooperation; attempts to improve the overall
count in a time of reduced mail response, poorer cooperation with
census-taking, and changes in the mobility of the U.S. population--
these changes require more follow-up, longer field work, and more
temporary census offices; attempts to reduce the differential in the
count among population groups, which involved special targeted
procedures for counting as well as expensive, intensive follow-up in
difficult areas--our plan for Census 2000 reduces the expense of the
intensive follow-up; attempts to obtain better small-area counts, which
involved improving address lists and developing an accurate electronic
mapping system.
Question. Could you please discuss some of the measures that you
are instituting to try to bring down the cost of the census.
For example, I understand that you are intending to spend $100
million for advertising on the assumption that for every 1 percent of
the population that mails back their census forms, you will save $25
million.
Answer. The Census Bureau will implement the following operations
designed to reduce the cost of Census 2000:
--Work with the U.S. Postal Service, as well as state, local and
tribal governments, to improve the quality of the address list.
In 1990, the Census Bureau compiled the address list from
costly private sources without help from these knowledgeable
partners.
--Use U.S. Postal Service information to identify vacant housing
units. In 1990, enumerators visited every housing unit from
which a completed form was not received, even those the Postal
Service identified as vacant.
--Use repeated mail contacts and motivating messages, in addition to
forms that are easier to read and complete, increase the chance
that households will return completed forms and avoid more
expensive personal visit follow-up.
--Use state-of-the-art technology--electronic imaging and intelligent
character recognition--to ``read'' completed forms and create
data files ready for tabulation. The 1990 census was
microfilmed and key entered. In Census 2000, the forms will be
scanned directly into computer files ready for tabulation.
--Offer ``point and click'' data tabulation so data seekers can
access the Census 2000 data and assemble their own data tables
instantly. This process is responsive to data user requests. It
is less costly and time consuming than publishing a large
number of printed paper volumes that still do not provide the
information needed by local governments.
--Make personal visits to a scientifically selected sample of
remaining nonrespondive households to ensure direct contact
with at least 90 percent of households in each census tract and
use that information as a basis for completing the follow-up
operation. This operation will produce more accurate results
less expensively and more quickly than the method used in 1990.
sampling
Question. There is a lot of controversy up here regarding sampling
to make the census more accurate. The House full committee chairman has
called it ``witchcraft.'' As I understand your plan it is to keep going
back and trying to count everyone, and when you've finally gotten to a
90 percent response you would use statistical models for estimating the
last 10 percent.
As I understand it, the Commerce Department uses sampling for a
number of surveys it carries out. I have a list here of 100 regular
surveys that the bureau performs using statistical sampling. The
economic projections that are announced every month, upon which Alan
Greenspan determines interest rates and the stock market goes up or
down--that is based on sampling isn't it Mr. Secretary?
Answer. Yes. Statistical sampling is used in almost all of the
economic and demographic censuses and surveys that the Census Bureau
conducts, including the Current Population Survey, the Survey of Income
and Program Participation, the Consumer Expenditure Survey, the Census
of Governments, the Annual Survey of Manufactures and the Monthly
Retail Sales Survey. Statistical sampling is a known, scientific,
quantifiable and transparent method for collecting data that are
important for businesses and policy makers.
Question. Why do you believe that a census using sampling would be
more accurate than a ``100 percent'' census?
Answer. As determined by the National Research Council, traditional
methods of enumerating the population have reached the limit of their
ability to produce an accurate count. For example, in the 1990 census
after repeated attempts to follow-up on nonresponding housing units,
the Census Bureau used less systematic techniques, such as proxy
responses and final attempt information (e.g. asking the neighbors) to
conclude our accounting of nonrespondents. Statistical estimation
techniques have long been used in the census for a number of purposes,
including close-out procedures, determining vacant units, and
imputation of missing census responses. The use of statistical methods
to sample nonrespondents and to improve the accuracy of the census is
formal recognition that modern statistical procedures can improve the
process, reduce costs, and produce better data for the Nation as a
whole, and for all component population groups, by reducing the
differential undercount.
Question. How much do you estimate that the sampling will save
compared with a ``100 percent'' census?
Answer. There two integral components to the Bureau's plan for
using statistical sampling in Census 2000--sampling for a nonresponse
follow-up (SNRFU) and integrated coverage measurement (ICM).
If the Bureau were not to use SNRFU in Census 2000, the estimated
cost would increase by $400 million, as additional field enumerators
would be needed to attempt to conduct field visits. This would have no
appreciable impact on the quality of data, at any level of geography,
in Census 2000.
If the Bureau were not to employ the use of the quality check
survey--ICM--the Bureau would save an estimated $200 million. However,
such a decision not to incorporate ICM would dramatically decrease the
quality of data for Census 2000 at all levels of geography--national,
state, Congressional districts and census tracts.
u.s. and foreign commercial service [us&fcs]
Question. Please provide the number of US&FCS American employees
and foreign service nationals by nation for the past four years.
Answer. The following chart shows the number of Americans, foreign
service nationals, and personal service contractors for each year
during the period 1994 through 1997.
--------------------------------------------------------------------------------------------------------------------------------------------------------
As of May 1997 Fiscal year 1996-- Fiscal year 1995-- Fiscal year 1994--
--------------------------- September 30, 1996 September 30, 1995 September 30, 1994
Region Country --------------------------------------------------------------------------------
Amer. FSN PSC's Amer. FSN PSC's Amer. FSN PSC's Amer. FSN PSC's
--------------------------------------------------------------------------------------------------------------------------------------------------------
ANESA Algeria ....... ....... ....... ....... 1 ....... ....... 1 ....... ....... 2 1
WH Argentina 3 9 5 2 8 4 2 8 5 2 8 2
EAP Australia 3 11 3 3 14 ....... 3 15 ....... 3 15 .......
EUR Austria 1 5 2 1 6 2 1 7 ....... 1 5 .......
EUR Belgium 2 8 ....... 2 8 ....... 2 8 ....... 2 8 .......
EUR Belgium-USEC 3 4 ....... 3 4 ....... 2 5 ....... 2 4 .......
WH Brazil 7 14 35 6 14 14 5 20 11 5 17 1
EUR Bulgaria 1 3 4 1 2 4 1 2 2 1 4 .......
WH Canada 6 18 7 5 19 3 4 20 1 5 21 .......
WH Chile 2 7 5 3 7 5 1 8 ....... 3 9 1
EAP China 13 ....... 50 10 ....... 46 12 6 39 8 5 26
WH Colombia 2 8 1 1 9 2 2 9 1 2 10 2
WH Costa Rica 1 3 ....... ....... 3 ....... 1 3 ....... 1 3 .......
ANESA Cote D'Ivoire 2 2 4 2 3 4 1 3 2 2 3 1
EUR Croatia 1 1 ....... ....... 1 ....... ....... 1 ....... ....... 1 .......
EUR Czech 1 2 5 2 3 8 2 3 5 2 5 5
EUR Denmark 1 5 ....... 1 5 ....... 1 5 ....... 1 5 .......
WH Dominican Republic 2 2 4 2 3 2 1 4 1 1 4 1
WH Ecuador 1 4 3 1 5 2 1 4 2 1 4 1
ANESA Egypt 3 8 3 3 7 3 3 8 3 3 8 3
EUR Finland ....... 3 1 ....... 4 1 ....... 4 ....... 1 4 .......
EUR France 5 19 12 5 19 14 5 20 11 5 25 5
EUR France-OECD 1 ....... ....... 1 ....... ....... 1 ....... ....... 1 ....... .......
EUR Germany 7 27 15 10 31 10 11 33 7 11 37 5
EUR Greece 1 8 1 1 8 ....... 1 8 ....... 1 8 .......
WH Guatemala 1 2 2 1 3 1 1 3 1 1 3 .......
WH Honduras ....... 1 3 ....... 2 4 ....... 3 2 ....... 3 1
EAP Hong Kong 4 6 13 3 9 10 3 12 2 3 11 1
EUR Hungary 2 6 2 2 6 ....... 2 6 ....... 2 6 .......
ANESA India 6 16 13 6 17 3 6 17 3 5 22 7
EAP Indonesia 5 7 13 5 12 8 5 13 3 4 13 2
EUR Ireland 1 3 2 1 3 2 1 4 1 1 4 .......
ANESA Israel 2 7 1 2 6 ....... 1 6 2 1 6 1
EUR Italy 5 19 1 5 20 ....... 5 21 ....... 5 21 .......
WH Jamaica ....... 1 1 ....... ....... ....... ....... 1 ....... ....... ....... .......
EAP Japan 15 38 6 15 39 1 14 41 1 13 39 1
NIS Kazakhstan 1 2 7 1 2 8 1 5 6 1 4 .......
ANESA Kenya 1 2 ....... 1 3 1 1 3 1 1 3 .......
EAP Korea 6 14 8 5 15 5 5 19 3 6 21 .......
ANESA Kuwait 2 3 3 2 4 2 2 5 2 2 5 1
EAP Malaysia 3 6 5 2 7 1 2 8 1 3 7 4
WH Mexico 13 27 31 12 29 32 11 29 15 11 30 15
ANESA Morocco 1 2 2 1 2 2 1 3 1 1 3 1
EUR Netherlands 2 9 2 2 9 2 3 9 1 3 9 .......
EAP New Zealand 1 4 4 1 3 ....... 1 4 ....... ....... 4 .......
ANESA Nigeria 1 4 4 1 6 4 1 7 4 2 5 4
EUR Norway 1 2 3 1 2 3 1 3 1 1 3 1
ANESA Pakistan 1 6 1 1 7 ....... 1 7 ....... 1 7 1
WH Panama 1 4 1 ....... 4 ....... 1 4 ....... 1 4 .......
WH Peru 1 1 6 1 3 5 1 2 3 ....... 2 3
EAP Philippines 2 6 11 1 6 9 1 7 8 4 7 9
MDB Philippines/ADB 1 2 3 1 2 3 1 2 3 1 1 2
EUR Poland 2 6 1 2 7 4 3 7 3 3 7 4
EUR Portugal 1 6 1 1 6 ....... 1 6 ....... 1 6 .......
EUR Romania 1 3 3 1 3 3 1 4 1 1 4 2
NIS Russia 8 15 19 9 19 13 9 25 5 8 23 2
ANESA Saudia Arabia 5 14 10 7 16 11 6 20 1 6 21 7
EUR Serbia ....... ....... ....... ....... ....... ....... ....... ....... ....... ....... 1 .......
EAP Singapore 3 7 6 3 10 7 3 10 5 4 10 1
EUR Slovakia ....... ....... 2 ....... 1 2 ....... 1 2 ....... ....... 1
ANESA South Africa 4 8 5 4 7 ....... 3 7 ....... 2 7 3
EUR Spain 4 12 2 4 11 2 3 12 1 4 13 1
EUR Sweden 1 6 1 1 7 ....... 1 8 1 1 8 1
EUR Switzerland 1 3 4 1 5 2 3 6 2 2 6 1
EAP Thailand 3 9 11 3 11 6 3 12 4 3 12 4
EUR Turkey 2 9 2 3 10 2 3 10 3 3 10 2
ANESA UAE 2 6 1 2 7 ....... 2 7 ....... 2 7 .......
EUR United Kingdom 5 13 5 4 13 4 5 14 1 4 16 1
NIS Ukraine 2 4 5 2 5 3 2 5 3 2 5 1
MDB United Kingdom/EBRD 1 ....... 1 1 1 1 ....... 2 ....... 1 1 .......
NIS Uzbekistan 1 2 6 1 ....... 5 1 2 3 1 1 2
WH Venezuela 2 8 4 2 8 1 3 11 1 3 9 1
EAP Vietnam 2 ....... 2 1 ....... ....... ....... ....... ....... ....... ....... .......
-------------------------------------------------------------------------------------------------------------
Total 198 502 399 190 552 296 187 616 190 188 625 142
--------------------------------------------------------------------------------------------------------------------------------------------------------
Question. In January 1995, I visited an office building in
Johannesburg, South Africa, with Ambassador Lyman and Millard Arnold,
Jr., the senior foreign commercial service officer. We visited two
floors that were being renovated for the US&FCS. I later learned that
the US&FCS decided that it did not like this commercial space and moved
to another site in South Africa. I was never informed of this change by
the Commerce Department.
What was the cost of the Johannesburg office renovation project?
Was there a cost in terminating this lease early, if so what was it?
What was the cost of new space that the US&FCS acquired? Please
describe the difference in space in square footage or other attributes
between the two sites. Is the US&FCS South Africa trade assistance
center located in this new facility, and, if not, why? What is the
mission of the trade assistance center?
Answer. There was no cost to the US&FCS unit for the renovation of
the 12th floor in the building where US&FCS Johannesburg was located at
the time of Senator Hollings' visit. The up-front cost for the
renovation of that space was absorbed by the building landlord at the
time the lease renewal was signed in 1994 because the landlord was
eager to have a prestige tenant remain in its building in the Central
Business District (CBD) of Johannesburg. When US&FCS moved, there was
no cost for terminating the lease early.
US&FCS management and post decided to move out of the CBD late last
year to better serve US&FCS Johannesburg's business clients who were
increasingly reluctant to visit the office downtown because of concerns
over crime and the declining infrastructure. Moreover, virtually all
our competition had already left the CBD for better locations in the
Northern Suburbs or the Midrand area. The U.S. Consulate is in the
process of relocating to a new facility in the same general area as the
US&FCS office for similar reasons.
The new office site provides greater accessibility, visibility and
facilities for expanded business services to American companies. The
facility has already provided enough space and versatility for a number
of successful single companies and United States Government (USG)
events.
The cost of the new office is $142,527 per year compared to $50,325
per year for the old office, and the net space at the new facility is
11,302 square feet compared to 6,501 square feet for the old space.
Concerning the Technical Assistance Center (TAC), we hope to
establish it under a Memorandum of Understanding with the Agency for
International Development (AID) by August 1, 1997. The purpose of the
TAC will be to establish commercial linkages between emerging South
African companies and U.S. companies as a means toward black economic
empowerment and expand U.S. private sector involvement in South
Africa's economy, resulting ultimately in helping small and medium-
sized U.S. businesses identify export opportunities in the South
African market.
We have extended an invitation to the South African Government
(SAG) to house the TAC in the new US&FCS facility. The SAG is still in
the process of evaluating our offer.
Question. Please provide a status report on the International Trade
Administration's (ITA) Trade Compliance Center (TCC). Please provide a
discussion of the office's accomplishments. What is the difference
between what this office does and what the Office of Agreements
Compliance in the Import Administration is charged with?
Answer. The following is the status report on our TCC. The new TCC
is designed to systematically, comprehensively, and proactively monitor
and evaluate foreign compliance with trade agreements and other
standards of behavior to ensure that U.S. business and labor receive
the full benefits of these international trading regimes.
The TCC is developing methodologies and techniques to
systematically monitor and report on foreign compliance with specific
trade agreements, investigating and analyzing specific compliance
problems, working with American businesses to resolve compliance
disputes. It also leads Commerce Department compliance advocacy
efforts. The TCC works with other elements of ITA to identify
compliance priorities, analyze compliance problems, and propose
effective solutions, often working in support of the United States
Trade Representative (USTR).
The TCC is also developing the government's first comprehensive
data base of trade agreements and compliance analyses. This data base,
now reaching prototype form, will allow the USG to expand greatly its
capability to deal with market access and compliance issues.
Working in conjunction with the Department's National Institute of
Standards and Technology, the TCC is developing the Nation's first
computerized data base of trade agreements, associated documents, and
compliance analysis.
The first requirement is that the data base of trade agreements be
complete. About 200 agreements have been identified so far, and it is
our expectation that all 200 agreements will be entered into the
database by the end of the year, utilizing task forces to accomplish
the objective expeditiously. Through May, thirty agreements had been
entered into the system.
One of the more innovative aspects of this new program will involve
a new kind of public-private partnership. Using the information
superhighway to provide data and government assistance directly to
businesses, the TCC is developing a new data base of trade agreements,
analyses and associated documents to help U.S. companies more readily
understand what their rights are and what foreign obligations exist
under the wide variety of existing trade agreements. This data base
will represent a quantum leap forward in directly helping business gain
maximum advantage from the 200 trade agreements and declarations
successfully concluded over the past four years. By making this
information available in a searchable form via the internet, we will
empower businesses to use these tools not only to identify barriers and
get help from the USG, but also as a mechanism for strengthening their
negotiating positions with foreign governments and businesses. We
anticipate an initial launch of public access to this information
during the fall allowing us to discover and correct any system
difficulties by next spring.
We are also taking steps to establish links from the TCC to the
country desks in order to ensure that each and every agreement has an
individual specified as responsible for its monitoring. Instruction
cables to all embassies are being prepared to introduce the TCC's role
and function and to identify the contribution the embassies should make
in identifying agreements and compliance problems. Also, we are in the
process of working with our trade development industry desks and
preparing a letter to industry trade associations inviting each
association to set up a compliance liaison function.
difference between trade compliance center and ia's office of
agreements compliance
Question. As part of reorganizing Import Administration (IA), the
Office of Agreements Compliance was abolished. That Office was charged
with monitoring compliance with suspension agreements by which IA
suspended its action in exchange for concessions by the foreign firm.
The new TCC is designed to systematically, comprehensively, and
proactively monitor and evaluate foreign compliance with all trade
agreements (other than IA's suspension agreements and other standards
of behavior, now handled by another IA unit) to ensure that U.S.
business and labor receive the full benefits of these international
trading regimes.
I have always strongly supported the US&FCS in its mission to
increase U.S. exports overseas. However, I am concerned of reports I
have heard that the agency is unilaterally changing its mission to
include promoting U.S. investment overseas, including establishing
manufacturing overseas. Has there been a formal policy change in the
US&FCS or is this an ad hoc policy on a post by post basis? When
evaluating whether to provide assistance, how does the US&FCS ensure
that it is not exporting U.S. jobs overseas instead of creating jobs
here in the U.S.?
Answer. The US&FCS remains fully committed to its primary mission
of providing export promotion services to U.S. companies as the
principal means of increasing U.S. exports. Particular emphasis is
placed on encouraging small and medium-sized U.S. businesses to explore
trade openings and gain potentially lucrative markets. The number one
priority for each of our overseas posts is to promote increased U.S.
exports to that country, by providing export counseling and market
information to American firms to promote their expansion in the
marketplace.
In addition, and in keeping with the Department's international
trade priorities, our trade and commercial relations are used to
promote democracy, peace and freedom in key regions and countries
around the world. In regions where we may assist in securing political
stability and peace, as with the Presidential Initiative for Northern
Ireland and the Border Counties of Ireland, the US&FCS may become more
involved in facilitating contacts to assist U.S. firms in becoming
established in the country.
On other occasions, ``strategic alliances'' may be discussed
between U.S. and foreign firms as a means to increase the U.S.
company's international posture. Based on the U.S. firm's ability and
other company-related variables, the U.S. firm may decide that its
interests are served more productively by approaching a specific market
via joint ventures, licensing agreements, or possibly overseas
production. The firm makes such decisions unilaterally or in concert
with foreign businesses directly. At no time do we encourage U.S. firms
to forego the establishment or expansion of production facilities in
the U.S. in favor of overseas manufacturing. The private sector knows
its internal limitations and abilities best and the firm ultimately
decides on the most viable method for approaching a specific market.
The US&FCS' Office of Multilateral Development Bank Operations
(MDBO) works to increase U.S. exports of goods and services to projects
financed by the World Bank and the other four multilateral development
banks (MDB's)--over $40 billion in projects sponsored by developing
national governments annually.
The MDB's also are providing funding to an increasing number of
privately-sponsored investment projects in developing nations. This
financing is made on market terms to projects that fit certain
financial, social and economic criteria established by the MDB's. The
MDB's will usually fund only about one-third of the total cost of a
private project. U.S. companies are eligible to tap into this source of
financing for their investment projects in developing nations if they
so desire.
For example, the US&FCS European Bank for Reconstruction and
Development (EBRD) post in London helped Honeywell Inc. (Minneapolis,
MN) secure $25 million in equity financing from EBRD to support
Honeywell's plan to create a series of energy service companies
(ESCO's) in several Central and East European countries. The ESCO's,
either Honeywell-owned or joint ventures with local partners, will
install meters and other energy saving equipment in industrial,
commercial and government facilities around the region. A substantial
amount of this equipment will be sourced from the United States.
US&FCS policy remains committed to encouraging U.S. exports of
goods and services. Under no circumstance is it ever our policy to
encourage or suggest that U.S. firms establish production facilities
overseas at the expense of U.S. firms' domestic employment.
Question. To this end, I understand that the US&FCS is now
conducting ``reverse trade missions.'' With these missions, US&FCS
brings foreign businesses to the U.S. which are seeking markets for
products. Please provide a list by country since January 1, 1995, of
these ``reverse trade missions'' missions and the cost and purpose of
each mission.
Answer. On a very limited basis, US&FCS has supported ``reverse
trade missions'' whose primary objective is to introduce qualified
foreign buyers to U.S. suppliers of goods and services. Hopefully, this
can be a cost-effective means for U.S. companies to meet with foreign
buyers and introduce their American-made products leading to sales or
agent/distributor agreements overseas.
The Trade and Development Agency (TDA) has a program specifically
designed to organize or sponsor ``reverse trade missions'' to the
United States. The US&FCS MDBO and our posts at the Inter-American
Development Bank (IDB), World Bank and Asian Development Bank (ADB)
have participated in several TDA-organized missions. In each case, the
reverse missions consisted of government officials from Latin American
or Asian countries who were interested in assessing U.S. technology for
possible purchase. Many of these officials had authority to procure
goods and services for projects financed by the IDB, World Bank and
ADB. In these cases, the reverse missions provided a very cost-
effective way to familiarize foreign government decision makers with
U.S. technology prior to the international procurement process taking
place.
The US&FCS supported the following ``reverse trade missions'' since
January 1, 1995:
--November 1995, ``Bridges to Progress'' reverse mission from
Morocco. The mission of 17 high-level Moroccan business people
led by Ambassador Marc Ginsberg visited the U.S. to find
suppliers and possible business partners. All costs associated
with the mission were covered by fees paid by the Moroccan
participants.
--February 1997, ``Bridges to Progress II'' reverse mission from
Morocco. The mission of 17 high-level Moroccan business people
led by Ambassador Marc Ginsberg visited the U.S. to find
suppliers and possible business partners. All costs associated
with the mission were covered by fees paid by the Moroccan
participants.
--April 1997, the Southern African Development Community (SADC)
reverse mission from Southern Africa. This mission of 12
ministers and 12 private sector representatives from the SADC
region came to Washington to discuss with USG officials
implementation of the organization's free trade agreement,
known as the SADC Trade Protocol. The travel costs for the SADC
delegation members were covered by AID. The cost to the US&FCS
was $5,000 to cover travel costs for the Commercial Minister
Counselor from Johannesburg who participated in the mission.
Question. I have always supported the integration of the domestic
and overseas personnel systems of the US&FCS. I'm pleased that this is
a goal for the US&FCS too. I am interested in how successful these
efforts have been. Please provide the total number of civil servants
that have been integrated into the foreign service by grades. What
percentage of civil servants that sought admission to the foreign
service succeeded?
Answer. The US&FCS has been pursuing its integration policy very
forcefully over recent years. When we aggregate the numbers, we find a
very high percentage of civil servants have converted into the foreign
commercial service after successfully passing a foreign service
assessment. As a total, we currently have on board 203 foreign
commercial service career officers (FCSC) of which 98 passed a foreign
service assessment and then converted from the civil service of the
Commerce Department. This means that 48 percent of today's total FCSC
officer corps came from the Commerce Department civil service after
having passed a foreign service assessment. We have an additional 19
Commerce Department civil servants currently posted to overseas
positions on ``limited non-career'' appointments; many of these people
also have successfully passed our latest March 1997 assessment for the
foreign service and should be offered the option of converting shortly.
Here are the current figures broken down according to grade:
------------------------------------------------------------------------
Total
Career Total from
Grade Officers in USDOC Civil
1997 Service
------------------------------------------------------------------------
Career Minister............................... 2 ...........
Minister Counselor............................ 13 2
Officer Counselor............................. 18 5
FS-01......................................... 48 27
FS-02......................................... 52 29
FS-03......................................... 54 29
FS-04......................................... 16 6
-------------------------
Totals.................................. 203 98
------------------------------------------------------------------------
Admission to the foreign service is based on successful completion
of an intensive examination which is referred to as an ``assessment.''
This assessment includes 5-6 hours of examination exercises. We have
conducted three assessments limited to internal civil service staff
with the following results: in August 1995, assessment for commercial
service staff at GS 14/15--pass rate of 55 percent (11 of 20 passed);
in November 1995, assessment for commercial service GS 12/13
employees--pass rate of 50 percent (33 of 66 passed); and in March
1997, assessment for ITA employees--46 percent (47 of 103 passed).
Many of the current commercial service officers did not pass the
assessment on their first attempt.
Question. What is the current on-board strength of the US&FCS
(overseas and domestic, U.S. national and foreign national employees)
as of February 28, 1997, versus September 30, 1996? What is the status
of the 106 additional FTE that were directed in the Senate
appropriations report?
Answer. The figures for the two periods follow:
----------------------------------------------------------------------------------------------------------------
As of February 28, 1997 As of September 30, 1996
-------------------------------------------------------------------
Domestic Domestic
Overseas Headquarters field Overseas Headquarters field
----------------------------------------------------------------------------------------------------------------
Foreign Civil Service officers.............. 191 12 19 187 14 15
Foreign Service secretaries................. 7 2 ........ 7 2 ........
Foreign Service nationals................... 496 ............ ........ 515 ............ ........
Civil service employees..................... ........ 162 283 ........ 164 275
-------------------------------------------------------------------
Subtotal.............................. 694 176 302 709 180 290
-------------------------------------------------------------------
Grand total...........................
(2)1,172
(2)1,179
----------------------------------------------------------------------------------------------------------------
US&FCS's operational FTE ceiling has not been adjusted to reflect
an increase of 106 FTE. This is prudent in light of ITA's and US&FCS's
fiscal year 1998 FTE request. Otherwise, the US&FCS would be in the
position of hiring staff in fiscal year 1997 only to release them in
fiscal year 1998 in order to comply with its fiscal year 1998 ceiling.
Question. The State Department regularly sends the Committee
information on its personnel levels, but US&FCS does not. Please
provide the number of US&FCS officers by grade (FS-04 through Career
Minister Counselor) as of September 30, 1992, September 30, 1996, and
current on-board strength. If there has been an increase in average
grade levels over this period of time, please explain why.
Answer. The US&FCS as an organization is a relatively small one as
compared to State--about 250 versus 8,100 foreign service personnel.
(This figure for State does not include the agencies of United States
Information Agency (USIA), AID and Arms Control and Disarmament Agency;
if it did 10,380 would be the approximate total.) We in the Commercial
Service are more like the Foreign Agricultural Service (FAS) with its
190 foreign service personnel. We would be more than happy to adopt any
standing procedures with your Committee that would be appropriate for a
small officer corps like ours.
Here are the three time frames requested and the breakdown of the
various grades:
----------------------------------------------------------------------------------------------------------------
September 30, 1992 September 30, 1996 Current
--------------------------------------------------------------
Career Noncareer Career Noncareer Career Noncareer
----------------------------------------------------------------------------------------------------------------
Career Minister.................................. 1 ......... 1 ......... 2 .........
Minister Counselor............................... 8 1 12 1 13 1
Officer Counselor................................ 15 ......... 16 ......... 18 .........
FS-01............................................ 45 4 48 3 48 4
FS-02............................................ 52 7 49 8 52 8
FS-03............................................ 25 6 53 13 54 14
FS-04............................................ 24 13 20 2 16 3
--------------------------------------------------------------
Totals..................................... 170 31 199 27 203 30
----------------------------------------------------------------------------------------------------------------
The Commercial Service began its career in 1981 and so did many of
its officers. Since it is a foreign service organization with its ``up
or out'' promotion policies, people have gradually been promoted
through the ranks, while others have reached their ``time-in-class''
and have retired or left the service.
In analyzing the career and non-career personnel, there is a
natural rise in the level of officers as the service matures from the
age of 11 to 16 years. There is also an increase in officers reflecting
the additional FTE that Congress has given us over the years. We have
placed many of these additional officers in the Big Emerging Markets
(BEM). Moreover, we are still using a number of non-career limited
appointments in the BEM's and other markets such as China, the Middle
East and the Newly Independent States (NIS) because we have lost many
specialized officers to the private sector. As with other foreign
affairs agencies, we have difficulty in replacing their skills quickly
enough from our career cadre.
In comparison to the other four foreign affairs agencies
(Department of State, USIA, AID, FAS), the Commercial Service is in
line with their grade/rank dispersion. Moreover, 47 percent of all
commercial service posts overseas are so called ``1-officer posts;'' so
a commercial service officer must have a significant degree of
experience and skill to carry out commercial responsibilities as the
``one and only.'' The one area, however, where we do not compare well
with most other foreign affairs agencies is that our senior commercial
officers have yet to reach the rank of ambassador. After being a
foreign affairs agency for more than 16 years, we feel our top level
officers are sufficiently qualified to have at least one of them become
an ambassador at a commercially significant post.
Question. In fiscal year 1996 and fiscal year 1997, Congress
reduced appropriations for the International Economic Policy (IEP)
division of the ITA significantly. It appears that in spite of dire
predictions by the Commerce Department, these reductions were
accomplished without significant employment or program impacts. How did
ITA manage to sustain IEP personnel levels in spite of reductions in
funding? What costs have been absorbed by other divisions, such as the
Trade Development division, to provide relief for IEP? Were such
actions not submitted to the Committees on Appropriations in accordance
with Section 605 of the Commerce Appropriations Act?
Answer. The Market Access and Compliance (MAC), formerly IEP,
subactivity has had a significant decrease in FTE usage. An apparent
increase of 16 positions, from 187 in fiscal year 1996 to 203 in fiscal
year 1997, is not an actual increase. It is due solely to the fact that
beginning in fiscal year 1997, 28 FTE devoted to AID-funded programs
administered by MAC (BISNIS--the Business Information Service for the
NIS, CEEBIC--the Central and Eastern Europe Business Information
Center, and SABIT--the Special American Business Intern Training
program) began to be reflected in the MAC's direct (as opposed to
reimbursable) FTE allocation.
Thus, this change in accounting for FTE makes it appear that MAC
had an increase in personnel, when in fact it did not. Net of the AID-
funded activities, MAC's authorized FTE has actually dropped by 12
(from 187 to 175). Within that total, by the end of fiscal year 1997,
MAC will have brought its FTE for the TCC to the 25 directed by the
Congress which is a gain of 20 from the 5 on board in fiscal year 1996.
MAC's regional operations have had to absorb this transfer fully in
addition to the overall reduction in staffing. In fact, MAC's regional
operations will have dropped by 32 FTE, or 18 percent, by the end of
fiscal year 1997.
This reduction cannot be viewed in isolation. MAC's FTE has been
declining each year since fiscal year 1994. In fiscal year 1996, the
cut alone was 14 FTE and MAC's regional staff has been reduced in size
by 46 FTE in two years. The effect has severely reduced MAC's ability
to address regional market access barriers. As examples, MAC had a
staff of eight officers working on China in fiscal year 1995 which has
been reduced to four, and MAC's Japan staff has been reduced from
thirteen to nine.
In response to the Congressionally imposed reductions, MAC is
shifting its mix of work activities by sharply reducing business
counseling in order to concentrate its remaining resources on
identifying market access barriers and agreements compliance
violations, and developing the strategies for overcoming the barriers
and remedying compliance problems. For example, MAC has closed its
Japan Export Information Center, which was the only U.S.-based source
of Japan access information, in order to focus its remaining staff of
Japan experts on Japanese market access barriers, Japanese compliance
with existing agreements, and providing expertise for ongoing
negotiations.
In January 1997, given the decreased fiscal year 1997 appropriation
and a set-aside for the TCC, ITA requested a reprogramming of funds for
MAC. The request was submitted to Congress for $500,000 from funds
deobligated from ITA's prior year accounts for the purpose of paying
external North American Free Trade Agreement review panelists. ITA has
acted in accordance with reprogramming guidance in Section 605 of the
Commerce Appropriations Act.
In April, 1997, ITA moved 9 positions from MAC to Trade Development
(TD) in order to consolidate trade information dissemination in the TD
unit and further relieve MAC to concentrate on other areas.
In summary, the declining fiscal years 1996 and 1997 funds
translated to a significant decrease of foreign market expertise
available in the organization resulting in a major adjustment and
reduction in services provided both to the U.S. business community and
other USG agencies. Our support of USTR has suffered in a number of
ways. The decreased funds have impaired our ability to support
negotiations and enforcement of critical sector trade agreements such
as the U.S.-Japan Medical Technology Agreement which covers a market
worth $2.6 billion to U.S. medical companies. MAC staff has also
stopped travel in support of the General Agreement of Trade and Tariff
and the World Trade Organization accessions involving a number of major
U.S. trading partners such as the People's Republic of China. We are
having difficulty providing country-specific analyses of regulatory
structures and importing regimes of 32 Latin American countries for the
preliminary Free Trade Agreement of the Americas market access
negotiations. There are other areas of decreased MAC support of USTR,
but they are too extensive to mention in this context.
Question. You state that you are considering reorganizing ITA. Why?
What are your goals?
Answer. ITA is considering reorganization to assess the possibility
of creating a more effective and efficient organization which better
serves its clients. We are examining a number of scenarios to determine
which best leads to the improved organization we are seeking.
One of the primary factors driving our examination of different
options is our desire to reduce the number of Schedule C appointees and
the number of deputy assistant secretaries in ITA. This is part of a
Departmental-wide plan which will be implemented during the next two
years. Linking these personnel changes with development of our new
strategic plan may require a reorganization.
Ultimately, whatever course we take will lead us down the track to
an organizational structure which puts client service first so that the
true benefits of increased exporting creates more jobs for U.S.
workers, more profits for U.S. firms, and a stronger economy in general
which can more completely reach fruition.
Question. I've always been pretty impressed with ITA. They do a
super job. What do you perceive is wrong or can be improved?
Answer. We feel the program mix delivered by ITA to its business
clients is currently very strong. As we mentioned above, however, we
are examining the possibility of performing a reorganization if it can
be shown to produce a more efficient and effective means of delivering
the programs.
Question. You have changed the guidelines for overseas trade
missions. I believe these missions are very important because they help
us compete with the Germans, Japanese and French. What has industry's
reaction been to your policy changes?
Answer. On March 3, 1997, the new policy guidelines for all trade
missions run by the Department were announced. These guidelines were
developed by both political and career employees after a thorough 30-
day review of all trade mission approval, promotion, recruitment and
selection activities.
The guidelines were designed to ensure better and broader
notification and promotion of our trade missions through the
Department's trade promotion partners, including trade and industry
associations and targeted media outlets, as well as more defined
recruitment and selection processes. The business and industrial
community have benefitted from these new guidelines by having greater
access to information about our trade missions through the Internet and
Federal Register. Most importantly, the guidelines have ensured that no
political influence is incorporated into the selection process.
The business and industrial community's reaction to these
guidelines has been positive, witnessed by the many successes following
my most recent mission to Latin America, as well as other Departmental
trade missions held since March 3rd. While the companies that
participate on these missions provide more information than in the past
when applying for a mission, including certifying compliance with the
Foreign Corrupt Practices Act for the mission and providing details on
their business objectives to ensure that they meet the goals of the
mission, the results of the missions are more assured.
The guidelines have helped to sharpen the focus of our trade
missions on the core business of the Department in this area which is
to promote the best that American business has to offer to the global
economy.
minority business development agency [mbda] effectiveness
Question. You are reorganizing the International Trade
Administration (ITA), a program that has been very effective. But in
the case of MBDA, there is an agency with an important mission that has
had problems and has been less than effective.
Have you given any thought on how to reinvigorate this Agency?
Answer. MBDA has already undertaken concrete steps to reinvigorate
its program. Over the past several years, MBDA had come to place
excessive reliance on its Minority Business Development Center (MBDC)
network as the vehicle for delivering its services to minority
entrepreneurs. While the MBDC network addresses a critical aspect of
any comprehensive strategy for minority business development, namely,
providing minority entrepreneurs with basic management and technical
assistance, too much of its resources had come to be concentrated in
this one area.
The MBDA Mission
Executive Order 11625 establishes MBDA, specifically its
predecessor the Office of Minority Business Enterprise, as the overall
coordinator of Federal Government efforts to promote the growth and
expansion of the Nation's minority-owned businesses. While MBDA has
never operated as a large bureaucracy in terms of either staff or
budget resources, its strategic, research and policy-oriented focus has
always been the key to MBDA's effectiveness. Early in its history, MBDA
assisted in the development of a national infrastructure to support
minority businesses by providing seed funding for such trade
organizations as the National Minority Supplier Development Council
(NMSDC) and the Hispanic Chamber of Commerce. MBDA also provided
technical assistance and guidance to state and local governments
throughout the country to help them establish their own minority
business enterprise programs. Many of the programs developed through
these efforts have gone on to support successfully minority business
growth long after MBDA's assistance was withdrawn. It is this sort of
flexible, strategic and highly-leveraged assistance that is the
cornerstone of MBDA's approach to minority business development, and
that distinguishes MBDA's programs from the more structured minority
programs of other agencies, including the Small Business Administration
(SBA).
In 1982, MBDA established the Minority Business Development Center
(MBDC) program. The MBDC's were developed as a strategy for providing
direct client assistance to individual minority-owned companies in
order to improve their overall competitiveness. Located throughout the
country in metropolitan areas having substantial minority populations,
the MBDC's offered minority entrepreneurs qualified professional
business consulting through a staff of trained counselors. Under the
traditional MBDC guidelines, MBDC's are operated by private
organizations who compete for grants to operate under a competitive
solicitation process.
Factors Which Have Eroded the Effectiveness of the MBDC Program
While the MBDC Program was an effective program when it was first
established over a decade ago, a number of factors have caused the
effectiveness of the program to decrease over time. These factors
include:
Cost.--The MBDC program has always been overhead intensive and
costly to operate. Out of the funding which MBDA provided, operators
had to lease and furnish commercial office space, hire clerical staff,
purchase computer equipment required under the program guidelines, and
attempt to attract consulting staff with the necessary credentials to
assist minority entrepreneurs with their business problems. Because of
stagnant (and now substantially decreased) appropriations, MBDA has
been unable to increase the funding levels for the centers in over a
decade, despite the fact that the operators' costs have been steadily
increasing. At the same time, however, a full eighty-five percent of
MBDA's program spending had come to be focused on maintaining the MBDC
network, impeding the MBDA's ability to deliver other types of program
services.
Non-Local Operators.--In addition to the pressures of rising costs,
the success of the MBDC program came to be impeded by the transience of
the MBDC operators themselves. The MBDC program guidelines previously
established no preference for locally-based applicant organizations in
the competitive solicitation process. This had the effect over time of
producing a number of centers which were operated by out-of-town firms
who, because of the fact that awards are recompeted every three years,
had no real incentive to build the centers as long term resources in
their local communities.
Limited Reach.--Funded to its fullest extent, the MBDC network
consisted of approximately 100 business assistance centers operating in
markets throughout the country. Recent reports have indicated that
these centers served less than one percent of the nation's total
minority business population.
Failure to Utilize Available State and Local Resources.--Since the
establishment of the MBDC program more than a decade ago, a number of
organizations and programs have developed at the state and local level
with resources to assist minority-owned businesses. These community-
based organizations include minority and non-minority chambers of
commerce, economic development groups, state and local MBE programs, a
variety of non-profit organizations, and others. The traditional MBDC
guidelines created no vehicle for establishing partnerships with
community-based organizations; thereby, leveraging MBDC funding with
locally-generated funding in order to enhance the overall value of the
MBDC projects that did not exist.
MBDA's Reinvention Effort
MBDA has adopted a reinvention plan which essentially focuses on
(1) updating and improving the effectiveness of the MBDC program, and
(2) diversifying MBDA programs and services beyond the MBDC program in
order to return to its more strategic, research and policy-oriented
focus. In order to achieve these goals, MBDA has adopted a revised menu
of program services which includes the following four items: Community-
based MBDC's; expansion of the Minority Business Opportunity Committee
(MBOC) Program; Internet-based service delivery; and sector
initiatives.
The program services are described as follows:
Community-Based MBDC's
In order to address the above-cited concerns regarding
effectiveness of the MBDC's and improve the overall performance of the
MBDC program, MBDA has adopted the following modifications to the
traditional MBDC guidelines:
Ten-Point Bonus For Locally-Based Applicants In The Selection
Process.--This ten-point bonus will have the practical effect of
preferring qualified locally-based applicant organizations over
similarly-qualified non-local applicants. MBDA believes that such an
approach will further the goals of the MBDC program because familiarity
with the local market, including knowing where opportunities for
minority entrepreneurs may exist at any given time, and having
established relationships with local business leaders who influence
buying and lending decisions, is a critical component of the MBDC work
requirements. While the ten-point bonus establishes a preference for
locally-based applicants, the preference is not so great as to enable
unqualified or marginally qualified local applicants to prevail over
qualified non-local firms.
Establishment Of Forty Percent Cost-Share Requirement.--MBDA now
requires MBDC operators to produce 40 percent of the annual cost of
MBDC projects from non-Federal sources as opposed to 15 percent in the
past. These additional resources will help to expand the scope of the
projects, and alleviate the budget constraints which have been placed
on the MBDC's as a result of stagnant MBDA funding levels. Furthermore,
the ability to meet the 40 percent cost-share requirement will itself
serve as a screening method for selecting the best operators, since
those organizations which have been providing the best services to the
community will be the ones most likely to have local-funding support
which can be leveraged with the MBDA funding.
With these two program modifications, the MBDC's will become more
cost-effective and more effectively integrated into their local
communities. Furthermore, by diversifying the funding bases of the
MBDC's and using locally-based service providers, MBDA increases the
likelihood that the projects will develop as long term resources which
could potentially continue to serve their communities even in the
absence of MBDA funding.
Expansion of the MBOC Program
The MBOC program was established by MBDA as a vehicle for
identifying available market opportunities for minority businesses
within diverse economic regions. Under the MBOC program, the MBDA
establishes a committee of key business and industry leaders
representing a cross-section of the industries that are vibrant within
a particular regional economy. MBDA provides funding to establish an
executive director and one or more support staff positions. The
committee then meets on a regular basis, no less than monthly, to share
information concerning the location of contract, procurement and other
market opportunities. This information is compiled and disseminated to
the minority business community through the committee staff.
Because the membership of the MBOC consists of a diverse cross-
section of the business community, i.e. banks, utility companies,
private corporations, port authorities, transit authorities, the
procurement offices of Federal, state and local government agencies,
etc., the MBOC's play an important role in helping to coordinate the
often disjointed efforts of separate organizations to promote minority
business utilization within a single market. At the same time, the
MBOC's provide a service that is more cost-effective and less overhead-
intensive than the MBDC program and one that addresses a critical need
within the minority business community, namely, access to market leads.
Many of our minority business clients have indicated that they have
outgrown the need for basic management and technical assistance, but
have a continuing need for information concerning where they can most
effectively market their products or services at any given time. MBDA
currently has nine MBOC's operating in various markets around the
country. In view of the success of this program, MBDA intends to
increase the number of these projects.
Internet-Based Service Delivery
In part because of decreased budget resources, MBDA is currently
developing the capability to provide business assistance to minority
entrepreneurs nationwide through telecommunications technology
including the Internet. This system will enable minority entrepreneurs
to access bid opportunities, register for inclusion in MBDA's database
of minority firms (which is used as a referral source for contract
opportunities), and receive interactive training and technical
assistance on-line.
Sector Initiatives
Part of MBDA's mission which is included in the Executive Orders is
to help minority entrepreneurs access opportunities in specialized
sectors of the economy offering the unique potential for high-growth
and profitability. In addition, MBDA has traditionally sought to
identify strategic initiatives through the deployment of its program
resources which leverage maximum results for the minority business
community. Consequently, a core component of MBDA's reinvention
strategy is a renewed emphasis on sector initiatives in such areas as
capital formation, franchising, corporate supplier development,
international trade, and others.
MBDA is fully committed to improving its performance and has a
solid program in place for achieving this goal. We share your belief in
the importance of MBDA's mission and would welcome an opportunity to
provide you with periodic updates as this reinvention effort moves
forward.
mbda/sba collaboration
Question. Last year we fenced money in MBDA's budget for programs
to be run in conjunction with the SBA. How is this effort coming along?
Could you give us a status report and some concrete accomplishments?
Answer. MBDA has already adopted a number of successful joint
projects with SBA under the two agencies' recently-developed Business
Resource Center (BRC) network. Developed through a partnership
consisting of MBDA, SBA, NationsBank, Bell Atlantic, Bell South and
others. The BRC's are state-of-the-art facilities offering
entrepreneurial training through SBA's SCORE counselors, management and
technical assistance through MBDA's MBDC program, computer equipment,
business software, printed resource material and teleconferencing
capability for workshops and seminars. These one-stop facilities
combine the resources of the various partners in order to create a
single focal point within a given market for small and minority
business development activities. BRC's are presently located in
Nashville, Baltimore, Charlotte, Charleston, Atlanta and Miami, with
additional centers now in the planning stages. This joint project has
proven to be a very effective vehicle for service delivery.
The two agencies also agreed to establish a series of Executive
Training Workshops for the Chief Executive Officers of 8(a) certified
companies, to be held in 13 cities throughout the country. These
workshops would involve a curriculum that combined the expertise of
both MBDA and SBA, in particular its Minority Enterprise Development
(MED) division, by having SBA conduct sessions on marketing to the
Federal government, Federal contracting procedures and other issues,
while MBDA would provide training on developing the 8(a) companies'
portfolio of non-8(a) business. While MBDA remains committed to this
concept, recent leadership changes in the MED Division at SBA and other
issues have delayed this project from moving forward.
MBDA fully supports the notion that it should strive to achieve
administrative and cost efficiencies through joint projects with the
SBA, wherever such projects have merit in supporting its respective
program strategies. However, MBDA does not believe that there is
substantial duplication of services or overlap between its programs and
those of SBA.
While to some degree SBA, like MBDA, administers programs designed
to promote the growth of minority-owned business, the nature of those
programs and the manner in which the two agencies operate is
drastically different. SBA administers both the 8(a) contracting
program, (a sheltered-market contracting program that provides minority
companies with access to Federal procurement opportunities), and the
Minority Prequalification Loan Program, an extension of SBA's 7(a) loan
guaranty program designed to increase the incentive for financial
institutions to make loans to minority business borrowers. Both of
these programs constitute important components of the Federal
government's minority business assistance efforts. However, both are
management-intensive programs requiring a substantial commitment of
staff and budget resources. These are self-contained programs within
SBA that have permanent statutory authority, and SBA is able to
administer these programs in large part because of the resources which
it has available as the lead agency for addressing the issues of the
Nation's small businesses as a whole.
As stated in response to the previous question, MBDA's approach to
minority business assistance is substantially different from that of
SBA. While SBA manages two of the Federal Government's largest minority
business programs on an ongoing basis, MBDA's practice, in accordance
with its Executive Order, is to use a flexible research and policy-
oriented approach to design strategic initiatives to impact minority
business growth. For this reason, MBDA (at that time the Office of
Minority Business Enterprise (OMBE)) was placed within the Department
of Commerce to facilitate the necessary linkages with sister Federal
agencies, and give the Agency cabinet-level stature to maximize its
ability to coordinate the activities of Federal, state, local and
private sector organizations.
noaa--satellites
Question. Your NOAA satellite program is probably the most
expensive single item in your Commerce Department budget. For fiscal
year 1998 you are requesting $321 million and your outyear estimates
include over $3 billion to procure Geostationary and Polar satellites.
I am concerned that while you and I pay for this program--it is run
and controlled by NASA. I cautioned Dr. Baker about this at last year's
hearing.
When I look at what has occurred in the past year with the NOAA
Geostationary Satellite program, I would have to say that I am very
disappointed. NOAA has proposed one procurement plan that has been
rejected by NASA. In each case NOAA has changed its plans and just does
what NASA wants.
So Mr. Secretary, you've got the budget and responsibility and
they've got the control. If NASA is going to run your Commerce
satellite programs, then why don't we just shift the cost for NOAA
satellite programs to NASA's budget and the VA-HUD Appropriations
Subcommittee?
Answer. The satellite programs are an essential element of NOAA's
operational environmental mission, whereas NASA's satellite programs
are science, research and development oriented. As the satellite data
user, NOAA believes that the overall program management must reside
with NOAA.
NOAA manages the overall GOES program and controls the flow of
funds to NASA. NOAA develops the GOES program requirements based on its
expertise and understanding of operational forecasting needs and
impacts. NASA then uses its research and development expertise to
develop specifications, and to procure, produce, launch and deliver
GOES satellite systems that satisfy NOAA's requirements. It is under
NASA's procurement authority that these satellites are being acquired.
Question. I fear we are recreating the situation we had in the GOES
geostationary satellite program just a few years ago. That's why this
Committee has consistently said we want reliability and coverage, no
more R&D with GOES Satellites.
Answer. Today's situation is much different from ``a few years
ago.'' Past development difficulties with instruments in the late
1980's have been successfully resolved and the risks are now well
understood and controlled. The instruments that are currently
operational on GOES 8 and 9 continue to provide data vital to the
protection of life and property. To keep risks to a minimum, and to
increase reliability, more of the same instruments are being procured.
These instruments do not require R&D.
To avoid future repetition of the problems from the past, NOAA will
pursue a more conservative approach to developing the next series of
geostationary satellites. This path will maintain an awareness of
current technological advances, identify risks early, and develop and
test means to mitigate risks well in advance of formal commitments to
implement actual instruments designs.
Question. It was just five years ago that I held a special hearing
and Secretary Robert Mosbacher said ``I don't know anything, it's not
my program, ask NASA.'' It's on your watch Secretary Daley, have you
looked into this situation? Have you asked NOAA satellite managers what
is the right course of action versus what NASA told them they are
willing to do?
Answer. Yes, I have looked into the situation. Following those
hearings, NOAA created the Systems Acquisition Office to provide
increased management and financial oversight to ensure that NASA
implements the program within NOAA's guidelines and constraints. NOAA
satellite managers work closely with NASA on technical issues and, in
many cases, conduct their own analyses. The Department is pursuing an
acquisition strategy for GOES that best meets the needs of the National
Weather Service while minimizing risk and program costs.
performance-based organization
Question. The Administration is proposing that the Patent and
Trademark Office (PTO) be made a ``Performance-Based Organization''.
What does that really mean?
Answer. A performance-based organization (PBO) is a discrete unit
of a department that commits to clear management objectives, measurable
goals, customer service standards, and accountability for specific
targets for improved performance. The unit remains within a department
under the policy guidance and direction of the Secretary and is still
subject to Government-wide regulations, rules, policies, and
procedures, unless specific waivers are granted. A PBO focuses on
programmatic operations, not policy-making functions.
A PBO will have a Chief Operating Officer (COO) and greater
managerial flexibilities in personnel, procurement and other specified
areas which will enable it to improve organizational performance. The
COO will be selected for managerial experience, for a fixed term, and
will sign an annual performance agreement with the Secretary and be
accountable for meeting the organization's performance improvement
goals. In addition to managerial experience, the COO would be selected
from individuals who have professional experience in patent or
trademark law. The performance goals would be used as a basis for the
Secretary of Commerce to evaluate the performance of the COO to
determine whether to award a bonus and, if so, the amount of the bonus.
In the case of the PTO, the PBO, to be called the United States
Patent and Trademark Organization (USPTO) would be an agency of the
Department of Commerce and would focus on the examination of patent and
trademark applications and the dissemination of patent and trademark
information. The USPTO would have greater flexibilities in connection
with personnel management and procurement, in accordance with special
statutory language. An Under Secretary of Commerce for Intellectual
Property would also be established under the Administration's bill. The
Under Secretary would be responsible for, among other things, granting
patents, registering trademarks, giving policy direction to the COO and
advising the President and agencies of the U.S. Government, through the
Secretary of Commerce, on patent and trademark policy and related
matters.
Question. So we are going to let compensation for PTO management go
up, what else do we expect to get out of it?
Answer. Maximum levels would be established in the legislation for
salaries for the COO and the other officers of the USPTO, consistent
with those paid for comparable positions in the Executive Branch. The
purpose of the legislation is to improve the efficiency and cost
effectiveness of the portion of the PTO that examines patent and
trademark applications and disseminates information about patents and
trademarks so that the USPTO will be able to operate more like a
business. More flexible procedures in connection with personnel
management and procurement would be available to the COO to meet the
goals that are set by the COO and the Secretary of Commerce in an
annual performance agreement.
Question. Will you, the Secretary of Commerce, still have a
management and oversight role for PTO if it becames a ``Performance
Based Organization?''
Answer. The COO and the Secretary of Commerce would enter into an
annual performance agreement establishing for the USPTO clear
management objectives, measurable goals, customer service standards,
and specific targets for improved performance. These would be used as
the basis for the Secretary of Commerce to evaluate the performance of
the COO to determine whether to award a bonus and, if so, the amount of
the bonus. The Secretary also could dismiss the COO for misconduct or
failure to meet the performance standards established in the annual
performance agreement. In addition, the USPTO would be under the policy
direction of the Under Secretary for Intellectual Property on patent
and trademark matters and would still be subject to governmentwide
regulations, rules, policies, and procedures, unless specific waivers
were granted.
Question. The Judiciary Committees created this Patent surcharge
for deficit reduction purposes back in 1990, and now the House
Judiciary Committee is proposing to give these fees back to the PTO.
What is the Administration's position on this surcharge issue?
Answer. The Administration opposes the surcharge fee provisions
incorporated in H.R. 400 and continues to support the concept of using
patent surcharge fees for deficit reduction. However, we are willing to
work with the Committee on this issue in the context of establishing
PTO as a PBO.
advanced technology program
Question. The ATP is sometimes criticized for contracting with
large firms as well as small ones to help the country develop next-
generation technologies. Yet other federal technology programs contract
with large companies when they have the best proposals for meeting a
public mission. NASA aeronautics, for example, contracts with Boeing,
General Electric, United Technologies, and others. DARPA, the Energy
Department, and USDA also contract with large firms. They're often the
ones with the technological expertise. Do you think it would be
appropriate to restrict the ATP to only small companies when other
Federal programs continue to fund the best proposals regardless of the
size?
Answer. The ATP has always been ``size-blind'' when making awards.
ATP competitions are rigorous but fair, and based entirely on technical
and business merit. Small companies compete just as effectively as
large companies. Since its inception, 47 percent of all awardees
(single applicants and joint venture leaders) have been small
businesses. Companies of all sizes have good ideas and the technical
capabilities, but they may face disincentives for tackling high-risk,
enabling technology development. ATP provides a process for independent
review, approval, and seed funding that pushes large companies to take
risks they would not have normally taken. Often the large company in a
partnership is very valuable since it brings its unique capabilities
for commercialization to the joint venture. Large companies are
certainly as important to the Nation's R&D effort as small companies
and for the ATP to make the necessary economic impact it will require
the engagement of all companies both large and small.
Question. Please tell us more about the consultations you will now
undertake regarding the ATP. With whom will you consult, and who will
lead these consultations? What do you expect will come of these
discussions?
Answer. Secretary Daley has asked the Commerce Department's
Technology Administration (which includes the National Institute of
Standards and Technology) to review and analyze several features of the
Advanced Technology Program to ensure the continued strength and
effectiveness of the Program. The topics to be considered include: the
ATP budget process; the ratio of new projects to old; whether or not
big companies should continue to be allowed to compete for ATP awards
outside of research consortia; whether or not the ATP applicants should
have first attempted to obtain private funding for their proposed
projects; and whether or not those states without an existing, strong
R&D community should be given a better chance to participate in the
program.
In gathering information for this study, the Technology
Administration will draw on the comments and opinions of the scientific
and technical research communities served by the ATP, including
industry, universities and non-profit research organizations, and will
use the existing studies of the ATP that document the effectiveness of
the program under its current policies as background. The Department's
goal in undertaking this review is to ensure that the ATP remains well-
positioned to foster the high-risk, high-payoff technologies that can
bring broad-based benefits to the nation's economy.
manufacturing extension partnership [mep]
Question. A number of the older Manufacturing Extension centers are
now reaching the end of their original Federal funding. Yet we know
that many small firms have yet to be reached by extension centers, and
we know that private consultants continue to ignore this group of firms
because they are so small.
What is the Administration's position regarding the so-called
sunset, and how will you proceed on this issue?
Answer. Listed below are the centers affected by sunset in fiscal
year 1998 and the dates on which they reach sunset: Great Lakes
Manufacturing Technology Center (OH), January 1, 1998; South Carolina
Manufacturing Technology Center, January 1, 1998; Mid-America
Manufacturing Technology Center (KS), April 1, 1998; Michigan
Manufacturing Technology Center, April 1, 1998; Minnesota Manufacturing
Technology Center, August 1, 1998; and California Manufacturing
Technology Center, August 1, 1998.
Congress previously granted a one-time, three-year waiver for the
centers in Ohio and South Carolina that reached sunset in fiscal year
1995 and a one-time, one-year waiver for the centers in Kansas and
Michigan that reach sunset in fiscal year 1997; in each instance the
waiver was granted in the annual appropriations legislation.
Without a modification of the sunset provision, centers will be
forced either to shift their focus to larger companies that can provide
sufficient business value to cover outreach costs or to close. Either
way, small firms, especially those most in need, will be left without
access to valuable technical assistance.
The NIST MEP was created by the passage of the Omnibus Trade and
Competitiveness Act of 1988. At the core of this program are a network
of not-for-profit MEP centers created with a 50 percent match in the
first three years between Federal funds and state, local, and private
sector funding. The Federal share decreases to 40 percent in year four
and to 33 percent in the last two years of the six-year statutory limit
on Federal funding defined in the sunset provision of the authorizing
legislation.
The Department of Commerce is considering a proposal to seek a
change in the authorizing legislation that will enable MEP awardees to
reapply for Federal funding beyond the six-year limit imposed by
current authorization law. Factors under consideration include merit-
based criteria for reapplication and selection.
Congress included language in the conference report covering fiscal
year 1997 appropriations which reflected their belief that the sunset
matter is most appropriately addressed through the authorization
process. NIST concurs that this is a more effective solution than the
piecemeal approach adopted previously for the MEP centers in Kansas,
Michigan, Ohio, and South Carolina through the annual appropriations
process.
Modification of the six-year limit on Federal funding does not mean
that NIST intends to fund MEP centers in perpetuity. Centers would have
to reapply and undergo a rigorous application process. NIST has the
authority, and has exercised that authority, to terminate Federal
funding to centers that are not performing up to MEP's published
criteria of excellence.
Pending modification of the sunset provision in the authorizing
legislation, the Administration's fiscal year 1998 budget submission to
Congress proposes language to be included in the fiscal year 1998
appropriations legislation that would grant a one-time waiver for those
MEP awardees facing sunset in fiscal year 1998 as follows: waive the
six year funding limitation and authorize additional financial
assistance; authorize funding for a period not to exceed two more
years; funding rate not to exceed one-third of center's total annual
costs; subject to positive evaluation of the center; subject to
reapplication by the center and a successful review of the
reapplication; and subject to Secretary of Commerce finding that
continued Federal funding to that center is in the best interest of the
program.
______
Questions Submitted by Senator Patrick J. Leahy
circulation and subscriber figures
Question. Secretary Daley, several issues have been raised
regarding the NTIS' World News Connection (WNC). I would appreciate
your answers to the following questions:
The WNC replaced a paper publication known as the ``FBIS Daily
Reports.'' What were the monthly circulation numbers for the final year
of ``FBIS Daily Reports'' and the monthly circulation numbers for the
WNC since its inception?
In addition, what was the monthly paid subscriber numbers for the
``FBIS Daily Report'' and what are the monthly paid subscriber numbers
for the WNC since its inception?
Answer. The requested figures are as follows:
FOREIGN BROADCAST INFORMATION SERVICE (FBIS) DAILY REPORTS
------------------------------------------------------------------------
Copies
Month/year Paying circulated per
subscribers month
------------------------------------------------------------------------
October 1995............................ 644 35,547
November 1995........................... 651 29,795
December 1995........................... 695 30,961
January 1996............................ 546 30,973
February 1996........................... 453 21,146
March 1996.............................. 470 25,749
April 1996.............................. 475 28,487
May 1996................................ 469 25,407
June 1996............................... 464 21,060
July 1996............................... 450 22,513
August 1996............................. 230 12,599
September 1996.......................... 165 1,540
-------------------------------
Total............................. .............. 285,777
------------------------------------------------------------------------
World News Connection
Paying
Month/Year Subscribers \1\
November 1995...........................................................
December 1995...........................................................
January 1996...................................................... 46
February 1996..................................................... 67
March 1996........................................................ 125
April 1996........................................................ 154
May 1996.......................................................... 184
June 1996......................................................... 204
July 1996......................................................... 234
August 1996....................................................... 346
September 1996.................................................... 450
October 1996...................................................... 499
November 1996..................................................... 547
December 1996..................................................... 559
January 1997...................................................... 585
February 1997..................................................... 614
March 1997........................................................ 641
April 1997........................................................ 622
\1\ WNC is an electronic product, so we do not have figures for copies
circulated.
---------------------------------------------------------------------------
wnc budget
Question. The WNC operating cost is included in the NTIS budget for
fiscal year 1998. What is the projected revenue for WNC in fiscal year
1998 and what is its projected operating costs? In addition, please
provide the subcommittee with the projected revenue and cost figures
for fiscal year 1996 and fiscal year 1997 and the actual revenue and
cost figures for fiscal year 1996.
Answer. For fiscal year 1996, we projected $600,000 in revenue and
$417,000 in costs. However, the program was inaugurated later in the
year than we anticipated. The actual fiscal year 1996 revenue and costs
were $97,922 and $376,211 respectively. Based on that experience, we
projected fiscal year 1997 revenue and costs at $419,400 and $675,000
respectively. Our projections are on target. The projected revenue and
costs for WNC in fiscal year 1998 are each $800,000. That is, WNC
should break even in fiscal year 1998.
wnc marketing
Question. Does NTIS market the WNC? If so, what are the target
subscriber goals that NTIS seeks to achieve in fiscal year 1998?
Answer. NTIS does market the WNC. The target subscriber goals for
fiscal year 1998 are 800 individual subscriptions and 55 networked
access subscriptions.
translation costs
Question. The Department of Commerce has previously indicated that
translation costs of articles included in the WNC are not borne by
NTIS. Why does NTIS not incorporate this cost into the subscription
rate for WNC? What is the estimated cost for this translation?
Answer. NTIS does not incur any translation costs with respect to
WNC. Similarly, translation costs were not charged when the product was
distributed in paper form. Such costs are borne by the Foreign
Broadcast Information Service (FBIS), which is part of the Central
Intelligence Agency (CIA), in accordance with its requirement to
collect foreign open source literature for federal policy makers. NTIS
is provided the data feed from FBIS, which consists of the translated
articles, in order to make them accessible to the public. NTIS is
unaware of the estimated costs for the translations. This question
should be referred to FBIS.
sources in wnc vs. sources in ``fbis daily report''
Question. What is the number of sources that were included in the
``FBIS Daily Report'' and what is the number of sources that are now
included in the WNC?
Answer. As NTIS did not produce the ``FBIS Daily Reports,'' it is
unaware of the number of sources included in the ``FBIS Daily
Reports.'' This question should be referred to FBIS. There are 3,442
sources included in WNC.
subcommittee recess
Senator Gregg. We certainly appreciate your time. Thank you
for your courtesy, and we look forward to working with you.
Secretary Daley. Thank you, Mr. Chairman.
[Whereupon, at 2:53 p.m., Thursday, March 13, the
subcommittee was recessed, to reconvene subject to the call of
the Chair.]
DEPARTMENTS OF COMMERCE, JUSTICE, AND STATE, THE JUDICIARY, AND RELATED
AGENCIES APPROPRIATIONS FOR FISCAL YEAR 1998
----------
WEDNESDAY, MARCH 19, 1997
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 2:05 p.m., in room S-146, the
Capitol, Hon. Judd Gregg (chairman) presiding.
Present: Senators Gregg, Campbell, and Hollings.
SECURITIES AND EXCHANGE COMMISSION
STATEMENT OF HON. ARTHUR LEVITT, CHAIRMAN
opening remarks
Senator Gregg. Why don't we get started. I want to thank
the chairman for joining us today. We would be happy to get
your input, unless the ranking member wishes to give an opening
statement.
Senator Hollings. No; thank you.
Senator Gregg. OK. We are pretty casual here, and we are
interested in your thoughts on what is happening at the
Securities and Exchange Commission [SEC] and any other ideas
you wish to bring to us.
Mr. Levitt. All right. I have a brief, two-page statement.
Senator Gregg. However you want to handle it. You can
submit it, read it, or just talk.
Mr. Levitt. I'll skim it.
Senator Gregg. OK.
summary statement
Mr. Levitt. Of course, I appreciate the opportunity to
testify before you this morning on our fiscal year 1998 budget.
The President's request for the SEC includes $317.4 million in
fiscal year 1998, which puts us in a no-growth budget with
respect to staffing levels, but would allow for an increase of
$12 million above the Commission's fiscal year 1997
appropriation. Most of that is going toward mandatory increases
in pay and related personnel benefits.
The proposed appropriation would hold our staffing at the
1997 level of 2,797 full-time equivalents. I don't have to tell
you about our markets and what's happened with the Dow and the
number of investors.
Today, one out of every three households invests in mutual
funds. There is more money in mutual funds today than there are
in all the bank deposits in America. These broad-based markets,
I believe, don't happen without broad investor confidence in
the fairness of our markets.
I believe that there is a dollar and cents consequence to
markets that are thought of as being rigged or unfair, and I
see that in other democratic markets around the world, as
compared to our own, which are rigorously and fairly regulated.
The Commission has fulfilled its mission to protect
investors and maintain fair and orderly markets. My concept is
that competition within our markets should be both fierce and
fair. And I think that has characterized our markets for some
years.
As a result of bipartisan efforts, last year the Congress
passed the National Security Markets Improvement Act that
provides a more stable funding structure to allow us to plan
better for our future.
prepared statement
The 1998 budget request is the first year that our funding
is controlled by and fully consistent with that agreement.
Thank you.
[The statement follows:]
Prepared Statement of Arthur Levitt
Chairman Gregg and Members of the Subcommittee: I
appreciate this opportunity to testify in support of the fiscal
1998 budget of the Securities and Exchange Commission.
The President's request for the SEC includes $317.4 million
in fiscal year 1998. This request would put the Commission on a
``no-growth'' budget with respect to staffing levels, but would
allow for an increase of $12 million above the Commission's
fiscal year 1997 appropriation. Most of that funding would go
to mandatory increases in pay and related personnel benefits.
The proposed appropriation would hold SEC staffing at the 1997
level of 2,797 ``full-time equivalents'' (FTE's), which would
stretch agency resources to the maximum in order to fulfill its
responsibilities to investors in the rapidly expanding U.S.
securities markets.
Our markets are the deepest, fairest, and most liquid in
the world. They have experienced considerable growth during the
longest and most vigorous bull market in history. In the past
year, the Dow Jones Industrial Average has broken 5,000, 6,000,
and 7,000 points; the New York Stock Exchange and the Nasdaq
Stock Market have both seen stock trading volume hit all-time
highs; and assets in mutual funds have reached record levels of
$3.5 trillion--a figure that far exceeds the $2.6 trillion
Americans have on deposit at commercial banks. Compared even
with the year just before, 1996 set some extraordinary records:
total dollar volume traded on the exchanges and the Nasdaq
Stock Market surpassed 1995 volume by 31 percent; registered
public offerings broke the trillion-dollar mark, rising 36
percent over 1995 offerings; and initial public offerings rose
to $50 billion, up from $30 billion in 1995, a 67 percent
increase.
The mounting participation of small investors in the
securities markets fuels some of this growth. Today, one out of
three American households invests in mutual funds. The number
of first-time investors grows daily, and will accelerate if
Congress acts to privatize a portion of the Social Security
program.
Whether up or down, such broad-based markets do not happen
without investor confidence in their integrity. I think that,
after 64 years of successful regulation, we sometimes take that
for granted. For a reality check, consider the extreme opposite
end of the spectrum: As I speak, the government of Albania is
in crisis, after an open rebellion in the streets. Why? At
bottom, it is because investors were not protected from pyramid
schemes, one of the simplest and most common financial frauds
around. In the U.S., however, thanks to the wisdom of Congress,
investors are confident that if a pyramid scheme wipes out
someone's savings, the government will wipe out the pyramid
scheme--period. That confidence is the cornerstone of our
markets.
The Commission has fulfilled its mission to protect
investors and maintain fair and orderly markets, and it has
done so with modest staffing and limited resources. I came to
the Commission after a lifetime in the private sector, and
though I'm mindful of the differences, I've tried to run the
Commission like a business. One of the key principles I have
applied is that, especially when resources are limited, you
improve productivity. Only by improving productivity has the
SEC been able to keep pace with what may be the most explosive
growth ever seen by our markets for three years in a row, while
its staffing has remained flat.
Although we believe staffing can safely remain level for
one more year, the challenges we face will continue to grow.
These challenges include: the increasing number of Americans
who invest their retirement savings in mutual funds; the
special concerns raised by the increasing use of derivatives
and other complex financial products; facilitating and
encouraging greater use of communications technology by
companies, brokers, dealers, and investors; completing our
mutual fund disclosure initiatives, including fund Profiles and
more clearly written and presented mutual fund prospectuses;
considering alternatives to the current model of capital
formation, including the idea of registering companies as
opposed to offerings of securities; redesigning the EDGAR
electronic filing system; securing more foreign listings, and
signing more cooperative agreements with foreign regulators;
conducting an aggressive effort to police Internet fraud;
shining a spotlight on the use of soft dollar payments through
examinations of investment advisers, institutional investors,
and broker-dealers; completing our re-evaluation of the Net
Capital Rule; granting qualified immunity to firms for
disclosures made on Form U-5; and the reporting of retail price
and trade information in the municipal bond market, which
should be in place by next January.
Thank you. I ask that my formal testimony be submitted for
the record and I would be pleased to answer any questions.
------
Biographical Sketch of Arthur Levitt
Following his nomination by President Clinton and his
confirmation by the Senate, Arthur Levitt, Jr. was sworn in as
the 25th Chairman of the Securities and Exchange Commission in
July, 1993.
Before joining the Commission, Mr. Levitt owned Roll Call,
the Newspaper of Congress. Mr. Levitt served as the Chairman of
the New York City Economic Development Corporation from 1989 to
1993 and the Chairman of the American Stock Exchange from 1978
to 1989. Prior to accepting the AMEX Chairmanship, Mr. Levitt
worked for 16 years on Wall Street. He graduated Phi Beta Kappa
from Williams College in 1952 before serving for two years in
the Air Force.
Upon his arrival at the SEC, Chairman Levitt quickly
established four priorities: improving investor protections;
reforming the municipal debt markets; raising the standards of
practice for brokers and strengthening the international pre-
eminence of the U.S. capital markets.
During Chairman Levitt's tenure, the SEC has established
the Office of Investor Education and Assistance and created the
SEC's World Wide Web site, one of the most popular on the
Internet, which allows the SEC to make all corporate filings
available to the public free of charge.
The SEC has worked to sever ties between political campaign
contributions and municipal underwriting business, a practice
known as ``pay-to-play,'' as well as improving the disclosure
and transparency of the municipal bond market.
Chairman Levitt has also sought to raise the industry's
sales practice standards and eliminate the conflicts of
interest in how brokers are compensated.
The Commission, together with the industry, has developed
the ``Profile Prospectus'' and other plain English guidelines
for investment products in an effort to make disclosure
documents easier to understand without compromising the value
of the information provided to investors.
Electronic markets
Senator Gregg. Thank you, Mr. Chairman, and we have great
respect for what your agency does. As you say, it maintains a
disciplined marketplace and an honest marketplace, and that is
absolutely critical.
As we see the expansion, though, of electronic activities,
people investing over the Internet, stocks being held
electronically--where no paper in some instances being used--
obviously you are facing a brand new set of challenges, and my
first question is what are your plans for the challenge of this
explosion of new type of investment activity, and what do you
need in the way of resources to address this brave new world?
Mr. Levitt. That's a big question, and there's not a simple
answer to it because the markets, as I see them, will be new
kinds of markets. New electronic markets are developing almost
by the day. Those aren't just using the Internet. They are
actual new marketplaces that have been organized, and growing.
As far as the Internet is concerned, we have a special task
force specifically assigned to monitoring the Internet, to
evaluate offerings that are being made. And those of you that
are computer literate know how outrageous some of those
offerings are, and we're bringing cases wherever appropriate.
We had a case not too long ago involving the sale of
several million dollars of investments in a nonexistent eel
farm. To think that almost 100 investors put up money for this
bogus scam is unbelievable unless you begin to surf the
Internet and see the offerings that come through there.
We have fairly sophisticated means of surveiling the
Internet, and we have a web site which invites investors to
report instances of their being subjected to Internet fraud.
It's not a question of resources, I think, because you
couldn't possibly--there are insufficient resources to do a
totally comprehensive job and eliminate all corruption. What we
can do is be pretty pointed in terms of what we're going after,
as to what we see as a national phenomena, and bring cases in
those areas. And I think we can do that with existing
resources.
Organized crime
Senator Gregg. In another area along this line, we saw
reports today where there were a certain number of companies, I
think it was 19 companies, that are being investigated--small
companies--as potentially involving organized crime, using one
of the national securities exchanges.
Can you give us your thoughts as to the penetration of
organized crime into the use of the national securities
exchanges, and what your thoughts are relative to your response
to it?
Mr. Levitt. The reports that have been documented in recent
weeks suggest that a number of smaller brokerage firms have had
some mob influence, some infiltration. I don't think that's
necessarily particular to this time. I think through the years
there has been some of that.
I believe that it's relatively limited. The Commission is
well aware of this practice. I cannot, at this moment, speak
about what we are doing, but I would be glad to brief you
privately in terms of our efforts to get at it. But rest
assured that it's something that we're very cognizant of, and
an area where we are taking steps.
Mutual fund problems
Senator Gregg. With the proliferation of mutual funds, and
this being another exploding area of regulatory oversight, can
you give your thoughts on the main problems that we have in
this area, and whether you need additional resources?
Mr. Levitt. With respect to mutual funds, I guess I worry
about the millions of new investors who have taken their money
initially from savings deposits, certificates of deposit in
savings institutions and banks, at a time when we have
disintermediation, and they could get better returns on mutual
funds than they could get in the banks.
The results were so affirmative that it was a short step
for them to invest in equity funds, and that worked so well
that they began to invest in country-specific funds, the
Singapore fund, the Malaysian fund, the Mexican fund, the
Brazilian fund, and so forth.
I guess I worry that there are millions of these investors
who have not experienced a down market, and I am greatly
concerned about how they will react when the market does have a
reaction.
Markets go two ways. We try to stress that in our investor
town meetings that we hold all over America. But I think there
is an inadequate appreciation, for instance, of the value of a
security that may be traded on the Kuala Lumpur Exchange. It
simply is not comparable to one traded on the New York Stock
Exchange. So a process of education has to take place.
I'm also concerned about the circumstance that, even though
we have billions of dollars more in mutual funds, the fee
structure of those funds appears to be going up rather than
down. That's counterintuitive. It's not appropriate for the SEC
to tell the industry what they should charge in fees. It is
appropriate, I think, for us to try to get mutual funds to
display clearly what they are charging, and allow investors to
make competitive determinations.
I think right now most investors have a very inadequate
notion as to, No. 1, what they're being charged, and, No. 2,
what an enormous impact even a few points may make in terms of
the impact on their investments. These are areas that concern
me.
We have also been concerned about mutual funds whose names
really give very little indication as to the direction of fund
investment. We have put out a proposal that at least 80 percent
of every fund called a bond fund, has to be in bonds. If it's
called a foreign fund, 80 percent has to be in foreign
securities. So I think misleading names are something that
we're concerned with. These are three very different and very
general areas that concern me about the mutual fund industry.
Mutual fund fees
Senator Gregg. In the disclosure of fees area, do you need
any additional legislation or do you feel you have adequate
authority now to create a playing field where people are
disclosing fees?
Mr. Levitt. I think we have adequate authority. We have
worked well with the self--well, it's really the trade
organization for the mutual fund industry, the ICI, and they've
been responsive to problems that we point out. I'd rather get
some of this through persuasion rather than legislation.
As you know, when you seek legislation it's necessarily
pretty indefinite as to what you get, or when you'll get it. So
I'm reluctant to start down the legislative road unless I
absolutely have to.
Senator Gregg. Senator Hollings.
Stock market infiltration
Senator Hollings. With respect to the infiltration, you
might say, of the Mafia in the securities business, the FBI has
reported their concern. It intrigues me, why would they want to
try to get in. How would that be? I mean, you've got the most
regulated, controlled, overseen, observed industry I know of.
How could they hope to mislead or take control or really
benefit?
Mr. Levitt. Well, I think they can do it in a variety of
ways. These are very tiny firms. Most people when they look at
our securities markets today think in terms of Smith Barney or
Alex Brown or firms like that. But virtually every day there
are teeny, tiny firms growing up, with two, three, four, five
people, and very low capital structures. And I think those
firms that may be hungry for business occasionally are induced
to do business with people who have questionable backgrounds.
Senator Hollings. Should you require a higher capital
structure?
Mr. Levitt. I don't think in and of itself that would do
it, because I think we've got to do it by a different means.
Again, what I would like to do, if it is of interest to the
committee, is give you a briefing together with the head of our
Enforcement Division on exactly what we are doing.
Senator Hollings. At least you should give that to the
chairman. Because we're looking at that, and we just don't want
to be caught just looking and not responding.
Mr. Levitt. I understand.
National Securities Markets Improvement Act of 1996
Senator Hollings. With respect to the Improvement Act, is
it working as you see it?
Mr. Levitt. Yes; it is working, and I am very grateful for
your involvement with Chairman Bliley in terms of trying to
rationalize the irrational.
Senator Hollings. Well, what's the long-term effect of
those 6(b) stock registration fees?
Mr. Levitt. Are you talking about----
Senator Hollings. The long term.
Mr. Levitt. The 10-year plan essentially is to lower the
fees over that period to a point where the Commission will be
funded almost entirely by appropriated funds.
Senator Hollings. And right now with everything up, you've
got more than enough money.
Mr. Levitt. We do, because volume has been great. We've had
a one-time aberration in the collection of fees, and we've also
just kicked in the payment of fees by the NASD which is new
this year. So we look flush at this point.
Senator Hollings. But you can't use the money unless the
chairman here appropriates it.
Mr. Levitt. That's right.
Senator Gregg. And I cannot do that unless the ranking
member tells me how to do it. [Laughter.]
preparation for a Market event
Senator Hollings. After that 1987 crash, Mr. Chairman, you
were there, and now do we need anything when the market--it was
down 60 points today, unless you can say something like Alan
Greenspan and bring it back up 60. We'd be delighted to hear
that kind of comment. I would welcome that.
What happens? Do we have adequate safeguards so that we
don't have to experience another 1987 when we politicians see
it going up and down 150 points, that kind of thing? We don't
want it to drop 500 like it did in 1987.
Mr. Levitt. I don't think there are any such safeguards,
Senator. I think books will be written on what occurred in
1987, and probably they will all be wrong. That kind of event
certainly could happen again, although my experience in the
markets tells me that no two market events are precisely alike.
What I can say, however, is that the means of communication
between the various market centers are vastly improved from
that period in 1987. So that within a matter of seconds, I can
be in touch with every major market center in the United
States.
I guess I have a greater concern in terms of the
globalization of our markets, where I worry less about the
trading between Smith Barney and Chase Bank than I do between
an American brokerage firm and a Japanese insurance company.
And I have a very imperfect notion as to the bankruptcy
laws or the netting agreements in some foreign country. And I
think with the volume of trading going on there, that is an
area of concern.
Senator Hollings. Do you have a special little team within
the SEC now that is watching that from day to day?
Mr. Levitt. Yes; we have an international----
Senator Hollings. Good. Now that I've got money, I want to
make sure we're doing everything. You and I are usually poor
mouthing each other. But now that we're rich here this
afternoon, we ought to have at least a little division, no
kidding, of experts watching that fellow back out in Thailand
and wherever.
Mr. Levitt. We do. But again, markets wouldn't be markets
if they didn't have the kind of volatility that made them
markets. I think we are better prepared, but that is no
guarantee against a market reaction.
I'm glad you didn't ask me where I thought the market was
going.
Federal/State regulatory responsibilities
Senator Hollings. To go back to the other extreme, to the
little State-run securities, you have got the oversight
responsibilities and the safeguards are adequate?
Mr. Levitt. I think so. The bill last year relieved a lot
of the pressure on the industry that was occasioned by
duplicative regulation from both State and Federal sources.
And we have gotten the States out of regulating mutual
funds, and in return for that we've given the States the
responsibility for the regulation of the smaller investment
advisers, the most rapidly proliferating part of our markets.
And we've taken on the responsibility of monitoring the
largest investment advisers, which represent about 96 percent
of the dollars in that area. I think that's a rational division
of responsibility, and I am hopeful that it will work well.
We're certainly better off than we were before.
Senator Hollings. Very good. Thank you, Mr. Chairman.
Senator Gregg. Senator Campbell.
Public Utility Holding Company Act
Senator Campbell. I just had one question, Mr. Chairman,
and it might not be a major portion of Mr. Levitt's domain. But
one of the big issues we're dealing with here is the impending
utility deregulation.
And your agency enforces the Public Utilities Holding
Company Act, as I understand it, which has a rather large
increase of registrations. I was wondering if you could speak
to that a bit about what you anticipate, what you think it
might do to the markets, and if your agency is prepared for
that increased trend as we go to a full blown deregulation?
Mr. Levitt. Well, Brian, would you like to address that
yourself? This is Brian Lane, the Director of the Division of
Corporation Finance.
Mr. Lane. You were referring to the Public Utility Holding
Company Act of 1935.
Senator Campbell. Yes.
Mr. Lane. The Commission staff conducted a study of the
act. And in that study, which was given to the Members of
Congress, the staff recommended several options, including the
ultimate repeal of the act. There were other options, such as
giving exemptive authority to the Commission, to exempt
utilities from some of the provisions of the Public Utility
Holding Company Act.
Back in 1935, there was a very diverse universe of utility
companies, and the act, as it's set up, requires things such as
that electric utility companies can't own gas companies, that
all utility lines have to be geographically linked together.
What we're finding today is the technology exists to permit
a company that's located in Alabama to sell electricity to a
customer in California.
In fact, the States of California, and, I believe, Rhode
Island as well have been researching things like retail
wheeling. So the technology is such that it eclipses the act.
Senator Campbell. So you feel it's sort of outlived its
usefulness?
Mr. Lane. Well, the study points out what some of the
shortcomings are. This is a study that was issued 2 years ago,
and it has some recommendations from the staff about ways that
Congress could change the law. If Congress didn't want to
repeal it, there were other options as well. Turn it over to
the States for example.
The States, of course, are very much into ratemaking and
regulation. There are other agencies like FERC which are into
ratemaking of the electric and gas markets. In 1935, the
protections of the 1933 and 1934 acts, the securities laws,
just giving disclosure to investors about these public utility
companies, how much money they make, how they do business and
all that sort of thing, were not as much in place as they are
today. Today investors are protected by the disclosures that
the SEC gets under its other statutes.
So the needed protection is more on the ratepayer, but is
the SEC the appropriate agency to protect the ratepayer? That
is the sort of general question the study addressed the SEC,
within its existing legislative framework, is trying to address
the technological developments of the public utility companies,
addressing them on a case-by-case basis, to let the companies
diversify and take advantage of other sorts of flexibility.
Senator Campbell. That's all I have, Mr. Chairman.
Carryover funds
Senator Gregg. We were talking a little bit about your
money situation. I think it is about $48 million you are going
to carry over, and you are headed toward $71 million. What do
you plan to do with all this money?
Mr. Levitt. We can't use it without you, obviously. We've
kept a pretty reasonable budget, I think. And we don't call on
those dollars without the approval of our funders.
Senator Gregg. Does the Office of Management and Budget
know you have all this money?
Mr. Levitt. I think they do, yes.
Senator Gregg. You are lucky you still have it.
Well, we certainly appreciate your coming down and giving
us your thoughts. Obviously we are here to try to be helpful
and supportive as you run into these issues. You are riding a
tiger, and so to the extent that things change where you need
more resources for the issues that come at you, gives us fair
warning, and we will try to help you. The SEC is an extremely
critical agency, in my view, for maintaining the strength of
this country and our prosperity.
Mr. Levitt. I appreciate that, everything you're doing for
us.
Senator Hollings. You're doing an outstanding job.
Senator Gregg. Yes, you are.
Mr. Levitt. Thank you very much.
Additional committee questions
Senator Gregg. I ask unanimous consent that additional
questions may be inserted in the record as Senators may have
them.
[The following questions were not asked at the hearing, but
were submitted to the Commission for response subsequent to the
hearing:]
Questions Submitted by Senator Pete V. Domenici
national standards and federal securities litigation reform
Question. In December 1995, Congress passed the Private Securities
Litigation Reform Act of 1995 (PSLRA). The legislation was designed to
limit abusive securities fraud lawsuits in federal court. However, in
the year since enactment of securities litigation reform, some
potentially disturbing trends have developed.
First, securities litigation in state courts appears to have
increased, particularly in California. Most of this litigation is
brought by one law firm, which appears in 83 percent of all securities
litigation brought in that state.
Second, it appears that trial lawyers have figured out ways to
circumvent the new law's procedural rules designed to limit frivolous
lawsuits. Class action attorneys have begun to file parallel lawsuits
both in state and federal court in order to get around the federal
law's discovery stay provisions. Trial lawyers then use discovery
obtained in state court to bolster their federal class action
complaints.
Third, trial lawyers still sue high technology companies at an
alarming rate. One out of three defendants in securities fraud class
actions are technology companies. This is the same percentage as before
the new law.
This leads me to conclude that we need one set of laws to govern
the procedural and substantive law related to securities litigation.
In the House, there appears to be bipartisan support for the idea
of ``national standards.'' A recent letter to President Clinton in
support of ``national standards'' had the signatures of almost 60
Democratic members.
What data can the Commission provide on the increase of securities-
related litigation in state courts since the enactment of the PSLRA?
Has securities-related litigation in state courts increased? Have
potential federal claims migrated to state court?
Answer. As you may know, the Commission was asked by President
Clinton to report to him and the Congress on the first year of practice
under the Private Securities Litigation Reform Act (PSLRA). That report
will be issued shortly and will provide more detailed information
relevant to these questions.
In preparing the report, the Commission staff found it difficult to
obtain data about the number of securities-related cases filed in state
court. Although the staff has been closely tracking all federal
securities class actions (a less difficult task since the PSLRA
requires that a public notice be given), the staff has relied on data
compiled by others in assessing the incidence of securities class
actions in state courts.
Based on the staff's review, it appears that during the first year
following enactment of the PSLRA, state courts have seen an increase in
both stand-alone securities class actions and class actions that are
parallel to federal actions. One study by the National Economic
Research Associates found that 78 cases had been filed in the first ten
months of 1996 (for an annualized total of 94), as compared to 48 for
the previous year.\1\
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\1\ Denise N. Martin, Vinita M. Juneja, Todd S. Foster and
Frederick C. Dunbar, ``Recent Trends IV: What Explains Filings and
Settlements in Shareholder Class Actions?'', National Economic Research
Associates (1996), at 7.
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According to the staff's report, some potential federal claims may
well have migrated to state court. Following enactment of the PSLRA,
some plaintiffs appear to have been drawn to state court by the
potential for obtaining discovery during the pendency of a motion to
dismiss, a procedure that is not available under the PSLRA. These
plaintiffs may be able to use state discovery procedures to uncover
facts necessary to frame allegations sufficient to withstand a motion
to dismiss, either in the state court proceeding or in a subsequently
filed federal complaint.
State court, however, does not always provide a favorable forum for
plaintiffs. Jurisdiction over the defendants must be established in the
particular state, and state law must provide a private right of action
for the plaintiffs' alleged securities claims. Also, some state courts
have imposed discovery stays similar to those required under the PSLRA.
Question. Is it appropriate for trial lawyers to file suit in state
court to evade the federal law's new discovery provisions?
Answer. In the Commission's view, is it appropriate for trial
lawyers to use discovery obtained in state court in order to bolster a
federal securities fraud complaint?
Question. Can the Commission provide this information without
improperly commenting on the merits of any pending securities
litigation cases in a manner which might prejudice the outcome of these
cases?
Answer. The Commission has not taken a formal position on these
issues. In preparing the report, however, the staff found that some of
the state cases have been brought for the primary purpose of obtaining
discovery that would otherwise be unavailable in federal court under
the PSLRA. To the extent that state courts can be used to avoid the
discovery stay in cases that would otherwise have been brought under
the federal securities laws, one of the goals of the PSLRA may be
frustrated. It should be recognized, however, that state courts may
offer other advantages to plaintiffs, including non-unanimous jury
verdicts, punitive damages, and aiding and abetting liability,
depending on the jurisdiction. On the other hand, few states provide
state law remedies for private plaintiffs that are as broad as the
federal remedies for securities fraud. For this reason, state court has
not traditionally been the primary forum for securities class actions.
If state law provides advantages to plaintiffs in a particular case, it
is reasonable to expect that plaintiffs' counsel will utilize the state
courts.
Question. Is the Commission willing to look at the idea of
developing one set of national standards for securities litigation?
Answer. After little more than one year of experience under the
PSLRA, we think it is simply too soon to tell if state law securities
actions pose a significant problem. It is important to recognize that
state securities laws have always provided different standards for
securities activities from state to state. The states have a
traditional interest in protecting their citizens, particularly against
fraudulent activities within their borders.
The federal securities laws are concerned with preserving and
strengthening our national securities markets and protecting investors.
If it is determined that securities actions brought under state law are
adversely affecting investor protection or are threatening the fair and
efficient functioning of our markets, we certainly believe the
Commission should consider an appropriate response--one that is
carefully tailored to address the specific problem. In the meantime, if
Congress determines that there is a need for some form of preemption,
we think that it would be desirable to craft the narrowest possible
preemption that recognizes legitimate state interests, while addressing
any abuses that may result from the use of state law in private
securities actions.
______
Questions Submitted by Senator Ben Nighthorse Campbell
streamlining initiatives
Question. Mr. Levitt, I am encouraged by the ``no-growth'' budget
you propose for the SEC for fiscal year 1998--I wish other agencies had
similar restraint. You also acknowledge, however, that this budget,
essentially the fiscal year 1997 level, would stretch your resources to
the maximum while fulfilling your responsibilities. This is also quite
encouraging. A government agency maximizing its resources is welcome,
yet too rare. This encourages me, but gives me pause, because it is
rare.
It surely would be nice if the SEC did maximize its resources while
fulfilling all its responsibilities to the investor. Your budget
suggests that your resources instead will be sorely tested. And, as you
rightly point out, the SEC has a vital role in maintaining investor
confidence in our markets.
Given that, in the budget estimate, the SEC notes several important
developments: there is increased internet fraud, increased foreign
participation in our securities markets, more global activity affecting
our markets, more defendants choosing to litigate, as well as a marked
increase in the sheer volume of securities offered and traded. These
changes are well under way while enforcement of securities laws is your
primary mission.
With these new and significant developments adding more pressure to
your enforcement staff, you must find new ways of maximizing your
resources. Yet, in the budget, for the ``Prevention and Suppression of
Fraud'' program, you say you will solve this by ``streamlining
initiatives.''
What are these SEC initiatives that need to be streamlined, and why
do you have initiatives that are not already streamlined? In the same
program, you tell us that ``other initiatives are needed to ensure
sufficient support''. What are these initiatives and how long until
they are implemented? Is there reason to be concerned that there is not
sufficient support in the meantime?
Answer. Enforcement of the federal securities laws is not static.
As with other law enforcement agencies, we must always be ready to deal
with new enforcement challenges as they are presented. For example, the
Division recently devoted significant resources to the investigation of
a variety of issues surrounding the bankruptcy of Orange County and to
our review of the Nasdaq market and the National Association of
Securities Dealers. While our resources are finite, we continue to
believe that one of the strengths of our program is our ability to
adapt promptly to problems in the capital markets requiring an
enforcement response. Our allocation of resources is under continuous
review as we uncover and prioritize to meet new enforcement challenges.
We believe we have improved our program's effectiveness through
initiatives undertaken to streamline some of our processes, as our
budget submission indicates. The examples given were expediting
authorization for formal orders and for subpoena enforcement. These
initiatives were the result of a review of our processes undertaken at
the suggestion of Chairman Levitt. Initiatives which we have identified
but not yet completely implemented include primarily those that will
introduce benefits from new technologies to support improved document
management (including optical scanning) and improved casetracking and
reporting. These long-term projects currently are underway.
We always are seeking ways to improve our processes, including
incorporation of new technology. In our budget submission, however, we
did not mean to suggest that we were looking at such improvements to
substitute for our continuous need to allocate resources, or that
identified proposed improvements to our processes are being ignored.
electric industry restructuring
Question. First, to what extent do you think this trend is in
anticipation of electricity industry restructuring?
Answer. We are seeing an increase in the number of registrations
under the Public Utility Holding Company Act (PUHCA). In particular,
approval of currently pending and expected merger applications would
result in five new registered holding company systems. In our view, the
trend is largely a reflection of industry restructuring. Utilities are
positioning themselves to compete successfully as the industry evolves
from a monopoly structure into an energy marketplace with many diverse
participants.
Question. In as much as this trend may be an anticipation of
electricity industry restructuring, there is likely to be an even
greater increase in the number of registrations this year. Is the
agency adequately prepared to meet this new trend?
Answer. As you know, the Commission has called for legislative
repeal of PUHCA. If the Act is not repealed relatively soon, and
registrations of utility systems continue to increase, we will likely
need to allocate additional staff to our Office of Public Utility
Regulation. PUHCA contemplates detailed substantive review and
monitoring of numerous activities and transactions by registered system
companies. Currently, the Office of Public Utility Regulation has only
16 professional employees. These resources are already stretched in the
effort to carry out all the measures needed to ensure the registered
systems' continuing compliance with PUHCA.
public utility holding company act
Question. Finally, do you think PUHCA has outlived its usefulness?
Answer. Yes, I believe that the burdens imposed by PUHCA
significantly outweigh its usefulness. Until the advent of full-scale
competition in the industry, however, the remaining monopoly power of
utilities will continue to make consumer protection a necessity. The
Commission supports repeal of PUHCA, accompanied by additional
authority at the state and federal level for the continued protection
of consumers, by providing for access to books and records, and federal
audit and oversight of affiliate transactions.
______
Questions Submitted by Senator Ernest F. Hollings
offsetting collection fees
Question. Chairman Levitt, in last year's Securities Improvement
Act, we compromised with the House Commerce and Senate Banking
Committee to create a new funding stream for the SEC. Specifically, the
6(b) stock registration fees were to be reduced over time and a new
NASDAQ transaction fee was created.
How is the new transaction fee coming? What are your revenue
estimates for fiscal year 1998? Since the NASDAQ over the counter
market keeps growing so much, won't these fee collections also greatly
increase above current projections?
Answer. To the best of our knowledge, the new NASDAQ transaction
fee is coming along just fine. The National Association of Securities
Dealers (NASD) has in place a monthly fee tracking and collection
process that it began with the start of the new fee in January 1997.
The NASDAQ transaction fee rate is 1/300 of 1 percent of the value of
each sale. In calendar year 1997, the NASDAQ fee is due to the SEC on
September 30 for all covered calendar year transactions that occur
through August 31. In subsequent years, the fee is due on March 15 for
transactions that occur during the prior September 1 through December
31, and on September 30 for transactions during the prior January 1
through August 31.
The NASDAQ fee estimate for 1998 is $120.3 million. This fee
estimate is higher than the $93.4 million estimate made just one year
ago for the same period. Therefore, should the growth in NASDAQ
continue at as high a rate as it has over the last two years--over 50
percent in 1995 and over 30 percent in 1996--actual fees received
should increase above current projections. However, estimates are only
educated guesses. We cannot project future fee collections with any
degree of certainty.
Question. What do you think will be the impact of reducing 6(b)
registration fees over time?
Answer. The reduction in 6(b) registration fees may facilitate
capital formation. With a lower cost for registration, additional U.S.
and foreign issuers, both large and small, may seek public funds rather
than more expensive private financing. The reduction will also shift
the agency's reliance on offsetting collections for its budget
authority and require additional appropriations.
enforcing and regulating the market
Question. In a recent newspaper article, it reported that SEC had
concluded an 18-month investigation of the NASDAQ Stock Market, in
which SEC found that market makers coordinated their quotations so that
investors paid too much and received too little when they bought and
sold stock on the NASDAQ Stock Market.
What is the SEC doing to ensure that this type of activity does not
happen again?
Answer. As part of the NASD's settlement with the Commission, the
NASD agreed to undertake a number of initiatives aimed at eliminating
the anti-competitive behavior uncovered in the investigation. The
Commission is closely monitoring compliance with these undertakings.
Many significant improvements are underway.
In order to comply with the settlement, the NASD, among other
things, must devote an additional $100 million over five years towards
enhancing its surveillance and examination of order handling and trade
reporting, develop rules regarding the activities and competitiveness
of market makers, and create an audit trail that is capable of tracking
an order from receipt through execution. It also split off its
regulatory function into a unit that is separate from the Nasdaq market
and has created more balanced boards and committees with 50 percent
non-member representation.
In addition, the Commission adopted order execution rules that will
go a long way in eliminating the ability of market makers to coordinate
their public quotations. These rules have begun to be phased in. They
were designed to benefit investors by increasing transparency,
providing access to the best available prices, enhancing quote
competition between market makers, and introducing new competition from
the display of customer limit orders.
Question. What do you think about current levels of mutual fund
fees and investor understanding of those fees?
Answer. Whether mutual fund fees are higher today than in the past
or whether these fees are generally higher than they should be are
questions that have been debated by fund observers. Some commentators,
noting that mutual fund expenses, as a percentage of net assets, have
increased in the past decade, argue that the cost of owning mutual
funds has risen. Other observers disagree, pointing out that many funds
now incur certain sales and marketing costs that were formerly paid
directly by investors through sales loads. As a result, these observers
argue, it is not clear whether overall fund costs have risen or fallen.
Any evaluation of fund fee levels needs to include consideration of
the types of services investors are receiving for their money. Fund
investors today seem to be offered services that may well be more
costly to provide. International funds, an increasingly popular
category, for example, provide additional opportunity for
diversification, but are a relatively costly type of fund. In addition,
many fund groups have introduced new and improved services over the
past decade, including sweep accounts, telephone redemption and
exchange privileges, check or wire redemptions, consolidated account
statements, automated yield quotations, and access to account
information via the Internet. While most are beneficial to investors,
these services do tend to increase the cost of holding funds.
Over the past ten years or so, the Commission's principal focus,
with respect to fund fees, has been to ensure that they are well
disclosed and understood. In seeking these goals, the Commission, in
1988, took the important and innovative step of requiring all mutual
funds to disclose their expenses in a fee table in the front of their
prospectuses. We understand from focus groups and surveys that
investors find the fee table most informative and helpful. As part of a
recent set of proposed rulemakings designed to improve prospectus
disclosure, the Commission proposed certain enhancements to the fee
table.
Although we believe the mutual fund fee table provides meaningful
information about fees to fund shareholders, we remain concerned that
many investors may not understand the operation and effects of fees. A
1995 joint survey undertaken on behalf of the Commission and the Office
of the Comptroller of the Currency found, for example, that few fund
shareholders appreciate the relationship between fund expenses and fund
returns.
To deal with this potentially troubling situation, the Commission
has undertaken a number of initiatives. As noted above, the Commission
recently proposed enhancements to fund fee tables. We also have
continued our efforts to educate shareholders about the importance of
fees. The Commission has published a brochure about investing in mutual
funds that has been widely distributed and that includes a section on
the importance of fees. We also have discussed the topic in detail in
town meetings and speeches across the country. Most recently, we have
sought to encourage the fund industry to take greater initiatives in
educating investors about fees.
market growth
Question. The SEC and others have reported that in the last year
the stock market has grown to be worth over $10 trillion. However, with
this huge growth the market hardly seems stable as it periodically
seems to have substantial drops. For example, in January the Dow Jones
industrial average tumbled 164 points in two days and on Monday, March
17, the Market slid as much as 81 points.
Following the 1987 crash, SEC put in place safeguards to put breaks
on trading during precipitous sell-offs. Given the growth in the
markets since 1987, are you comfortable that these safety measures are
still adequate? What if Alan Greenspan says the wrong thing again?
Answer. We recognize that every market event is different and that
it is not possible for regulators to implement procedures to address
every possible contingency. Nevertheless, the Commission has taken the
lead in a number of regulatory initiatives since the market break in
October 1987 that are designed to reduce potential disruptions and
systemic risks from a severe short-term market decline.
Coordination and Information Exchange
Improved Interagency Coordination.--Since 1988, the President's
Working Group on Financial Markets has provided a useful forum for key
financial regulatory agencies to share information and coordinate
responses to market contingencies such as severe market declines.
Improved Intermarket Communications Systems.--Following the market
break in 1987, the stock, options, and futures markets implemented a
new ``hoot-n-holler'' teleconferencing system, known as the Information
Network for Futures, Options, and Equities (INFOE). The SEC and CFTC
also have access to this system, which has proven extremely useful for
distributing information among markets and regulators during recent
sharp market swings. In 1994, a similar teleconferencing system was
implemented to link the SEC Chairman with the heads of the nation's
securities markets and clearing organizations.
Market Controls
Circuit Breakers.--Circuit breakers were adopted in 1988 to provide
for brief, coordinated trading halts to give markets and investors
opportunities during a severe price decline to assess market conditions
and any operational or financial difficulties that may have arisen. In
July 1996, we approved shortening the marketwide circuit breaker halts
by 50 percent and in January 1997, we approved increases in the trigger
levels by 40 percent to partially correct for the change in market
levels from 1988. Currently, circuit breakers call for a 30 minute halt
if the Dow Jones Industrial Average (DJIA) declines 350 points in a day
and for a one-hour halt if the DJIA declines 550 points.
Other Volatility Procedures.--Other volatility procedures also have
been adopted by the markets since 1987. The stock index futures markets
have adopted intra-day and daily price limits that are designed to slow
a severe decline. The New York Stock Exchange (NYSE) also has
implemented procedures to address program trading during sharp market
swings. NYSE Rule 80A(c) (``Collar Rule'') requires that, if the DJIA
moves up or down 50 points from the previous closing value, program
orders to buy or sell stocks as part of index arbitrage strategies must
be entered with directions to have the order executions effected in a
manner that stabilizes share prices. In addition, if the S&P 500
futures decline 12 points (roughly equivalent to 100 points in the
DJIA), the NYSE implements its ``side-car'' procedures to temporarily
route program orders to separate electronic files to assess possible
order imbalances.
Expanded Emergency Authority for the SEC.--The Market Reform Act of
1990 provides the Commission with additional authority to issue rules
on an emergency basis and, under extreme conditions, to order
marketwide trading suspensions provided that the President does not
object.
Capacity Enhancements
Increased Market Capacity.--Computer capacity at the securities
markets has been increased substantially since 1987 and it appears that
the markets generally are ready for extremely volatile trading days.
Most exchanges have excess capacity of almost three times or more over
that needed for an average trading session. The NYSE is averaging 505
million shares per day and reports that its systems could handle up to
2.5 billion shares, or five times average capacity. The Chicago Board
Options Exchange is averaging 733,000 contracts per day and has
capacity to handle 2 million contracts, or almost three times average
capacity. Nasdaq has average volume of approximately 622 million shares
with a capacity of one billion shares without affecting normal system
operation.
Increased Capacity at Broker-Dealers.--Our overall assessment is
that the major broker-dealers' computerized trading systems are ready
for volatile trading days. The major broker-dealers have around two
times capacity over that needed for an average trading session. We
further believe that the major broker-dealers have adequate on-line
performance monitoring during the trade day which helps identify
potential choke-points and provide the means to re-route message
traffic to alleviate queuing. The major broker-dealers have adequate
capacity modeling and verification of models used, and adequate
budgeting to procure necessary hardware. The major broker-dealers also
have taken steps to keep their systems ahead of projected transaction
message growth rates. When compared to the status of the capacity of
computerized systems in 1987, the broker-dealers are generally ready
for extremely volatile trading days.
Capital and Internal Controls
Improved Broker-Dealer Capitalization.--In the event of a major
market downturn, the capital adequacy at the major broker-dealers, the
market-makers, and the regional firms will be tested. No significant
broker-dealer failed in 1987, and firm capitalization has increased
substantially since 1987. The major firms have sufficient capital to
withstand substantial losses associated with a severe equity market
drop. As of September 30, 1996, broker-dealers filing FOCUS reports
with the Commission had approximately $1.6 trillion in total assets and
$95.6 billion in total regulatory capital (equity capital plus
qualifying subordinated debt).
Reduction in Relative Equity Positions at Large Firms.--Equity
position market value vis-a-vis total assets at these firms have
diminished since 1987. The market value of equity positions of these
firms at the end of September 1987 was only a relatively small fraction
of their total assets--in most cases less than 5 percent of the total
assets of the firms. The market value of equity positions of these
firms at the end of September 1996 was smaller than in 1987, comprising
approximately 2 percent of the total assets of these firms. This
indicates a reduced market risk exposure on proprietary positions.
Improved Securities Investor Protection Corporation Financial
Condition.--In the event of a failure of a retail broker, SIPC has
taken action to increase the size of its insurance fund. In 1987, the
SIPC fund totaled approximately $379 million. As of February 15, 1997,
the SIPC fund had a balance of approximately $1 billion. In addition,
SIPC has access to a $1 billion line of credit established with a
consortium of banks and statutory authority to borrow up to $1 billion
from the U.S. Department of the Treasury, through the Commission.
Enhanced Internal Controls/Operations.--In the event of a severe
market downturn, the internal controls and operational procedures of
broker-dealers will be tested. The advancement of technology also has
reduced the likelihood of processing/clearing delays caused by the
break. Clearing firms now have substantially increased clearing
capacity and are able to handle substantially greater transactional
volume. In addition, the events of 1987 demonstrated that the SEC's
customer protection rules worked well. Risk management policies have
been improved substantially since 1987 at the major securities firms.
Improvements in Clearance and Settlement
Adoption of T+3 Settlement.--On June 7, 1995, the Commission
established a standard three-business-day (T+3) settlement timeframe
for most broker-dealer transactions. T+3 settlement reduces risks in
the clearance and settlement system by eliminating two days of
potential participant default. Clearing organizations and the
securities industry in general modified their procedures to effectively
implement the T+3 settlement cycle.
Same-Day Funds Settlement System.--On February 22, 1996, the
industry took a major step in addressing the finality of payments in
the clearance and settlement system and the liquidity requirements of
clearing members by converting to a same-day funds settlement system.
Payment is made in funds that are immediately available and final at
the time of settlement. The goal of SDFS is to reduce risk in the
clearance and settlement process by simplifying cash management,
reducing overnight exposure, and achieving close conformity with
payment methods used in derivative markets, government securities
markets, and other markets.
Cross-Margining at The Options Clearing Corporation (OCC).--Since
1987, OCC has established several cross-margining programs. Currently,
OCC has entered into cross-margining agreements with the Intermarket
Clearing Corporation, the Chicago Mercantile Exchange, the Board of
Trade Clearing Corporation, the Comex Clearing Corporation, and the
Kansas City Board of Trade Clearing Corporation. The cross-margining
programs are designed to increase liquidity and depth to markets by
reducing clearing members' combined daily margin requirements and by
reducing potential for financial gridlock, particularly during volatile
markets when clearing organizations may demand additional clearing
margin from their members. These programs utilize participants' end-of-
day positions to determine combined daily margin requirements.
Risk Control Improvements at OCC.--OCC has developed and
implemented a number of other major system enhancements to reduce risk
in the clearance and settlement system for options including (1) a
sophisticated, risk-based, methodology for calculating margin, (2) an
electronic notification and approval system for settlement processes,
and (3) a sophisticated risk analysis system designed to help OCC
clearing members and exchanges manage the risk of their customers and
members in the same manner that OCC manages its risks.
Cross Guarantee Agreements.--Cross guarantee agreements are
agreements between clearing agencies which generally provide that in
the event of a default of a participant common to both clearing
agencies, any resources remaining after the failed common participant's
obligations to one clearing agency have been satisfied will be made
available to the other clearing agency. The guarantee is generally not
absolute, but rather is limited to the extent of the resources of the
failed participant remaining at the guaranteeing clearing agency. The
principal resources of defaulting participants will be settlement
credit balances, clearing fund deposits, and collateral. The National
Securities Clearing Corporation has executed cross guarantee agreements
with the Depository Trust Company and OCC. Additionally, MBS Clearing
Corporation, Government Securities Clearing Corporation, Participants
Trust Company, and International Securities Clearing Corporation have
amended their rules to allow them to enter into cross guarantee
agreements with other clearing agencies, including futures clearing
organizations.
Collateral Management Service (CMS).--In 1995, NSCC developed CMS
whereby NSCC collects from and provides to participants and other
clearing entities information regarding a participant's clearing fund,
margin, and other similar requirements and deposits at participating
clearing entities. CMS helps clearing agencies and their participants
to better monitor clearing fund, margin, and other similar required
deposits that protect a clearing agency against loss should a member
default on its obligations to the clearing agency. DTC, Stock Clearing
Corporation of Philadelphia, Philadelphia Depository Trust Company,
GSCC, MBSCC, PTC, and OCC have received Commission approval to
participate in the CMS service.
Creation of the Securities Clearing Group and Unified Clearing
Group.--There have been a number of initiatives since 1987 to improve
cooperation and information sharing among the securities and futures
clearing organizations. As part of this effort, in 1989 the major U.S.
securities clearing organizations formed the Securities Clearing Group
and in 1995 joined with the futures clearing organizations to create
the Unified Clearing Group.
Liquidity Improvements at Clearing Agencies.--DTC, NSCC, and OCC
have substantially increased their total participants/clearing funds
and their total lines of credit since 1987.
mutual fund industry
Question. Recent mutual funds topped $3.5 trillion. What are your
greatest concerns about the mutual fund industry?
Answer. The $3.5 trillion is a reflection of the strength and
importance of the mutual fund industry. The industry has suffered no
major problems in over two decades and we should work with the industry
to continue this excellent record. We have some concerns about the
industry despite its tremendous growth. We believe we must make every
effort to encourage fund investors to become educated; make sure fund
information, including risk, is communicated clearly to investors; and
maintain the industry's excellent record of compliance in the face of
the pressures of increasing competition.
Fund Shareholders.--Our greatest concern is fund shareholders. We
worry whether the fund industry is doing enough to educate investors
not only about particular types of funds, but about investing in
general, how to allocate assets and better understand risk, for
example. We're trying to do our part on the education front. We're
continually trying to educate investors through meetings with
investors, preparing investor brochures, and assisting in the
development of high school and college courses relating to investing.
Disclosure.--We have met with investors from throughout the
country. So many of these hardworking, intelligent people are putting
their hard earned money into funds as a way of saving for their
children's college education or their own retirement. We are concerned
that the expectations these people have about funds may be unrealistic
and will not be met. That's why we've been pressing so hard for funds
to use good, clear disclosure in their written documents and for
sellers of fund shares to be guided by the highest ethical principles.
Expectations are, after all, shaped by what investors read and are
told.
New Entrants.--The fund industry has grown dramatically over the
past 10 to 15 years. We are concerned, on behalf of fund shareholders,
that new entrants to the business--like new entrants in any business--
may not fully understand their obligations in managing fund assets and
selling fund shares. A survey we saw recently of the CEO's of 1,300
domestic and foreign banks and thrifts, for instance, indicated that 25
percent of these institutions have no risk management process for the
sale of mutual fund shares. Concerns over new entrants have caused us
to focus more of our fund inspection unit's time and attention on those
companies.
Compliance.--Many have pointed to the extreme competition we are
starting to see in the fund business. The competition may well lead to
lower fund expenses, which would be most beneficial for shareholders.
We are concerned, though, that costcutting could also mean cutbacks of
important functions, particularly compliance. That would be a mistake
and would hurt the fund business in the long run.
investment advisers
Question. As a result of the National Securities Markets
Improvement Act, oversight for over 70 percent of all registered
investment advisers will become the responsibility of the states. The
SEC will now be responsible for the 8,000 investment advisers that
manage portfolios over $25 million.
What impact will this division of responsibility have on the SEC?
Answer. We will be able to reduce our current examination cycle for
the advisers who will be registered with the SEC to once every 4-5
years. In the past, examination cycles ranged from every 7-8 years for
the largest advisers, to every 44 years for the smaller advisers. The
advisers who will remain registered with the SEC and subject to this
enhanced oversight manage approximately 95 percent of the industry's
assets under management. In addition, we will be able to conduct
``targeted inspections'' which identify specific topics of regulatory
interest (such as with the soft dollar project now underway) as well as
continue our routine and cause inspections. In a targeted inspection,
we obtain an understanding of how a practice or activity is performed,
the types of problems or violative conduct that can arise and whether
there is further need for regulatory consideration of the practice or
activity.
Question. What responsibility will the SEC have to oversee the
state run programs?
Answer. We will have no direct responsibility. Each state will be
responsible for regulating those advisers within its borders that
manage under $25 million. The SEC will not be responsible for
overseeing the various state programs. The Improvement Act does,
however, direct the SEC to make technical and other assistance
available to the states. We have been active in this effort by
developing training programs for state regulators, creating SEC
internships, conducting joint examinations, and sharing information
about examination techniques and about specific advisers that will be
solely state-regulated.
Question. Does this policy change have any budget implications?
Answer. The changes to the Advisers Act were intended to affect the
investment adviser program, and not to have a budget impact. This
legislation has vastly improved our ability to examine and regulate the
adviser population registered with the SEC. To prepare for the
legislation, the Commission has reallocated eight existing staff
positions to the Division of Investment Management to form a task force
to update the Commission's adviser rules. In addition, $20 million was
authorized by the Improvement Act for 1997.
electronic data gathering analysis and retrieval [edgar] system
Question. The current EDGAR contract expired in January 1997.
You've stated in your written testimony that EDGAR is 10 year old
technology and the Improvement Act asked SEC to look into the
possibility of privatizing EDGAR by April 9, 1997.
What is the status of the EDGAR recompetition?
Answer. The SEC is currently evaluating proposals received in
response to Phase 1 of the solicitation. We are also preparing the
report to the Congress that will address the issue of the modernization
of EDGAR through privatization.
It is anticipated that once the Congress has provided its guidance
on privatization, the SEC will issue Phase 2 of the solicitation and
will award a new contract following proposal receipt and final
evaluations.
Question. Are there funds requested in the President's 1998 budget
for the SEC to update EDGAR?
Answer. The 1998 budget request has carried forward the 1997 level
of $8 million for the maintenance of EDGAR operations. This funding
level is not sufficient to carry out an EDGAR modernization program.
subcommittee recess
Senator Gregg. Thank you. Thanks for your time. The hearing
is concluded.
[Whereupon, at 2:28 p.m., Wednesday, March 19, the
subcommittee was recessed, to reconvene at 2 p.m., Thursday,
March 20.]
DEPARTMENTS OF COMMERCE, JUSTICE, AND STATE, THE JUDICIARY, AND RELATED
AGENCIES APPROPRIATIONS FOR FISCAL YEAR 1998
----------
THURSDAY, MARCH 20, 1997
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 2 p.m., in room S-146, the Capitol,
Hon. Judd Gregg (chairman) presiding.
Present: Senators Gregg, Domenici, Hollings, and
Lautenberg.
UNITED NATIONS
STATEMENT OF AMBASSADOR BILL RICHARDSON, U.S. PERMANENT
REPRESENTATIVE TO THE UNITED NATIONS
ACCOMPANIED BY PRINCETON N. LYMAN, ASSISTANT SECRETARY FOR THE BUREAU
OF INTERNATIONAL ORGANIZATION AFFAIRS
opening remarks
Senator Gregg. We will start the hearing. I know there are
other Members of the Senate that are going to be joining us,
but I do not want to hold the Ambassador up. Here is the
ranking member right now.
Basically we very much appreciate the Ambassador coming by.
I would just say, as a bit of an opening statement, that we
have been working with the Ambassador and with the Secretary of
State on the issue of arrearages. We have a working group
functioning that has been aggressively trying to resolve the
problem.
I hope that by the middle of April we will have some sort
of an agreed-to position between the Congress and the
administration on how to address the arrearages question; how
much we will pay; and the manner of the payments and the
conditions of the payments.
I personally do not intend to spend any time or any
significant time on that issue, although it is deemed to be the
most controversial. There is so much going on in the way of
trying to resolve it, that I do not think it is necessary to
spend a lot of time on it, in my viewpoint.
However, there are other issues, obviously, which involve
the United Nations and we appreciate the Ambassador coming
today. I would yield to the ranking member for any comments
that he might have.
Senator Hollings. Thank you, Mr. Chairman. Just the
reality, Mr. Ambassador, of what we face. A couple of years ago
we answered up to our responsibilities and Congress took care
of the arrearages. We appropriated over $1 billion.
Twofold: now that you've come back, one question, what did
we get for the $1 billion. No reforms, really. Second question
is that unless you get this money in a supplemental, in this
Senator's judgment, you're going to have a tough time.
You've got drives and moves on foot to cut back period or
to eliminate, like the Department of Commerce. This is State,
Justice, and Commerce. And when we get into the final
conference and all which you have experienced yourself, they
say, wait a minute, why are we so bothered about arrearages and
paying that bill when we don't even pay our own bills here in
the United States.
And the flexibility of trying to get a conference report,
and the bill passed, falls right on that particular U.N.
amount.
And we go out on the floor, Senator Kassebaum, on two
occasions. Once she got 17 votes, I think, and another time,
21. So we tried. We're not acting in opposition. It's a real
problem. Suggestion: please put the pressure on in that
supplemental where we can get it done and not put it in the
overall budget.
Thank you, Mr. Chairman.
Senator Gregg. OK. We'll be happy to get your thoughts, Mr.
Ambassador, in any manner in which you wish to express them.
opening statement of ambassador richardson
Ambassador Richardson. Well, first of all, Mr. Chairman,
and members of the subcommittee, let me just say it's good to
be back home in the Congress. I've been away 1 month, and this
is a very challenging job, as U.N. Ambassador.
U.N. arrears
As the chairman mentioned, in the executive branch we're
undergoing a process of negotiating with the congressional
leadership, the appropriators, the authorizers, on a package,
as the chairman mentioned, that involves the arrearages issue,
and subsequent reforms.
And our hope is that we can come up with an agreement,
hopefully, within 30 days.
I would only want to make one point, and not go into an
opening statement, because I think it's more relevant to answer
your questions, plus, as my colleagues may know, I am faced
with a potential Middle East resolution in the National
Security Council, and if possible I'd like to go back once I'm
adequately finished here.
U.N. reform
The only point I would like to make to the members of the
subcommittee is that we do have a Secretary General that is
reform minded, that has taken the lead on reforms. And, I know,
Senator Hollings, you've expressed some disappointment with
those reforms, but I do think that what Annan has put forth,
and some reforms that our Government has pushed in the last 2
years under Secretary Albright, have resulted in a leaner,
meaner United Nations.
Let me just go through very briefly these reforms that
Secretary General Annan announced on Monday which I think are
significant and should be the basis of negotiations along with
the Senate, the House, and the administration.
No. 1, the United Nations has a negative nominal growth
budget, the budget cap. This is historic. It's $2.608 billion.
They've stuck to it. We think in the next biennium, which is 2
years from now, there will also be a budget cap.
One thousand posts were eliminated. Now, these are jobs
which will not be filled again. Secretary Annan will go to the
General Assembly and try to get these posts eliminated so that
they can never be replaced.
No. 2, a 13-percent reduction of administrative costs, from
38 percent to 25 percent by the year 2001, with the annual
savings directed to substantive programming.
No. 3, 25 percent reduction in U.N. documents and paperwork
by December 1998.
No. 4, the establishment of a code of conduct, and I know
this is very important to Members of the Senate. This is
basically a code of conduct for U.N. employees involving
financial disclosure, all types of employee behavior, perks
that would be eliminated which is considered significant.
No. 5, the merging of three separate development
departments into one. This will improve the accounting. This
will consolidate three departments of the United Nations on
economic issues into one. The merging of the Conference
Services Division, General Assembly Affairs Division, another
effort at consolidation.
Restructuring the Department of Public Information, country
level coordination of U.N. programs, centralized management
system, coupled also with other reforms that we stand behind,
such as, besides the budget cap, a stronger oversight inspector
general operation with the United Nations--the OIOS. Inspector
general services, investigation oversight services, which goes
in, roots waste out.
They recently did, in the Rwanda war crimes tribunal, three
individuals were dismissed because of mismanagement. This is an
operation that we want to see have more teeth and that we're
strongly supporting.
In addition to that, there are initiatives that deal with,
as I mentioned, consolidations, having departments at the
United Nations run more efficiently, the merging of other
economic and social council agencies.
Peacekeeping
I would also like to mention peacekeeping, which I know has
been a big issue in the Congress and in this committee with
many of you taking leadership roles in peacekeeping operations.
We have reduced our role in peacekeeping.
We have right now about $280 million in our cost of
peacekeeping--this is the U.S. contribution. In the mid-1990's,
it was up to $1 billion. Instead of there being 75,000
peacekeepers, there are 25,000 right now in the whole U.N.
system.
We asked the tough questions on peacekeeping. Every day I
spend at the National Security Council where we discuss
peacekeeping missions, we ask the questions, what is the exit
strategy. What's it going to cost? Command and control. Have we
consulted the Congress? What is the mandate?
These questions, through a U.S. effort, are being asked. We
do have a more efficient, reform-oriented United Nations.
summary
Let me just summarize: without us dealing with the arrears
issue--and the modalities of how we deal with it, I suspect,
will be the subject of negotiations--without us paying the
arrearages, we cannot go to the United Nations and retain our
leverage to pursue our interests at the United Nations, which
are substantial; we will not be able to get the scales of
assessments reduced for all members.
You know, Senator Hollings, we want to pay less in U.N.
dues and in peacekeeping. We want a fairer share for the United
States vis-a-vis other countries. In the peacekeeping area, we
want to go from 31 percent--close to 31 percent--to 25 percent.
In U.N. dues we want to go down to 20 percent from
approximately 25 percent, to conform with what this Congress
has wanted us to do.
So we're making progress, and I need that leverage. I need
a tangible, good faith financial effort to show that part of
these reforms will be an investment in the future, but that our
interests in the United Nations, preserving our interests in
peacekeeping, preserving our interests in keeping sanctions on
Iran and Iraq, and dealing with North Korea, and monitoring
elections, and bringing smallpox eradication.
And I know, Senator Hollings, trade issues are very
important to you, protecting worker rights and the
International Labor Organization. And making sure that we find
ways that the United Nations works for the American people.
There is a civil aviation entity within the United Nations that
deals with airline travel--40 percent of all travelers in the
air are American.
prepared statement
I could go on and on, but I guess my very abbreviated
statement has gotten a little longer. I need your help, and the
administration needs your help to forge a bipartisan agreement
where we can put this U.N. arrears issue and reform issue to
bed in a bipartisan fashion.
And this committee is key in this happening.
[The statement follows:]
Prepared Statement of Ambassador Bill Richardson
Mr. Chairman, Members of the Subcommittee: Thank you for inviting
me here today. This is my first opportunity to appear in front of you
since assuming my new duties, and it is both a little strange and a
little nostalgic to be sitting on the other side of the dais to discuss
the matters before this committee.
After a month in New York, what I have confirmed for myself is that
the U.N. remains an institution that is enormously useful for the U.S.,
and where it is important that we remain engaged.
In recent weeks, we have been able to maintain full sanctions by
the international community on Iraq and Libya. We are making sure that
the very important U.N.-sponsored peace agreement in Guatemala is able
to go into effect, so that American taxpayers do not have to spend
money averting problems that are close to home. And in El Salvador,
because of a U.N.-brokered and guaranteed peace accord, a military that
a few short years ago was fighting a civil war, may soon be
contributing to international peacekeeping around the world.
Even prior to my current position, I had already seen firsthand how
the United Nations helps further our interests. In North Korea,
inspectors from the International Atomic Energy Agency have helped
verify that the North Koreans are living up to their commitments not to
produce nuclear weapons. In remote parts of Sudan to which Americans
have little or no access, I have seen how U.N.-affiliated bodies help
protect and feed the victims of terrible humanitarian disaster. In
Burma, I have seen how the nations of the world through the U.N.
General Assembly have brought hope to embattled democrats by justly
condemning a brutal and repressive regime.
Mr. Chairman: With all of those considerations in mind, today I
come to discuss with you the Administration's funding request for
international organizations and conferences for fiscal year 1998.
I want to spend a few moments outlining the Administration's
proposal for the appropriations we are requesting to meet our fiscal
year 1998 annual requirements for international organizations and
conferences. We are providing additional detail in writing and I ask
that it be included in the record.
I am also joined today by Ambassador Lyman, Assistant Secretary for
International Organizations, who, along with myself, will be happy to
answer any further questions you might have on these issues.
Our proposal includes: for Contributions to International
Organizations (CIO), $969,491,000, which would fully fund our assessed
contributions for calendar year 1997; for Contributions for
International Peacekeeping Activities (CIPA), $240,000,000; and for
International Conferences and Contingencies (ICC), $4,941,000.
In addition to these annual requirements for fiscal year 1998, the
Administration is requesting funding to pay our recognized arrears
under the CIO and CIPA accounts in full. We seek $100 million in fiscal
year 1998 funds, $54 million for U.N. regular budget arrears in the CIO
account and $46 million for CIPA; and an fiscal year 1999 advance
appropriation of $921 million, as an fiscal year 1997 supplemental, to
pay the remaining arrears in both accounts.
Mr. Chairman: This request reflects our commitment to accomplishing
three ambitious and demanding tasks over the next few years:
First--the substantial reform and reinvigoration of the U.N. System
so that it is prepared and able to meet the challenges of the 21st
Century. These include vital security, health, crime and drug control
activities--all of great importance to the American people;
Second--reaffirming and sustaining vigorous American leadership
within the United Nations. Whether defending our trade interests,
maintaining sanctions against aggressor states, or controlling the
proliferation of weapons of mass destruction, our leadership is
indispensable to protecting our interests;
Third--bringing U.S. financial support of international
organizations to a level that is sustainable and supportable by the
Congress.
Mr. Chairman, as you know, under the leadership of then-Ambassador
Albright, major progress was made towards reforming every aspect of the
way the U.N. conducts its business.
I can report to you today that, last Monday, U.N. Secretary-General
Kofi Annan took a significant and unprecedented step towards the kind
of structural reform that will help the U.N. do more, better and for
less.
He had already made a public commitment to carry out those reforms
that are within his authority--a commitment he made to Congressional
leaders in January. Now, in a detailed and thorough blueprint, he
specified a series of ten reform benchmarks. He will begin to implement
these benchmarks very soon and extending over the next several years:
--The presentation of a negative nominal growth budget proposal for
the 1998-1999 biennium and the elimination of 1,000 posts.
--A 13 percent reduction in administrative costs, from 38 percent to
25 percent by 2001, with the annual savings directed to
substantive programming.
--A significant 25 percent reduction in U.N. documents and paperwork
by December 1998.
--The establishment of a Code of Conduct.
--The merging of three separate development departments into one.
--The merging of Conference Services Division and General Assembly
Affairs Division.
--The restructuring of the Department of Public Information.
--The country-level coordination of U.N. programs.
--The establishment of a centralized management and issues capability
to handle matters that cross departmental lines.
This is a plan that indicates that the U.N. Secretary-General has
heard, loud and clear, the message from member states and is now taking
bold and effective action. It is a plan that encompasses many of the
most important reforms the United States has advocated and worked for
over the last three years. Thus, he has answered the call for
leadership on reform and is prepared to exercise the powers of his
office in an affirmative and appropriate manner.
We recognize that implementing some of these proposals will indeed
meet resistance. It is my commitment to you today that we will spare no
effort to ensure that the U.N. delivers on these reforms.
We are also very pleased that since his appointment, Mr. Annan has
wielded his authority as Chief Administrative Officer to root out
incompetence and inefficiency.
He has already cut several senior positions from his Executive
Office. We were also impressed by the swift removal of inept officials
at the Rwanda War Crimes Tribunal. We are pleased at his establishment
of a policy coordination group--an idea we have strongly supported--to
bring cohesion and authority to the decision-making process.
Mr. Chairman, this is a good start, and sets the kind of example he
expects of the entire institution. But many of the broader structural
and organizational reforms are beyond the authority of the Secretary-
General. They must be negotiated with other member states as well as
the governing councils of affiliated organizations. We are already
working to eliminate outdated functions, consolidate duplicative and
overlapping programs and ensure that goals and priorities that are
clear and achievable are set across the organization.
This is why a fully functioning, strong and effective Office of
Internal Oversight Services remains so vital and we have repeatedly
indicated to the U.N. the importance of Inspector General Karl
Paschke's work. We are very pleased that even within the budget cap,
OIOS is being provided the resources necessary for full staffing and
for its investigative, monitoring, and audit activities. We will
maintain our strong efforts to ensure that the Office continues to be
provided with a level of resources sufficient to allow the OIOS to
fulfill its mandate effectively.
However, Mr. Chairman, based on my first four weeks in New York, I
must tell you that the pace and scope of this kind of real progress
towards reform will not continue without progress of our own towards
paying our arrears. Our failure to pay is also impeding our efforts to
achieve a more equitable and fair scale of assessment, a key part of
our proposal to bring contributions from the CIO account down to $900
million for fiscal year 1999, with no arrears at that level. It is also
increasingly affecting every other interest we have at the U.N. and
harming vital relationships that we have worked to build over many
years with U.N. delegations, entities, and related groups.
Recently, I briefed U.N. delegates in New York on the
Administration's proposal to schedule our arrears, reduce budgets, and
achieve further U.N. reforms. The first reactions I got were blunt, and
can be summarized this way: ``Even if we give the United States all
that it is seeking, why should we believe that it will honor its
commitments, when it has not done so in the past?''
The question is a fair one. Our ability to get what we want at the
U.N. is impaired because member states are not convinced that, in the
end, even with reform, we will pay our share. I have explained to
delegates that that is one reason why the President's budget calls for
advance appropriations--so that member states will have some assurance
that we really will make substantial payments toward our arrears as
reforms are implemented. They also understand how our government works
and they are well aware that it is Congress, not the Administration,
who will provide the necessary appropriations. And they understand that
reforms are essential.
The problems are particularly apparent as we work to adjust the
scales under which countries are assessed for U.N. costs, including a
reduction of the U.S. assessment rates for regular budget activities
and peacekeeping. The Administration believes that the U.N. assessment
system should reflect recent changes in the global economy and that the
U.N. would function better with a broader base of shareholders who have
a more significant financial stake in the international system.
But to achieve this, we need the approval of 184 other member
states, many of whom would have to pay more if we pay less. Without the
leverage of a credible U.S. commitment to pay our outstanding arrears,
we have little chance of convincing them.
Other delegations have indicated to me that they understand, even
if they do not yet accept, our requirements and they are willing to
work with us. But they are firm in insisting that first, there be a
credible commitment that the United States will honor its treaty
obligations--to both pay arrears and meet our commitments in the
future.
I hope that I can bring back to New York a message that, while
reforms are being debated, while questions and concerns remain to be
addressed, there is bipartisan support for the U.S. making a financial
commitment in which U.N. members can place their confidence.
I can assure you that the willingness and commitment of the
Chairman and other members of this Committee to become engaged in the
reform and financial process at the U.N., has already played an
important and positive role. The meetings that have already occurred
between Members of the House and Senate and Secretary-General Annan and
General Assembly President Razali were useful and productive. I hope
that the dialogue that you have started will continue.
Mr. Chairman, President Clinton has made repaying our debt to the
international organizations a foreign policy priority because the
multi-lateral system, more than ever, makes an important difference on
the vital issues that we care about. As you well know, our total
contributions to international organizations amount to about one-tenth
of one percent of the Federal budget--value for money made even more so
as we proceed in the direction I have outlined today.
This is why we are committed to revitalizing the United Nations by
reforming every aspect of its operation, paying what we owe and
avoiding future debt--and guaranteeing a sustainable level for our
contributions. I am looking forward to working with you to achieve
these goals.
______
Biographical Sketch of Ambassador Bill Richardson
Bill Richardson was named United States Permanent Representative to
the United Nations by President Bill Clinton on December 13, 1996. He
is a member of the President's Cabinet and is also a member of the
National Security Council. Ambassador Richardson was sworn in to office
on February 13, 1997 by Vice President Gore.
Prior to becoming the U.S. Permanent Representative to the U.N.,
Bill Richardson served New Mexico's 3rd Congressional District--one of
the largest and most ethnically diverse in the country--and was elected
eight times. As a member of the United States Congress, Richardson held
one of the highest ranking posts in the House Democratic Leadership. He
was a member of the Resources Committee, the Commerce Committee, the
Permanent Select Committee on Intelligence and the Helsinki Commission
on Human Rights. During the 103rd Congress, he chaired the Subcommittee
on Native American Affairs. He has been described as one of the most
``prolific legislators in the House,'' with numerous bills and
amendments enacted in the environment, energy, Indian, health, foreign
policy and defense areas.
Admired for his work as President Clinton's special envoy on many
sensitive diplomatic missions, Ambassador Richardson was nominated for
the Nobel Peace Prize a second time in January, 1997. As a diplomatic
``trouble shooter'' he has worked to free hostages in several countries
including Bangladesh, Burma, Iraq, and North Korea. Most recently
Ambassador Richardson successfully secured the release of three Red
Cross workers taken hostage in the Sudan. In 1996 he held a historic
meeting with Cuba's Fidel Castro during which he successfully
negotiated the release of three political prisoners and visas for their
families. Ambassador Richardson has also chaired U.S. observer teams
for elections in Guatemala, Nicaragua, and East Germany.
Ambassador Richardson received a B.A. (1970) from Tufts University
and an M.A. (1971) from The Fletcher School of Law and Diplomacy.
Ambassador Richardson is fluent in Spanish, with good speaking and
reading abilities in French.
Ambassador Richardson currently resides in New York with his wife
Barbara.
U.N. credit
Senator Gregg. Thank you, Mr. Ambassador. Following up on
that point, and I do not expect to spend a lot of time on it,
but I do have a couple of questions. You received a credit from
the United Nations for an overpayment of $27 million. Now, for
some unknown reason, we have been hearing from the Secretary of
State, and when she was U.N. Ambassador we heard about the lack
of leverage. We have heard from you about lack of leverage as a
result of not paying our arrears. And yet, when the State
Department got a $27 million payment refund, it was applied to
next year's obligations, instead of being applied to the
arrearages; that makes no sense.
Are you going to adjust that, and go back and do what makes
sense, which is to reduce the arrearages by $27 million?
Ambassador Richardson. Let me also mention that Assistant
Secretary Princeton Lyman is here. His jurisdiction is all
international organizations. He answered this question
yesterday very effectively, I thought, in the House
Appropriations Committee.
These are $27 million that, as I understand it, we have
said we may need to deal with in a new fashion. So is that OK,
Mr. Chairman?
Mr. Lyman. Senator, what we did, we applied that $27
million against the assessments we have for this year, and,
therefore, lowered the fiscal year 1998 request by $27 million.
We could have applied it to arrears. Then we would have had to
increase our request to you this year by $27 million.
Either way, the $27 million would be credited to the United
States. If the Congress prefers, we could go back and have that
credited to the arrears, but then it would mean that we would
have to increase the request for fiscal year 1998, because we
just subtracted it from that.
Senator Gregg. Well, that makes sense, from our standpoint.
Basically you have attempted to take the arrearages out of the
budgeting process by advance funding them, which is, I think, a
very big mistake and creates all sorts of budgetary problems
for this committee.
So now by doing this, you've just aggravated the problem
another $27 million, in my opinion.
Unencumbered balances
How about the unencumbered balances?
Mr. Lyman. The unencumbered balances, Senator, represent
amounts against which all the billing has not come in.
Therefore, we don't know how much of those balances would be
needed for future billing. I mean, they are against
peacekeeping operations, either still underway, or closed out,
but all the bills haven't come in.
We expect, from the best estimates we have, that most of
those unencumbered balances will be used for bills related to
those operations. Once the billing is closed, then we can
dispose of those unencumbered balances, but the amounts that
are now in there don't represent a kind of cash surplus. They
are against expected or anticipated billings.
Senator Gregg. Well, we do not have a number for what they
stand at now in anticipation of billings. Do you have that
number?
Mr. Lyman. I know what the total of them are. They're in--
off the top of my head, as I recall, it's about $200 million.
We expect most of that will go against billings.
But let me get you a more detailed list of that.
Senator Gregg. Yes; we would like a detailed list of what
the unencumbered balances are by accounts, and then if you also
can give us what the anticipated billings are that you know are
in the pipeline.
Mr. Lyman. As much as we can, because some of it hasn't
been calculated. But we will give you the best information we
have at this time.
Senator Gregg. As you know, we are going to have this
problem with finding approximately $900 million. We are going
to have to scour around, and certain accounts are going to be
easier to scour in than other ones. It might make sense to use
this money instead of trying to look for it somewhere else, and
then come back and pay these bills in a future appropriations
process. We have got to know what the numbers are before we can
do that.
Mr. Lyman. These funds have been set against very specific
peacekeeping operations. But let me get you the specific
information, Senator.
[The information follows:]
The following table lists the latest unencumbered balances
(by U.N. peacekeeping operation) which have been obtained from
the U.N. These amounts are overall figures from which the
United States would be entitled to a 31 percent share (equal to
the U.N. 31 percent rate of assessment) for peacekeeping.
Future assessed charges are expected to use up all the
unencumbered balances for all operations, except the completed
operations in Mozambique and Haiti. When all assessed bills for
these completed operations are paid, and if there is money left
over, then the U.N. General Assembly may decide to return these
amounts to the contributing member states.
FINANCIAL INFORMATION--U.N. PEACEKEEPING OPERATIONS
----------------------------------------------------------------------------------------------------------------
Unencumbered
U.N. Force/Operation balance \1\ Document date U.N. document
----------------------------------------------------------------------------------------------------------------
UNDOF--Golan Heights.................. $3,487,000 Feb. 21, 1997............. A/51/684/Add.1.
UNIFIL--Lebanon....................... ............ Dec. 18, 1996............. A/51/535/add.2.
UNIKOM--Iraq/Kuwait................... 4,603,000 Nov. 6, 1996.............. A/51/658/add.1.
UNAVEM--Angola........................ 18,927,000 Jan. 30, 1997............. A/51/494/Add.3.
MINURSO--Western Sahara............... 19,393,000 Dec. 23, 1996............. A/51/763.
UNPF--Phasedown/closeout \2\.......... 102,000,000 Dec. 2, 1996.............. A/51/701/add.1.
UNMIBH--Bosnia-Herzegovina............ 6,517,000 Feb. 21, 1997............. A/51/519/Add.3.
UNTAES--Eastern Slavonia.............. 18,820,000 Feb. 21, 1997............. A/51/520/add.2.
UNPREDEP--Former Yugoslavia Republic 5,260,000 Mar. 5, 1997.............. A/51/508/Add.2.
of Macedonia.
UNFICYP--Cyprus....................... 385,000 Dec. 18, 1996............. A/51/755.
UNSMIH--Haiti Support Op.............. ( \3\ ) .......................... ..............................
UNOMIG--Georgia....................... 1,056,000 Feb. 4, 1997.............. A/51/793/Add.1.
UNAMIR--Rwanda........................ 15,813,000 Jan. 31, 1997............. Secretariat Handout.
UNMOT--Tajikistan..................... 2,860,000 Feb. 11, 1997............. A/51/784/Add.1.
UNOMIL--Liberia....................... ............ Feb. 4, 1997.............. A/51/756/Add.1
--------------
Total assessment offset......... 199,121,000
==============
ONUMOZ--Mozambique.................... 19,052,000 Feb. 25, 1997............. A/51/807.
UNMIH--Haiti.......................... 7,023,000 Dec. 27, 1996............. A/51/764.
--------------
Total may be returned........... 26,075,000
----------------------------------------------------------------------------------------------------------------
\1\ Unencumbered and surplus balances are the net of assessments and other income less operating costs.
Projected costs are used when available to provide more current estimates of balances. These balances are not
equivalent to cash on hand which is the amount of assessments received less cash payments.
\2\ Note that there is more than $200 million in unassessed commitment authority for UNPF which would more than
offset this unencumbered balance.
\3\ No financial performance report as of this date.
SOURCE: Data provide by U.N. 4/25/97.
International police task force
Senator Gregg. I have some other questions on the inspector
general and also on the international organizations, but let me
defer to Senator Hollings.
Senator Hollings. Very good. I welcome the Ambassador. We
were there in January 1995 when you were Ambassador to South
Africa.
With respect to Secretary Cohen, who was just upstairs at a
caucus that we had, he was talking about the commitment to
withdraw from Bosnia, a firm commitment, starting with the
drawdown beginning the first of the year.
He also alluded to the fact that while militarily we're
quite resolved in doing it, in a commendable fashion, then
money for the economic revival of the area had not come forth,
and we were going to need a police force.
And he no way was going to allow his defense force to
become a police force. Question: Does that then fall upon the
United Nations? And is that, if it does fall upon it,
Ambassador Richardson, is that in your request here now? Or
what?
Ambassador Richardson. Senator, what we're talking about
here is what's called the IPTF. This is a police monitoring
force. And we're talking as part of a recent--in northern
Bosnia, the Brcko implementation. And what we want to make sure
of is that our troops not be jeopardized.
We're talking about police monitors and human rights
monitors. We're not talking about an extended operation. We're
talking about just implementing this agreement that will bring
some stability to that part of northern Bosnia.
And we're talking about a very limited operation.
Senator Hollings. And that's included in the request here
before the committee?
Ambassador Richardson. Yes.
Senator Hollings. Thank you, Mr. Chairman.
Senator Gregg. Senator Lautenberg.
U.N. arrears
Senator Lautenberg. Thank you, Mr. Chairman.
Congratulations, Mr. Ambassador. Our relationship has suddenly
gotten formal. I used to like it when we were just plain old
Bill and Frank. But I like seeing you in that job. I have a lot
of confidence in you, having seen you on some of our Helsinki
travels.
I think also it is fair to say that the U.N. functioning
has, I think, become more respected here. Change is taking
place. There are so many things going on around the world that
I think we need help in picking up our responsibilities.
And I'm frankly distressed that we don't pay our bills.
It's, to me, it's akin to citizens withholding their taxes
because they want a change in the structure of Government. I've
heard that appeal many times.
And I just think that if you're going to--to use a
whimsical expression--you're going to belong to the club,
you're going to have to pay the dues. Otherwise you have no
voice.
And I hope that we will figure out a way, a bipartisan way,
if that's possible, to get these arrearages up to snuff, or at
least appropriate the money. I don't understand the delay in
paying it if you owe it--especially from past obligations.
But I would hope that the United States can comport itself
like the leading power in the world that we are, and not be
deadbeats on bills that we owe. It does, as you said, Mr.
Ambassador, reduce your leverage.
It's kind of a hollow thing when you owe money and you're
continuing to order from the menu.
So we wish you luck, and I hope that we will be able to
help restore some of the confidence that I think we should
have.
Mr. Ambassador, you've got an abundance of problems to deal
with in the United Nations. And it seems to me that again the
obligation has expanded substantially.
Israeli housing issue
Did you say today there's going to be a National Security
Council vote on the----
Ambassador Richardson. Well, what's happened, Senator, is,
as you recall, 2 weeks ago the United States vetoed a
resolution on the Israeli housing issue, a resolution we
thought would not be helpful.
Our view has been that in the Middle East process it's
better to have the parties negotiate themselves rather than the
National Security Council getting involved. We felt that the
issue at hand is a final status negotiation that should happen
at the end with the parties themselves.
This morning I had a meeting with the Arab Ambassadors,
trying to persuade them not to offer a subsequent resolution
that deals with the actual construction of the housing, which
is taking place.
And my hope is that we can work this out, and not deal with
another resolution. Because our view is that there is an
impetus to peace--the President, in his meetings with Arafat
and with King Hussein and with President Mubarak and
Netanyahu--that the parties themselves are the best agents for
that peace process, based on the Oslo accords, and based on the
Camp David agreements, and the Madrid meetings and not to
inject it within the National Security Council.
We talked about that this morning in the National Security
Council, and I suspect, hopefully, a positive resolution of the
issue, and that is, hopefully, not a resolution. Perhaps a
Presidential statement.
We were concerned, as a matter of policy, with this
construction. We let it be known to the Government of Israel.
But we don't feel that the National Security Council is the
place to achieve any positive results on the Middle East peace
process.
Senator Lautenberg. I think that was an important veto, Mr.
Ambassador, because it was followed on by the meeting in Gaza
with people who are forced to take a side by their very
presence there, including the United States. And I did object
to the meeting.
And I'm not at all condoning Israel's actions in this case.
I think it could have been handled a little more delicately,
and a little more correctly. That's the way I think that things
ought to go on there--through face to face negotiations. There
is no constructive value in bringing in other countries and
excluding Israel to decide what's good. And the United States
ought to, by virtue of our position, veto proposals that are
determined by nonfriends of Israel as being the right way to
go.
War crimes tribunals
I would just ask one other thing, Mr. Ambassador. Your
predecessor was a strong supporter of U.N.-established and
funded international criminal tribunal for former Yugoslavia.
She was actively involved in securing the arrest and transfer
of war criminals to the tribunal for prosecution.
We're not getting a lot of cooperation, as you know, from
Croatia or Republika Srpska. Do you intend to continue an
active role in that area?
Ambassador Richardson. Senator, I commit to you a very
strong, active role in that area. We are concerned about the
lack of movement there. We are concerned with the
implementation of that tribunal. We would like to see more
speedy movement in the dealing with some of those criminals,
and I commit to you a very vigorous effort on my part,
hopefully, a trip there soon, where I can first hand get some
impressions of how we can specifically move ahead.
But we are debating and reviewing this within the executive
branch right now, how we can make this process work better.
Senator Lautenberg. We wish you luck, Mr. Ambassador, and
I'm confident you're going to do the right job.
Ambassador Richardson. Thank you, Senator.
Senator Gregg. The Senator from New Mexico.
DOD's resources
Senator Domenici. Mr. Chairman, and Mr. Ambassador, I'm
sorry I was late. I was at another meeting, and I hope I don't
duplicate anything that was said.
Let me first, Mr. Ambassador, suggest, before we talk a
little bit about U.N. arrearages and major reforms as you see
them, let me suggest that I think everybody in positions like
yours, not just the Defense Department, ought to know what a
situation like Bosnia does to the United States military.
Because we did not have anything in reserve for these kinds
of efforts, and because we didn't plan to have money there,
$2.8 billion has been spent out of this year's budget by the
President on Bosnia that comes out of every day O&M, operations
and maintenance and training money.
Before we're finished, it will be over $6 billion, from
what I understand. I think it's really important that we
understand that that kind of commitment is not just a neutral
event because it's a big, important event. We're in a very
drastic situation right now.
If we don't have some reprogramming in the Defense
Department and some rescissions, we've got a substantial
portion of the training and operation and maintenance money of
the U.S. military used up there. Because the President needed
ready money, not budget authority, and so it comes out of the
one-for-one ratio programs. That's almost all training and
operation and maintenance and the like.
We don't have a place to just go pluck the money now. We
have to go back through defense, and if it worked right, you're
going to have to cut defense in a whole bunch of places to pay
for this.
That will be a tough problem, because what we're going to
have to do is probably take a lot of items that have long pay
out in order to get some--because there's no other money that
will do the job. We're going to have to cut some real dollars
out in program authority to get this $2 billion in outlays that
has been spent.
So I only share that with you because frequently we make
these commitments. You aren't part of this directly. I'm saying
we should all know together, when we make these kinds of
commitments that there ought to be some real effort to say how
we're going to pay for it, rather than let it be done in the
way that this one is happening.
I don't expect you to say anything or do anything. I just
want to share that concern with you.
U.N. reforms
I understand we have a difference of opinion in the Senate
versus the administration on how much arrearage we owe. I don't
choose to argue the point, but I guess there is a bipartisan
group working together up here and you're there, aren't you,
Mr. Chairman.
Senator Gregg. Right. We're trying to work that out.
Senator Domenici. I believe that you know that there is a
difference of opinion on whether we're going to put all that
money in at one time, or whether we're going to pay it over
time.
I think all of this comes about because--and I'm just
giving you my version--because we don't want to reform
entitlement programs and save real dollars, so we end up taking
appropriated accounts. Everywhere we turn we have less and less
money available.
That situation puts all these kinds of programs in
jeopardy, including the budget for this subcommittee. Could you
tell us, of the reforms that the United Nations is
contemplating, what two or three are apt to save the most money
over time?
Ambassador Richardson. Senator, let me mention that there
are two types of reform the United Nations is pushing, the ones
that were announced by Secretary General Annan last Monday.
These are reforms that Annan can do on his own as Secretary
General. They involve Secretariat functions.
And the second set of reforms he is going to be pushing
will be before the end of July, and these are reforms that he
would have to submit to the General Assembly for approval, to
all the member states--185 member states.
Princeton is our expert on what the most important ones
are. My sense, Senator, is the most important ones are the
reforms that consolidate the departments. The chairman is very
interested in accounting issues. I think to consolidate is very
important. There are a lot of departments at the United
Nations.
Just one of his reforms was three separate development
departments were merged into one. I would say the staff
reduction of 1,000 people, which reduces the U.N. staffing by
about 10 percent. We're talking about a high several years ago
of 11,200 employees. We're now down to about 9,000.
These are positions that he is going to try to eliminate
altogether. It's not just vacancies that go unfilled. I think
those two, in my judgment. I mentioned also a 13-percent
reduction of administrative costs that will save about
$138,000.
Senator Domenici. Before Senator Hollings leaves--Senator
Hollings, I would just want to remind everyone that it was in
this subcommittee when you were chairman and I was your ranking
member that we first indicated that we were not going to fund
the United Nations any longer unless they had some bookkeeping,
accounting, and efficiency reforms.
Senator Hollings. You and I put $1 billion there a couple
of years ago.
Senator Domenici. That's right.
Senator Hollings. And got them up to snuff, and we can see
how our position on Boutros. But that's the whole point. Once
we've won out and we've got a good Secretary General, we've got
to be able to back our team up there and give them some
credibility.
And I just don't know where the money is going to come from
unless we get it out of the supplemental. This installment
payment plan is not going to do right well, I think, at the
United Nations.
Senator Domenici. Could we ask Mr. Lyman, the expert, if he
has any thoughts?
Mr. Lyman. Thank you, Senator. I would just add one point
to what Ambassador Richardson said about steps that will save
us money, and that's changing the scale of assessment. We are
now assessed for the regular budget at 25 percent for almost
all these organizations, and the United Nations assesses us at
close to 31 percent for peacekeeping, because the permanent
five members of the National Security Council have a surcharge
for peacekeeping.
You know Congress has put that 25 percent cap on
peacekeeping, but as long as the United Nations keeps billing
us at 31 percent, the arrears build up.
This year, and this is the year we've got to do it, we're
going to get the United Nations to agree--that's our
objective--to lower that scale of assessment, across the board.
Not only in the United Nations in New York, but also the U.N.
specialized agencies.
If we do that, we bring down the U.S. costs of this whole
structure, very close to the level that Congress in its wisdom
gave us last year and the year before. Then there would be no
arrears at that level, and that's our objective, and that saves
the United States money.
Senator Domenici. Do you think you can do that?
Mr. Lyman. I think if we give Ambassador Richardson here
the backing and credibility he needs.
Ambassador Richardson. If I get some bucks, Pete, I'll have
the leverage to lower the scales, which would be by the end of
this calendar year.
Senator Domenici. In other words, you would be saying,
we're paying our dues, now we want you to bill us right.
Ambassador Richardson. Right. Fairly.
Senator Domenici. I think that's it. I thank you very much.
offsets for Arrears
Senator Gregg. I have a couple of other additional
questions. First off, I think Senator Hollings' comment as he
left is very pertinent, because he has been on this committee
for a long time and he understands the dollars. I have been
concerned about this. As you know, I have expressed it at every
meeting that we have had.
I think what we need to get from you, working with OMB, is
what the offsets are going to be. Where are you going to find
the money? If this is so important that we pay these
arrearages, then why didn't you want to put it all in this
year, or at least a large part of it, in this year?
And, second, why did you use this budgeting gimmick of
advance funding where there are no offsets? I think we have to
get some specific offsets. I suggest that we get that pretty
soon, because I think the effort to reach a good-faith
agreement is going to depend on our knowing where this money is
going to come from and how it's going to be paid.
We seem to have an awful lot of affiliated organizations.
You are talking about consolidation. Something I would like to
be able to get--and maybe we have this, but we do not have it
effectively--is for the affiliated organizations which are
clearly peripheral, things like the copper study group, the
cotton group, the grain group, Institute of Unification of
Private Law, the vine and wine group, the rubber group; you
know what I'm talking about?
Ambassador Richardson. Yes.
Withdrawal from organizations
Senator Gregg. I'd like to get the number of people who
work in these organizations; the number of people who contract
out to work with them; what countries are their origins from;
the number of employees; and where they have facilities.
We need to know what we are dealing with here, relative to
bureaucracy. It seems to me that a lot of these are very
marginal, and in need for support. If you're looking for a
place to consolidate, that would be where to do it.
Now, relative to the inspector general, he's been limited
by his resources and by his number of personnel. What do you
expect to happen in that area?
Ambassador Richardson. Senator, on your first point, just
for the record, we did get out of three or those organizations.
UNIDO being one--the U.N. Industrial Development Organization,
we felt it was not appropriate to stay in. The Pan American
Railway Congress Association and the World Tourism
Organization.
We have targeted another one, the International Cotton
Advisory Committee, but there was a little bit of concern in
Congress, so we cut that back.
Senator Gregg. Well, target it again. You can put vine and
wine, you can put copper, cotton, grain as far as I am
concerned.
Office of Internal Oversight Services
Ambassador Richardson. We'll get that data for you. Let me
also say that we attach great priority to this Office of
Internal Oversight Services. We think it's very important.
We have worked with--and this is one of our major reform
initiatives, when Princeton started in this job. And we're
trying to get resources for this organization. We're actually
advocating an increase in resources for it, because we think
ultimately it will save money.
Senator Gregg. How much?
Ambassador Richardson. Well, we're----
Mr. Lyman. We're going to be filling seven new
investigative positions this year. And they have come to an
agreement that in the 1998-99 budget, the inspector general,
Paschke, will have the resources he feels he needs to carry out
investigations at his own initiative.
Senator Gregg. Is that the whole world of U.N. activity?
Ambassador Richardson. No; just the Secretariat.
Mr. Lyman. He only has authority through the Secretariat
and some of the operational funds and programs that come under
it. We have to work through the other specialized agencies to
get the same kind of capacity built into them. We're making
progress, but we're not there yet, and that's one of the things
that's high on our list in these other specialized
organizations.
But the inspector general doesn't have authority over them.
They have their own governing councils, their own structures,
and we have to work through them.
Ambassador Richardson. We're trying to give his office--we
pushed to give his office more independent authority, more
teeth, more resources so that he can function like an inspector
general in our departments. We haven't reached that.
But Mr. Paschke is a very committed manager and reformer.
Let me also mention, Mr. Chairman, that I'm trying to
persuade you to come to New York to see first hand how this
office operates, along with the Under Secretary for Management,
Joseph Connor, who is a former Price Waterhouse chairman, who
is involved with management. I think he's also a Republican.
I'm not sure. I don't know if he's from New Hampshire.
But we have Maurice Strong, too, a very well known
international expert on accounting. We have some very active
people at the United Nations. that are part of the U.N. system.
And I must say we have a very good team on our staff, headed by
Victor Marrero, who is I think here, and at the State
Department that are pushing reform.
Every day I give a speech on accountability and reform. You
may find that difficult to believe, but I do. Within the U.N.
system, we're pushing these issues very hard.
Senator Gregg. I congratulate you for that. We hope there
will be results from the pushing, especially in expanding the
inspector general's portfolio and his support, because we think
it has been very limited.
Mr. Lyman. I just want to mention that we welcome the GAO
study that is beginning now, at the request of the Senate, on
the functioning of the OIOS office, and giving us some
guidelines as to how it should grow over the years. We'll be
very interested in that study.
I gather we'll have the results sometime toward the end of
the summer.
Senator Gregg. I know you have to get back to New York. We
appreciate your taking the time out of your busy day.
Ambassador Richardson. Thank you, Senator.
subcommittee recess
Senator Gregg. We look forward to working with you on these
issues.
I ask unanimous consent that we be allowed to submit
additional questions for the record.
The hearing is concluded.
[Whereupon, at 2:38 p.m., Thursday, March 20, the
subcommittee was recessed, to reconvene subject to the call of
the Chair.]
DEPARTMENTS OF COMMERCE, JUSTICE, AND STATE, THE JUDICIARY, AND RELATED
AGENCIES APPROPRIATIONS FOR FISCAL YEAR 1998
----------
THURSDAY, APRIL 10, 1997
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 10 a.m., in room S-146, the
Capitol, Hon. Judd Gregg (chairman) presiding.
Present: Senators Gregg, Domenici, Campbell, Hutchison,
Hollings, and Mikulski.
DEPARTMENT OF JUSTICE
Federal Bureau of Investigation
STATEMENT OF LOUIS J. FREEH, DIRECTOR
Immigration and Naturalization Service
STATEMENT OF DORIS MEISSNER, COMMISSIONER
Drug Enforcement Administration
STATEMENT OF THOMAS A. CONSTANTINE, ADMINISTRATOR
opening remarks
Senator Gregg. We will get started. We appreciate everybody
being here early. That is great.
This is a hearing involving basically the core law
enforcement community of the country: the Federal Bureau of
Investigation, the Drug Enforcement Administration, and the
Immigration and Naturalization Service. So we should all feel
very safe, at least for the hour that we are here in the
hearing.
We appreciate the Director's and the Commissioner's joining
us this morning. We want to go over budgets. We decided to do
this as a panel so that we could save you time and, hopefully,
move the process along. I am going to pass on giving an opening
statement also to move things along.
Senator Hollings. Me, too.
Senator Gregg. Do you have any opening comments?
Senator Campbell. Well, not to read an opening statement as
much as thank you to all of these three agencies, Mr. Chairman,
for a coordinated effort with the Denver police. It was very
successful. It culminated, after 5 months of intensive
investigation, dealing with a drug project called the Crofton
project, and resulted in, as I understand, 51 heroin dealers
being collared and 66 others deported, and a number of cases
are now in the process. The heads of these three agencies, of
course, were a big help to help reduce the drug flow in our
State, particularly in our major city, and I just want to thank
them.
Senator Gregg. Why don't we start with you, Director? We
will work our way right to left.
Director Freeh's opening statement
Mr. Freeh. Thank you, Mr. Chairman. Thank you very much.
Members of the subcommittee, good morning. It is a pleasure to
appear before you, particularly with my two friends and
colleagues in the Department of Justice.
I have a somewhat lengthy prepared statement which I would
submit for the record, with your permission, and perhaps in
just a few minutes I will go over some of the highlights of our
request, and then I will certainly be happy to answer your
questions.
The FBI's 1998 budget request is for $3 billion and 24,839
positions--including 10,524 agents. The budget proposes program
increases of $142 million and 522 positions.
As you know, since the hiring freeze was lifted at the FBI
in July 1994, we have been hiring in the greatest burst of
hiring in the history of our institution. Since the hiring
freeze was lifted, we have hired about 6,020 individuals. Those
are all employees who, of course, require drug screening,
polygraph examinations, as well as the full background for a
secret clearance because of our counterintelligence
responsibilities. We have hired 2,446 agents and 3,574 support
personnel during that period.
Our hiring plan for 1997 is on track with respect to the
agents; we expect to hire all 1,057. With respect to the
support personnel, we expect to hire 2,607 for 1997. At this
point, we are on track with respect to the hiring, including
the 1,110 positions for our criminal justice information
services [CJIS] facility in West Virginia. There is a
possibility we will fall 200 or 300 short with respect to the
support hiring, even though at this point we are on track and
hopeful and confident to have them all on board. But it is a
very, very busy time.
We certainly appreciate this subcommittee's support in that
personnel infusion, which was desperately needed for us to
maintain our mission and take care of new responsibilities.
Telecommunications carrier compliance
The 1998 budget can be broken down into seven initiative
areas. The first area is the telecommunications carrier
compliance request, which is for $100 million. As I said, Mr.
Chairman, last year, and as I certainly repeat this year, this
is a critical part of our budget. It is really not simply an
FBI item, although it is in the FBI budget. This is an
initiative which we undertake on behalf of all law enforcement,
including the agencies represented here, and, more important,
the thousands of State and local departments who utilize court-
authorized electronic surveillance and who would lose its
efficacy if the technology is not available to deal with the
new digital telecommunications systems. So we ask for that for
1998.
This committee and the Congress created the
telecommunications carrier compliance fund last year. I am also
pleased to report that we have been able to get contributions
from other agencies which will help defray the cost of
retrofitting the embedded telecommunications base equipment.
Administrator Constantine from the DEA has promised $15
million; the U.S. Postal Inspection Service has given $1
million; and the Department of the Treasury has promised $1.8
million. The Attorney General and I are working very hard,
particularly with the national security agencies, to make sure
that they make some contributions, since a lot of the
technology is directly related to the mission we perform for
them.
Technology crimes initiative
The second area is the technology crimes initiative. We
spoke a little bit about this at the hearing on Tuesday, which
I was pleased to attend and which I again compliment you for
holding, on child pornography on the Internet. As we said at
that hearing, we are entering a new venue in terms of
cybercrime and cyberspace, and the FBI agents of the 21st
century who are now being hired, thanks to your resources. We
will need the technology and the know-how to chase fugitives
not only over back fences but through cyberspace. The computer
crimes initiative, which includes the ``Innocent Images''
matter that we discussed on Tuesday, and the general trend for
more and more crimes being committed on technologically
difficult investigative areas is a big burden for us and a big
challenge and one that we want to meet by being prepared now.
We have cases where people in St. Petersburg, Russia, break
into Citibank accounts in New York City with a laptop computer
and move millions of dollars out of the country before the bank
even knows they are gone. We have other people using laptop
computers who, from a foreign country, come into the United
States without leaving their apartment and get into northern
Florida and shut down 911 systems. These are systems which
deliver not only police services, but emergency services.
Telecommunications fraud is a problem. If somebody wants to
hire a murderer or engage in some crime, the Internet and the
availability of technological means now makes that a very
attractive area for criminals, not just child pornographers.
So our technology crimes initiative will help us get
prepared for that. We have set up computer squads in three
cities--New York, San Francisco, and Washington, DC. These are
unique squads for the FBI. They do not have a particular
programmatic assignment--bank robberies, mail fraud, et cetera.
They are there to deal with crimes and assist agents in dealing
with crimes in this new area.
We also have our Computer Investigations and Infrastructure
Threat Assessment Center [CITAC] in Washington, DC, which will
give us the technology and the training and the coordination to
work those crimes. So it is a very important area, and I
certainly appreciate your past support for that.
International law enforcement
The third initiative is international law enforcement. In
the international law enforcement area, we are completing the
4-year joint FBI and Department of State plan which was
submitted to and approved by the Congress last year. As I said
last year the FBI's mission in the 21st century includes
investigating counterterrorism, narcotics, and financial crimes
that now span the globe. It is my very strongly held belief
that we need agents in other countries to protect Americans, to
have a perimeter of defense for Americans, and enable us to
conduct investigations--not for other countries, but on behalf
of the United States. And the plan that we are pursuing and the
expansion of the legal attache offices at really a very
relatively modest investment will give the FBI and the United
States the capability to investigate a crime scene in Saudi
Arabia, as we did last summer, and to find a fugitive in
Tanzania who is a member of a notorious D.C. drug gang, one of
whose members was responsible for killing two of my FBI agents
and a police sergeant in November 1994. We want these agents
and resources overseas to protect Americans. We also get
benefits in terms of liaison and training.
In the La Cosa Nostra initiative, we have asked for some
additional resources to implement a 5-year counterorganized
crime initiative, which has been very, very successful. Over
the last 15 years, we have arrested and convicted 177 major
organized crime bosses, under bosses, and consiglieres. The new
strategy targets labor unions and particular industries where
there has been increasing infiltration by organized crime
interests, including the stock market. A recent arrest in New
York showed that they were targeting stockbrokers as opposed to
more traditional areas, and this is a very strong organization.
There are over 2,000 La Cosa Nostra members still active. We
have less than 12 percent of the membership and leadership
convicted and under incarceration. The goal is to reduce the
strength of the La Cosa Nostra over the next 5 years, and
particularly to intervene in the industries where they are very
active and where the costs of doing business will increase
because of their power.
Southwest border initiative
The fifth initiative is the Southwest border initiative,
which I share with my good friend, Tom Constantine. We have
asked for some additional resources to deal with not only the
drug trafficking, but also the public corruption which is
involved in that regard. We have had some extremely successful
initiatives there, including the Zorro II case. Our agencies
are totally integrated--I emphasize totally integrated--with
respect to that strategy, to include the leadership, the
preparation, and the utilization of resources. It is a good
example of how components not just in the Justice Department,
but including the Customs Service, and particularly the INS,
have put together a strategy that, at least on our side of the
border, has become very, very important in our war against
drugs.
Construction
Another initiative is construction. We are asking for the
last segment of funding for the construction for our new $130
million FBI laboratory at Quantico. The amount we ask for in
1998 is $32.6 million, which will complete the funding
required.
The site preparation will begin in the fall. This will be a
state-of-the-art teaching laboratory where, in addition to
performing Federal and FBI forensic examinations, we will
provide an enhanced capability to teach and share technologies
with the State and local scientists. We are very proud of our
FBI laboratory. It conducts over 600,000 examinations a year.
As I mentioned on Tuesday, one of those 600,000 matters was
the palm print of Richard Allen Davis, which was taken from a
wall and used to solve the Polly Klaas murder in Petaluma, CA.
The laboratory does that on a routine basis every day.
We are certainly mindful of problems in our laboratory. The
inspector general's report, I believe, is going to be issued
next week. We will review that report, and we will take the
criticism very seriously. We will make changes. We have already
made changes to deal with some of those issues, but as I said,
I am extremely proud of our laboratory and the work that it has
done. I think the new facility at Quantico, which will be
constructed with a view toward improving evidence maintenance
as well as avoiding contamination problems, will really give us
the facility that we need to do the job for the Government in
the 21st century. The goal is to have it open and operating by
the summer of 2000--which I guess is not that far away, but
every time I say it, it seems like it is very far away.
Infrastructure initiative
The last two items, very briefly. The seventh of our
initiatives is an infrastructure initiative. This includes
security investigations of FBI and contract employees. As I
said, we have hired over 6,000 people since July 1994. They all
have secret clearances. It is the best time in terms of the
employment process to determine problems, to identify people
who are not suitable not only for Government work but for work
requiring a secret clearance. We are asking to hire what we
call background investigation contract service [BICS]
investigators or former Federal investigators to conduct these
background investigations. They do it at one-half the cost of a
current on-board agent. They also free up our agents to do
investigations which do not necessarily relate to backgrounds.
Part of the infrastructure initiative is the national
backstopping program. That is the means we use to protect our
undercover agents and put together for them credible and
protective backgrounds so when the bad guys check them out,
they are able to survive and perform their very dangerous
missions.
We have asked for replacement of microwave radio equipment
as the Government auctions off megahertz of radio spectrum,
without any reimbursement to the Federal agencies. We require
funding to relocate and replace microwave equipment so we can
continue the radio communications vital to operations despite
the shrinking spectrum allocation.
The other aspect is some additional funds to comply with
the electronic Freedom of Information Act [FOIA] which the
Congress now, I think very wisely, has put in place. It will
give us the ability to respond to FOIA requests quicker. We
have a very large backlog in the FBI which we are trying to
deal with, and this will require us to move quicker, and we
would like some additional resources to respond to that.
prepared statement
Those are the highlights in seven different initiatives of
our overall budget. I just want to say again how appreciative I
am personally, and the FBI is institutionally to you, Mr.
Chairman, Senator Hollings, and other members of the
subcommittee, for what has been extraordinary support over
several years. Our budget has grown very, very significantly,
certainly in the almost 4 years that I have been Director. We
have used that money prudently and wisely and we will endeavor
to complete all of our assignments and use that money with the
very clear understanding of the difficulty that it takes to
appropriate those funds and give them to us. And we are very
appreciative of your support.
Thank you.
Senator Gregg. Thank you, Director.
[The statement follows:]
Prepared Statement of Louis J. Freeh
Good morning, Mr. Chairman and members of the subcommittee. I
welcome this opportunity to appear before you today and discuss the
1998 budget request for the FBI.
At the outset, I would like to thank both Chairman Gregg and
Senator Hollings for their continued strong support of the FBI during
the 1997 budget process.
The additional resources you provided for the FBI are being used to
protect the nation and its citizens against the threat of terrorism, to
keep international crime away from the borders of the United States
through expansion of our legal attache offices, and to attack drug
trafficking and public corruption along the Southwest border.
I am grateful for your efforts to fund the telecommunications
carrier compliance initiative, which was my top budget priority for
1997, and for your continuing support for the construction of our new
laboratory facility. Both of these initiatives will provide
immeasurable benefits to our state and local law enforcement partners.
1998 budget request
For 1998, the FBI is requesting $3 billion in direct budget
authority, 24,839 permanent positions--including 10,524 agents--and
23,770 direct funded workyears. This amount represents a net increase
of $204.3 million from the 1997 enacted levels.
To build upon the work started with the 1997 budget, as well as to
address new and increasing investigative responsibilities and provide
necessary infrastructure services, the 1998 budget proposes direct
program increases totaling $142.1 million and 522 permanent positions,
of which 161 are agents.
This is a relatively modest increase in new positions that will
allow us to enhance our efforts in some of our highest priorities,
including computer crimes, La Cosa Nostra, and Southwest border. This
level of new hiring will also allow us to begin providing specialized
training of new agents that were brought on board during 1995, 1996,
and 1997, as well as other agents for which such training was deferred
due to new agent hiring and training requirements.
1998 initiatives
The 1998 budget proposes increases that support seven initiatives,
including: telecommunications carrier compliance, technology crimes,
international law enforcement, La Cosa Nostra, Southwest border,
infrastructure, and construction.
telecommunications carrier compliance
For 1998, we are asking for a total of $100 million for
telecommunications carrier compliance activities to support the
Communications Assistance for Law Enforcement Act (CALEA). Through this
initiative, we are working to preserve the ability of law enforcement
to conduct court-authorized wire-taps, pen registers, and trap-traces.
These capabilities are critical to all law enforcement, not just the
FBI.
Forty-one states, the District of Columbia, the U.S. Virgin
Islands, and Puerto Rico have laws allowing for court-authorized
interception of communications by state and local law enforcement. In
1995, state and local law enforcement accounted for 44 percent of the
applications for wiretaps in criminal cases.
The loss of these capabilities would be especially devastating to
the nation's efforts to combat drug trafficking. Approximately 69
percent of the criminal applications for wiretaps in 1995 were for
narcotics investigations.
These techniques are equally important to protecting the nation's
security. Over the past ten years, 59 percent of all federal wiretap
applications were in support of national security investigations.
In many cases, there is no substitute for the use of court-
authorized electronic surveillance in gathering evidence, preventing
crimes, protecting victims, and in bringing to justice the persons
engaged in violent crimes, terrorism, drug trafficking, and espionage.
The CALEA implementation plan, which was requested in the 1997
conference report, was recently provided to each member of the
Committees on Appropriation and Judiciary in both the House and Senate.
We await your approval of the plan so that we may begin entering into
cooperative agreements with industry and obligate the funding you
provided for this important initiative.
This past January, the FBI issued the second notice of capacity
requirements. We are now in the process of reviewing comments from
industry and the public. We are now preparing to publish final cost
recovery rules for the telecommunications carriers that establish the
procedures for the cooperative agreements that will be used to provide
reimbursements for costs incurred by carriers in complying with CALEA.
We continue to be fully engaged with industry in developing necessary
standards that will guide CALEA compliance efforts. Finally, we are
also working with other federal agencies to identify eligible funding
for transfer to the telecommunications carrier compliance fund that you
authorized in the 1997 Omnibus Appropriations Act.
This past November, the Attorney General sent a letter to all
eligible agencies advising them of the fund and asking their support by
transferring available funding. The FBI has received firm commitments
from several agencies, including the United States Postal Inspection
Service, the Drug Enforcement Administration, and the Department of the
Treasury for the United States Customs Service and United States Secret
Service. These commitments total $17.8 million. I am hopeful that other
agencies will also be able to make additional funding available this
year.
I believe we have made much progress over the past year in working
with industry, the Congress, and other interested groups. Now is the
time to begin the process of actually implementing the solutions
envisioned by Congress when it passed CALEA. All of us here recognize
the consequences if law enforcement loses its ability to effectively
conduct court-authorized electronic surveillance.
technology crimes
The 1998 budget also proposes additional agents and funding to
enhance our capabilities to address a growing workload in the area of
computer-related crime, ranging from criminal attacks to acts designed
to disrupt or disable the national information infrastructure. We
currently have three computer crime squads located in San Francisco,
New York City, and Washington, D.C. The additional agents requested
will allow us to establish teams in other key field offices so that
there is a core capability for investigating computer-related crimes
across the nation.
Assisting our field computer crime agents is the Computer
Investigation and Infrastructure Threat Assessment Center (CITAC). This
center, which operates at FBI headquarters, was among the
counterterrorism capabilities supported by the committee in 1997.
As you know, going after the type of criminals, terrorists, and
others involved in cyber-crime often requires very specialized and
technically trained investigators and support staff. We are
supplementing our staff with contract telecommunications and computer
science experts. This is a very dynamic area, where the potential
threats are broad and challenging. CITAC will provide the FBI with a
much needed resource for countering these threats. Funding requested in
our 1998 budget will support ongoing CITAC operations and efforts.
international law enforcement
Last year, Congress approved the FBI's four-year plan to increase
our presence overseas as part of our efforts to prevent foreign crime
and terrorism from reaching the United States. In 1997, we are
proceeding with the opening of new FBI legal attache offices in
Estonia, Saudi Arabia, the Ukraine, Poland, India, and South Africa. I
am pleased to report that legal attache offices will be operational in
all of these locations this year. At present, we have agents in every
location except New Delhi and Pretoria, which will open later this
spring.
Funding is requested in 1998 to implement the third year of this
plan by opening eight new legal attache offices in Brazil, the Czech
Republic, Denmark, Kazakhstan, Turkey, South Korea, Nigeria, and
Uzbekistan. We are also planning to assign additional staff to eight
existing locations.
I recently visited several Middle Eastern countries, including
Egypt, Israel, and Jordan, where I had the opportunity to talk with
foreign government leaders and law enforcement officials. These leaders
and officials were very pleased that Congress was supporting our plan
for new FBI overseas offices. They remain enthusiastic and committed
toward building the ``cop-to-cop'' relationships that are possible
through our legal attache program. With your support in 1998, we can
improve our ability to protect American cities and communities against
the impact of international crime.
la cosa nostra
The La Cosa Nostra remains the most powerful and dangerous,
organized criminal threat to American society. Our investigative and
intelligence information indicates that La Cosa Nostra families that
were previously damaged by prior FBI and other law enforcement
investigations and prosecutions are attempting to rebuild their
criminal enterprises.
Last year, the FBI began implementation of a strategic plan, named
``Operation Heaven's Gate,'' that is focused on reducing the influence
of the La Cosa Nostra over labor unions and certain industries, as well
as toward reducing the members of all La Cosa Nostra families. The 1998
budget includes additional agents and funding to support our efforts to
achieve these objectives.
To illustrate the success that exemplifies the ``Operation Heaven's
Gate'' strategy, this past December, FBI agents in Fort Lauderdale
arrested Nicky Corozzo and eight others following their indictment for
conspiracy to murder the FBI's cooperating witness and other charges.
At the time of his arrest, Corozzo was alleged to have been one of the
three-man ruling commission for the Gambino family in New York City due
to the conviction of John Gotti. These arrests came after a two-year
investigation of loansharking, credit card fraud, trafficking in
untaxed cigarettes, and other criminal activities.
In June 1996, the acting boss and 18 other members and associates
of the Genovese family in New York City were indicted on racketeering
charges. The indictment also seeks the forfeiture of numerous assets,
including $20 million that represents the proceeds of the charged acts
of racketeering.
I mention these cases because our investigative successes were
achieved, in large part, by using some of the most important tools
available to attack organized crime, namely, cooperating witnesses
willing to provide us information, undercover operations that get us
inside these close-knit groups, and court-authorized electronic
surveillance to collect evidence of criminal wrong-doing. Funding is
requested in our 1998 budget to strengthen our capabilities to support
undercover operations and to provide the necessary and adequate
safeguards to the brave agents who undertake those types of dangerous
roles in an effort to make our communities safer.
southwest border
The Southwest border project is a joint FBI, DEA, and United States
attorney initiative targeting the activities of four major Mexican drug
trafficking organizations operating along the United States and Mexican
border. This past January, one of the targets of this investigation,
Juan Garcia Abrego, was sentenced in federal court to 11 life terms and
fined more than $128 million after being found guilty of various drug-
related offenses. While the conviction and sentencing of Garcia Abrego
sends a strong message to other Mexican drug traffickers, we still have
much unfinished business.
Through the joint Southwest border project, we are pursuing a
comprehensive effort against drug trafficking by the major Mexican drug
organizations. Additionally, we are also focusing on violent crimes
that are being committed to support these drug trafficking activities
and the corruption of government officials, including law enforcement,
that allows drug traffickers to operate without fear of detection,
arrest, and prosecution.
Last year, you provided the FBI with 70 new agents for the
Southwest border project. Our 1998 budget proposes another 70 agents to
build upon the work already started and to expand our focus to second-
tier drug traffickers.
construction
Overall, the FBI is proposing $49 million in 1998 for construction
projects. This request includes $32.6 million to complete the funding
requirements of the new FBI laboratory facility, which is projected to
cost approximately $130 million. We have selected a design concept for
the new facility that was developed by our architectural and
engineering firm. We expect to break ground later this summer. Our goal
is to have the new FBI laboratory ready for operation by the summer of
2000.
Construction of this new state-of-the-art facility will
significantly improve the operations of the FBI laboratory and the
quality of forensic services the FBI provides to the entire law
enforcement community.
Additionally, construction funds are proposed to begin the
renovation of space in the FBI headquarters building that is being
vacated by the relocation of fingerprint identification and related
operations to West Virginia, to expand and realign space for the FBI
field office in Los Angeles, California; and to continue necessary
upgrades and maintenance at the FBI Academy complex in Quantico,
Virginia.
infrastructure
Within our infrastructure initiative, funding is being proposed for
several important projects, including: security reinvestigations of FBI
employees and contract personnel; the national backstopping program
that supports undercover operations; the replacement of microwave radio
equipment that must be changed due to the loss of spectrum assignments;
and achieving compliance with the recently enacted Electronic Freedom
of Information Act.
freedom of information act
The FBI faces a backlog of approximately 16,000 Freedom of
Information and Privacy Act (FOIPA) requests. Congress provided 129 new
positions in 1997 to help us reduce this backlog. We are well on the
way to filling these positions and I am confident we will have all of
these employees on board by the end of this year. All 129 positions
will be line employees dedicated to reducing the backlog.
Additionally, with your concurrence, I moved responsibility for
management of our FOIPA program to our Office of Public and
Congressional Affairs. I did this to increase management oversight over
the process. Since that move became effective in late October, a number
of streamlining initiatives have been undertaken and the work flow
process is being redesigned. Our goal, which is optimistic but
achievable, is a 40 percent improvement in processing productivity by
the end of fiscal year 1998.
Last year, Congress enacted the Electronic Freedom of Information
Act. This act requires government agencies to provide public
information to requesters in an electronic format, such as computer
diskettes or compact disks, and places other requirements on government
agencies. A new pilot automation project has proven the viability of
producing the records in an electronic format.
To comply with the new law, the 1998 budget requests both
additional staffing and funding to implement an automated document
processing system that can produce FOIPA releases in an electronic
format. The additional positions and funding for automated document
processing, coupled with the other numerous initiatives, will permit us
to reverse the current trend and come into compliance with the law.
Without the additional staff and funding, we cannot meet the mandates
of the law.
conclusion
Mr. Chairman, I would like to again express my gratitude for the
committee's support and confidence in the FBI. I am hopeful that we can
continue to build upon our successes and serve the American people
proudly and effectively. As tough as our job is, I know that it would
be that much harder were it not for the willingness of the committee to
support us with the resources needed to meet our investigative,
national security, and law enforcement service responsibilities.
This concludes my opening remarks. I would like to respond to any
questions that you may have.
Senator Gregg. Administrator.
Mr. Constantine. Senator, like the Director, I have a
lengthy statement to file.
Senator Gregg. We will put all statements in the record.
Administrator Constantine's opening statement
Mr. Constantine. OK. Thank you. I want to thank you,
Senator Hollings, and the other members of the subcommittee for
your support on behalf of all DEA agents around the world who
know that your support has gone past mere words. There has been
substantial financial support for DEA programs, and it has been
very much appreciated.
Our budget for fiscal year 1998 is focused on three primary
operational issues that really reflect the impact of drug
trafficking in the United States and addresses it through law
enforcement programs.
International organized crime
The first is the substantial international organized crime
syndicates that control and direct virtually all of the major
narcotics trafficking within the United States.
Cocaine and heroin are not grown in the United States. They
are not manufactured in the United States. Both are
manufactured and grown outside of the United States, and the
importation of those drugs and the management of the
distribution in the United States is not controlled, for the
most part, by citizens of the United States, but by the
leadership of powerful organized crime syndicates the likes of
which I have never seen before in my law enforcement career.
And I think as the Director mentioned, the efforts that we have
made over the last 30 years on the LCN groups have been
substantial. It has been proven that we can make an impact on
organized crime.
What we have done in the area of narcotics trafficking is
take the same model that has been so successful against
organized crime. The most substantial program in our budget
request for this year is labeled the Southwest border strategy.
I suspect that if I were going to define that operation today,
I would not call it the Southwest border strategy. As we
started with it, we recognized that about two-thirds to three-
quarters of all of the narcotics entering the country was
coming across the Southwest border. Drug trafficking was
originally controlled by organized crime syndicates out of
Colombia who had asked organized transportation groups out of
Mexico to merely smuggle cocaine across the border and then
turn it back over to Colombian organizations. Those
organizations have their branch offices in New York, Chicago,
Detroit, Los Angeles, and Houston.
Over the last 3 or 4 years, the situation has changed
fairly dramatically, especially with the leaders of the groups
from Cali, Colombia, having been arrested. More and more we see
the powerful syndicates being controlled out of the families in
Mexico.
The Southwest border strategy is, in reality, all of those
investigations, which for the most part are jointly conducted
between the FBI and DEA. These are major technology-driven
investigations, which are joined later by Immigration, Customs,
and the Criminal Division of the Justice Department. We have
been able to identify to a major degree the leadership in the
United States and the command and control individuals who
reside outside of the United States.
We have to recognize that these groups we are investigating
and attempting to arrest and prosecute make a profit somewhere
between $7 to $10 billion a year, tax free, and they have hired
the best technical experts. They have intelligence systems or
counterintelligence systems that certainly surpass anything in
domestic law enforcement outside of the Federal agencies, and
in many ways would rival that of a second-level country. And
they continue to build these defense systems.
The DEA has asked for 96 agents and a substantial number of
intelligence analysts for the Southwest border strategy. We are
also requesting technology infrastructure support for DEA.
National drug trafficking problems
The second area is what we call national drug trafficking
problems. Recognizing that the management of many of these
organizations at the higher level still comes from Colombia and
Mexico, there are two primary drug problems. For some strange
reason, they are divided geographically. The first in the West
and the Southwest, and beginning in the Southeast now, is
methamphetamine, a drug formerly controlled by motorcycle gangs
with a very limited usage. That changed dramatically in the
early 1990's. It has become the drug of choice in California,
the No. 1 drug of addiction. And for the first time in the
history of us recording drug-trafficking issues, we find that
the addiction in the female population exceeds the addiction in
the male population. We also have a tripling of hospital
emergency incidents and a doubling of overdose death rates.
Also what we have is, because of the impact of this drug on
individual long-term usage, we have this delusional, paranoid
state that many addicts wind up in, and they become very
dangerous----
Senator Mikulski. What is this drug?
Mr. Constantine. Methamphetamine. It is a chemical compound
out of the precursor drug ephedrine or, increasingly,
pseudoephedrine. It is a drug similar to crack cocaine but its
effect is longer in duration. When police officers try to make
arrests, or in domestic violence situations, methamphetamine
produces violence and is a danger to the victims as well as
police officers. I think as Senator DeConcini knows, the
troopers from the New Mexico State Police chased somebody from
Albuquerque to Sante Fe----
Senator Mikulski. Domenici.
Mr. Constantine. I am sorry.
Senator Mikulski. They all want to be Ambassadors.
[Laughter.]
Mr. Constantine. I had gotten a call yesterday from Senator
DeConcini, and that is how I kind of lost that.
Senator Gregg. That is OK. He always calls me Senator Judd.
[Laughter.]
Senator Domenici. I used to. I don't anymore.
Mr. Constantine. There had been a high-speed pursuit by the
police department out there in which the defendant eventually
decapitated his own son under the influence of this drug. Meth
is controlled to a large degree by organized crime groups out
of Mexico, but they turn it over to groups in the United States
for street-level distribution.
The second drug problem is heroin, which has always been a
problem in the United States dating back to the 1920's and
1930's. Within the past 4 or 5 years heroin that used to come
from Southeast Asia and Southwest Asia, now for the first time
comes from South America, specifically Colombia. And heroin
that used to be 7 percent pure is now 90 percent pure, and we
are seeing increasing addiction rates. It is primarily a major
drug problem on the east coast of the United States, and,
Senator Mikulski, unfortunately, Baltimore is one of the
leading per capita heroin addiction cities in the United States
today. Today's heroin is controlled by Colombians, and it is
sold to illegal aliens from the Dominican Republic who control
the distribution up and down the United States.
Our budget request includes a major enhancement for
methamphetamine enforcement programs and also for heroin
enforcement programs. Recently, we conducted hearings with
Congressman McCollum in the Caribbean, the Director and I,
along with the Coast Guard and Customs. In addition to our
problem on the Southwest border, increasingly we have this
problem in the Caribbean region. The traffickers seem to float
their distribution systems back and forth between the Southwest
border and the Caribbean. Both the Lesser and the Greater
Antilles Islands are being used as major embarkation points for
the drugs into the United States.
Infrastructure
The other major increases are in the area of
infrastructure. The DEA, like every enforcement agency, when
times were tough with money, our philosophy, right or wrong,
was the agents were our first priority. We did that often at
the cost of our own infrastructure needs. The Attorney General
has been very emphatic to myself, the Director, and the
Commissioner, that we rebuild this infrastructure which is so
important in the out-years.
prepared statement
That is the nonagent, nonpersonnel component of our budget
request, and I will be glad to answer any questions. I
appreciate your support.
Senator Gregg. Thank you.
[The statement follows:]
Prepared Statement of Thomas A. Constantine
Mr. Chairman, Members of the Subcommittee: It is a pleasure and a
privilege to appear before you today to discuss details of the fiscal
year 1998 budget for the Drug Enforcement Administration. Before that
discussion, however, it is important to assess the current drug
situation and discuss several lessons we have learned over the past
several years, lessons which are shaping our current approach to drug
law enforcement at home and overseas.
But first, I would like to take a few moments to express our deep
appreciation to you, Chairman Gregg and Senator Hollings, and to the
other members of the Subcommittee for the extremely generous support
DEA received in our fiscal year 1997 budget. Your advocacy for our
budget resulted in the first billion dollar budget for DEA and provided
us with 261 additional new Special Agents to work in American
communities and overseas in areas where the world's most sophisticated
drug traffickers are headquartered. Additionally, you provided us with
funding to build the Justice Training Center at the FBI Academy at
Quantico, which will give DEA the space necessary to train Special
Agents, state and local partners, and international drug law
enforcement officials. This center is more than just a building to DEA:
it is a testament to the professionalism and creativity of DEA's
Special Agents and is a tangible symbol of your support for our
mission. On behalf of the men and women of the Drug Enforcement
Administration, you have our sincere gratitude.
During today's hearing, I would like to provide you and the Members
of the Subcommittee with a picture of how today's international
organized crime syndicates operate, how they rely on national drug
trafficking organizations within the United States to carry out their
business, and how violent trafficking groups have transformed many of
our communities into virtual war zones. I will also discuss how the
Drug Enforcement Administration is working around the world to target
and build cases against the world's most notorious drug traffickers,
focusing attention on the major traffickers operating along the
Southwest Border of the United States.
international organized crime
Powerful international drug syndicates continue to operate around
the world, supplying drugs to American communities, and employing
thousands of individuals to transport and distribute drugs. The most
significant international drug syndicates operating today are far more
powerful and violent than any organized crime groups we have ever seen
before. Frequently, these organized crime groups are referred to as
``cartels'' or ``federations''--titles that do not capture the full
range of their criminal activities, and give these vicious drug
traffickers a veil of respectability.
Today's leaders of major international organized crime syndicates
trafficking in narcotics are simply the 1990's versions of mob leaders
U.S. law enforcement officials have fought since the beginning of this
century. However, there are stark differences between major
international groups and their domestic counterparts. Members of
international groups in Colombia and Mexico, have at their disposal,
sophisticated technology--encrypted phones, faxes, and other
communications equipment--that even the best law enforcement
departments in the U.S. do not have access to. Additionally, they have
in their arsenal, aircraft, radars, weapons and an army of workers who
oversee the drug business from its raw beginnings in South American
jungles to the urban jungles within the United States. Mob leaders
operating in places like New York, Chicago or Las Vegas called their
business shots on American soil; major traffickers from Colombia and
Mexico make decisions from the safety of their headquarters in Cali or
Guadalajara. Law enforcement officers in the U.S. were eventually able
to identify, target, arrest and prosecute mob bosses, and today,
organized crime in America is a shadow of what it once was. The new
international drug syndicate leaders, in some countries, are virtually
untouchable because their operations are headquartered in foreign
countries and the likelihood that these leaders will ever face justice
in their countries, or in the United States, is remote.
With the intense law enforcement pressure focused on the Cali
leadership by brave men and women in the Colombian National Police
during 1995 and 1996, all of the top leadership of the Cali syndicate
are either in jail, or dead. The fine work done by General Serrano, and
other CNP officers, is a testament to the commitment and dedication of
Colombia's law enforcement officials in the face of great personal
danger, and a government whose leadership is riddled with drug
corruption.
Since the Cali leaders' imprisonment, on sentences which were
ridiculously short and not nearly commensurate with the seriousness of
their crimes, traffickers from Mexico have taken on greater prominence.
The alliance between the Colombian traffickers and the organizations
from Mexico had benefits for both sides. Traditionally, the traffickers
from Mexico were involved in smuggling marijuana, heroin and cocaine
into the United States, and had established solid distribution routes
throughout the nation. Because the Cali syndicate was concerned about
the security of their loads, they brokered a commercial deal with the
traffickers from Mexico, which reduced their potential losses.
This agreement entailed the Colombians moving cocaine from the
Andean region to the Mexican organizations, who then assumed the
responsibility of delivering the cocaine into the United States. In
1989, U.S. law enforcement officials seized 21 metric tons of cocaine
in Sylmar, California; this record seizure demonstrated the extent and
magnitude of the Mexican groups' capabilities to transport Colombian-
produced cocaine into the United States. This huge shipment was driven
across the Mexican/U.S. border in small shipments and stored in the
warehouse until all transportation fees had been paid by the Cali and
Medellin cartels, to the transporters from Mexico. Now, trafficking
groups from Mexico are routinely paid in multi-ton quantities of
cocaine, making them formidable cocaine traffickers in their own right.
The majority of cocaine entering the United States continues to
come from Colombia through Mexico and across U.S. border points of
entry. Most of the cocaine enters the United States in privately owned
vehicles and commercial trucks. There is new evidence that indicates
traffickers in Mexico have gone directly to sources of cocaine in
Bolivia and Peru in order to circumvent Colombian middlemen. In
addition to the inexhaustible supply of cocaine entering the U.S.,
trafficking organizations from Mexico are responsible for producing and
trafficking thousands of pounds of methamphetamine, and have been major
distributors of heroin and marijuana in the U.S. since the 1970's.
In addition to the sophisticated groups operating in Mexico and
Colombia, there are numerous international drug trafficking
organizations headquartered in Southeast and Southwest Asia. With the
vast quantities of opium production in these regions of the world, and
with the relative isolation of countries like Burma and Afghanistan,
heroin trafficking flourishes. The influence and power of heroin
traffickers such as Khun Sa, the world's most notorious heroin
trafficker, are unparalleled.
In 1994, DEA Bangkok and the Royal Thai Police initiated Operation
Tiger Trap, which was an operation designed to disrupt the heroin
trafficking capability of the Shan United Army (SUA). The objectives of
the operation were to disrupt and immobilize the SUA infrastructure in
Thailand and to arrest and extradite members of the organization under
indictment in the U.S. Tiger Trap primarily targeted the heroin
traffickers on the production and wholesale levels. To date, 15 targets
of Operation Tiger Trap have been arrested.
As a result of Tiger Trap and other influences, in 1995, the SUA,
formerly the principal producer of Southeast Asian heroin, experienced
a number of setbacks. Its northern bases were attacked by the Burma
Army and United Wa State Army (UWSA). Thailand restricted the flow of
supplies to the SUA by maintaining a closed border policy with Burma's
Shan State that began in 1994. Months of secret negotiations between
the Government of Burma and the SUA, resulted in Burma Army troops
peacefully occupying the Ho Mong headquarters of the SUA on January 1,
1996.
Khun Sa, surrendered to Burmese authorities. These arrest of key
members of his trafficking organizations denied Kuhn Sa the ability to
market his heroin and collect monies owed from prior transactions. Many
of the other SUA troops surrendered. Nevertheless, heroin production
has continued, albeit at reduced levels, in the Shan-controlled areas.
Law enforcement action further weakened the Shan marketing
infrastructure in Thailand.
While Asian heroin trafficking organizations are a formidable force
in international narcotics trafficking, the proximity of trafficking
groups from Mexico and Colombia pose the greatest, most immediate
threat, to both the national security of the United States and the
quality of life in many American communities.
trafficking organizations from mexico
A number of major trafficking organizations represent the highest
echelons of organized crime in Mexico. Their leaders are under
indictment in the United States on numerous charges. The Department of
Justice has submitted provisional warrants, to Government of Mexico,
for many of their arrests and only one, Juan Garcia Abrego, because he
was a U.S. citizen, has been sent to the U.S. to face justice. The
other leaders are living freely in Mexico, and have so far escaped
apprehension by Mexican law enforcement.
The most powerful drug trafficker in Mexico at the current time is
Amado Carrillo-Fuentes, who, as recently reported, allegedly has ties
to the former Commissioner of the INCD, Gutierrez-Rebollo. His
organized crime group, based in Juarez, is associated with the
Rodriguez-Orejuela organization and the Ochoa brothers, from Medellin,
as well. This organization, which is also involved in heroin and
marijuana trafficking, handles large cocaine shipments from Colombia.
Their regional bases in Guadalajara, Hermosillo and Torreon serve as
storage locations where later, the drugs are moved closer to the border
for eventual shipment into the United States. The scope of the
Carrillo-Fuentes' network is staggering; he reportedly forwards $20 to
$30 million to Colombia for each major operation, and his illegal
activities generate ten's of millions per week. He was a pioneer in the
use of large aircraft to transport cocaine from Colombia to Mexico and
became known as ``Lord of the Skies.'' Carillo-Fuentes reportedly owns
a fleet of aircraft and has major real estate holdings.
Miguel Caro-Quintero's organization is based in Sonora, Mexico and
focuses its attention on trafficking cocaine and marijuana. His
brother, Rafael, is in prison in Mexico for his role in killing DEA
Special Agent Kiki Camarena in 1985. Miguel, along with two of his
other brothers--Jorge and Genaro--run the organization. Miguel himself
was arrested in 1992, and the USG and GOM cooperated in a bilateral
prosecution. Unfortunately, that effort was thwarted when Miguel was
able to use a combination of threats and bribes to have his charges
dismissed by a federal judge in Hermosillo. He has operated freely
since that time.
The Caro-Quintero organization specializes primarily in the
cultivation, production and distribution of marijuana, a major cash-
crop for drug groups from Mexico. The organization is believed to own
many ranches in the northern border state of Sonora, where drugs are
stored, and from which drug operations into the United States are
staged. Despite its specialization in marijuana cultivation and
distribution, like the other major drug organizations in Mexico, this
group is polydrug in nature, also transporting and distributing cocaine
and methamphetamine. Miguel Caro-Quintero is the subject of several
indictments in the United States and is currently the subject of
provisional arrest warrants issued by the United States Government. In
an act of astonishing arrogance, he called a radio station in
Hermosillo, Mexico last May stating that he was bothered by statements
I had made, and indicated that he was an innocent rancher and that
charges made against him by DEA were untrue. He then had the audacity
to give his address and invite law enforcement officials from Mexico
and the United States to visit him--yet he remains at large.
The Arellano-Felix Organization (AFO), often referred to as the
Tijuana Cartel, is one of the most powerful and aggressive drug
trafficking organizations operating from Mexico; it is undeniably the
most violent. More than any other major trafficking organization from
Mexico, it extends its tentacles directly from high-echelon figures in
the law enforcement and judicial systems in Mexico, to street-level
individuals in the United States. The AFO is responsible for the
transportation, importation and distribution of multi-ton quantities of
cocaine and marijuana, as well as large quantities of heroin and
methamphetamine, into the United States from Mexico. The AFO operates
primarily in the Mexican states of Sinaloa (their birth place),
Jalisco, Michoacan, Chiapas, and Baja California South and North. From
Baja, the drugs enter California, the primary point of embarkation into
the United States distribution network.
The AFO does not operate without the complicity of Mexican law
enforcement officials and their subordinates. According to extradition
documents submitted by the Government of Mexico in San Diego,
California, key family members reportedly dispense an estimated $1
million weekly in bribes to Mexican federal, state and local officials,
who assure that the movement of drugs continues to flow unimpeded to
the gateway cities along the southwestern border of the United States.
The Arellano family, composed of seven brothers and four sisters,
inherited the organization from Miguel Angel Felix-Gallardo upon his
incarceration in Mexico in 1989, for his complicity in the murder of
DEA Special Agent Enrique Camarena. Alberto Benjamin Arellano-Felix
assumed leadership of the family structured criminal enterprise and
provides a businessman's approach to the management of drug trafficking
operations.
Ramon Eduardo Arellano-Felix, considered the most violent brother,
organizes and coordinates protection details over which he exerts
absolute control. Ramon Arellano's responsibilities consist of the
planning of murders of rival drug leaders and those Mexican law
enforcement officials not on their payroll, as well as AFO members who
fall out of favor with the AFO leadership or simply are suspected of
collaborating with law enforcement officials. Enforcers are often hired
from violent street gangs in cities and towns in both Mexico and the
United States in the belief that these gang members are expendable.
They are dispatched to assassinate targeted individuals and to send a
clear message to those who attempt to utilize the Mexicali/Tijuana
corridor without paying the area transit tax demanded by the AFO
trafficking domain.
A joint task force composed of the Drug Enforcement Administration
and the Federal Bureau of Investigation has been established in San
Diego, California, to target the AFO; the Task Force is investigating
AFO operations in Southern California and related regional
investigations which track drug transportation, distribution and money
laundering activities of the AFO throughout the United States.
The Amezcua-Contreras brothers, operating out of Guadalajara,
Mexico head-up a methamphetamine production and trafficking
organization with global dimensions. Directed by Jesus Amezcua, and
supported by his brothers, Adan and Luis, the Amezcua drug trafficking
organization today is probably the world's largest smuggler of
ephedrine and clandestine producer of methamphetamine. With a growing
methamphetamine abuse problem in the United States, this organization's
activities impact on a number of the major population centers in the
U.S. The Amezcua organization obtains large quantities of the precursor
chemical, ephedrine, utilizing contacts in Thailand and India, which
they supply to methamphetamine labs in Mexico and the United States.
This organization has placed trusted associates in the United States to
move ephedrine to Mexican methamphetamine traffickers operating in the
U.S. Jose Osorio-Cabrera, a fugitive from a Los Angeles investigation
until his arrest in Bangkok, was a major ephedrine purchaser for the
Amezcua organization.
Like most organized crime groups, major drug traffickers in
Colombia, Mexico and Southeast Asia rely on corruption and intimidation
to further their goals. The problems of corruption and violence are
particularly acute in Mexico.
Since 1993, twenty-three major drug-related assassinations have
taken place in Mexico, particularly in the Tijuana area. Virtually all
of these cases are unsolved. In the February 24, 1997 issue of U.S.
News and World Report, an article titled ``An Inferno Next Door''
reports that ``Mexico's drug gangs buy the officials they can--and kill
those they can't.'' In a particularly grisly episode, the article tells
the story of Hodin Gutierrez, a young prosecutor who was one of eight
law enforcement officials recently killed in Tijuana. After winning a
conviction against a corrupt state police officer and investigating the
murder of a police chief who had refused a bribe, Gutierrez was shot
120 times and his killers then repeatedly ran their vehicle over his
dead body. The killers were allegedly working for Mexican drug
traffickers.
Unfortunately, the violence that is attendant to the drug trade in
Mexico is spilling over the border into U.S. towns, like San Diego,
California and Eagle Pass, Texas. Last summer, ranchers along the
Texas/Mexico Border reported they were besieged by drug organizations
smuggling cocaine and marijuana across their property--fences were torn
down, livestock butchered and shots were fired at the ranchers' homes
at night. Ranchers reported seeing armed patrols in Mexico with night
vision equipment, hand-held radios and assault rifles that protected a
steady stream of smugglers back packing marijuana and cocaine into the
United States. The problem became so acute that the State of Texas and
the federal government, sent support in the form of additional U.S.
Border Patrol Agents, DEA Special Agents, Officers from the Texas
Department of Public Safety and the Texas National Guard. Life has
returned somewhat to normal in that area, as the drug gangs reacted to
law enforcement pressure and have moved their operations elsewhere.
organized crime's surrogates in the united states
The international drug trafficking syndicates cannot operate
effectively without an infrastructure in the United States composed of
high level managers, transporters, accountants, communications experts,
storage experts and enforcers. The Colombian traffickers, and to a
large extent the traffickers from Mexico who are currently dominating
the international drug traffic, establish bases of control in major
U.S. cities, and rely on an intricate network of cells, similar to the
structure employed by international terrorist organizations. Cell
managers maintain close communication with organized crime figures in
Colombia and Mexico, and are in some sense, the ``foreign service'' of
these drug organizations, representing the syndicate's interests
abroad.
These managers use an effective system of communications to
coordinate daily operations. Cell phones, beepers, pay phones and faxes
ensure that U.S. representatives are given the most recent information
on loads, prices, storage locations and contacts in order to conduct
the complex business of drug trafficking. A cell director typically
reports directly to the cartel's principals in Colombia and oversees a
city-wide area of operation. He directs specific functions including
accounting, financial movement, storage of the product, a motor pool
and other logistical matters requiring high level attention and
discretion.
Both Colombian and Mexican organizations headquartered overseas
rely on their networks in the U.S. to distribute vast quantities of
cocaine, heroin, methamphetamine and marijuana. At the present time,
Colombian organizations are responsible for supplying heroin and
cocaine to traffickers on the East Coast of the United States. Mexican
organizations dominate the cocaine trade in the Western portion of the
U.S. and the methamphetamine business, which is rapidly growing
throughout the West, Midwest, Southwest and increasingly, Southeast
sections of the United States. Colombian trafficking organizations are
now providing free samples of South American heroin as part of their
cocaine transactions in order to introduce users to their high potency
and relatively inexpensive product. In the methamphetamine trade, large
organizations in Mexico, which produce methamphetamine, distribute the
product to Mexican groups within the United States for distribution in
California, the Southwest and the Southeast regions of the country.
Primary bulk cocaine distribution centers within the United States
include Southern California, Southern Texas, New York City and Southern
Florida. From these centers, cocaine is shipped throughout the United
States for delivery to lower level distribution groups in secondary
source cities. Distribution groups within the United States usually
include street gangs and ethnic groups, and in the case of New York,
primarily Dominican traffickers with strong ties to Colombian
organizations.
A recent case in New York illustrates the flexibility of these
trafficking organizations and demonstrates clearly how the structure of
trafficking groups changes to meet new situations and opportunities.
Just last month, nine members of a cocaine distribution ring operating
in New York City were arrested and over two tons of cocaine was seized.
What was different about this organization was the fact that Mexican
traffickers were supplying lower-level Colombian distribution groups in
New York City. In most previous cases, Colombian traffickers in the
U.S. controlled the top supply and distribution levels, relying on
traffickers from the Dominican Republic to distribute cocaine at lower
levels.
Many of the most significant drug trafficking cases made today
begin, not in foreign countries, but on the streets of our major cities
where the surrogates of the drug mafias are operating a multi-billion
dollar enterprise. By making strong cases against the top mafia
representatives operating in the U.S., large conspiracy cases can be
constructed and indictments against the mafia principals can be handed
down. However, mafia leaders understand that the larger the number of
surrogates operating within the U.S. who are directly tied to the
leaders in Colombia, Mexico, or Burma, the greater the vulnerability of
the entire operation.
violent drug trafficking organizations in the united states
Violence and the drug trade go hand-in-hand, and while overall
crime figures are down for the fifth year in a row, drug-related
violence continues to be an extremely difficult problem facing too many
American communities.
While violence permeates every level of drug trafficking, it is
particularly acute at the local level where drug dealers use violence
as a method to gain control of the trade, or rectify differences. Many
violent drug dealers are themselves users, and their violence is fueled
by crack or methamphetamine.
If the drug trade is seen as a seamless continuum, it is evident
that the violent drug dealer operating on the streets of Los Angeles,
New York, Chicago, the Southwest Border--or in rural areas such as
Sandy Level, Virginia, or Rocky Mount, North Carolina--is connected
directly or indirectly to the major traffickers headquartered in Cali
or Guadalajara. In some cases, there is a direct link between homicides
committed within the United States and the orders of drug lords across
international borders.
Along the Southwest Border, there have been many incidents of
violence and intimidation carried out by representatives of the major
traffickers in Mexico; last summer, there were numerous press accounts
of ranchers along the Texas/Mexico border who were targeted by drug
organizations smuggling cocaine and marijuana across their property.
Livestock were killed and gunfire was aimed at the ranchers' homes. The
problem was so serious that additional law enforcement resources from
the state and federal government were sent to improve the situation.
In San Diego, a violent group called the ``Logan Heights Calle 30''
was acting on the orders of the Arellano-Felix group to carry out
executions and maintain security for their distribution efforts. Six
members of this group were arrested by DEA and the San Diego Police
Department for the murder of a man and his son in San Diego. A total of
49 members of ``Calle 30'' have been arrested by the San Diego Task
Force on drug trafficking and violent crime charges.
In recent years, the San Diego area has been the scene of much
drug-related violent crime. In 1993, twenty-six homicides related to
the methamphetamine trade were committed. As recently as December of
1996, the Arellano-Felix organization ordered the death of an
individual who was shot in the face five times during a rush hour
homicide in an exclusive community in Coronado, California.
Drug-related violence is not limited to the Southwest Border of the
United States. Puerto Rico has experienced a dramatic increase in
violent crime as the drug trafficking situation there is worsening.
Violence is also not limited to urban areas; during last year's
appropriations testimony we discussed the tragic situation in Sandy
Level, Virginia, where violent crack dealers had terrorized the
residents of this small town which had been settled by freed slaves.
Increasingly, areas of the country, once immune from the effects of
drug-related violence, are now reeling from murders, assaults and other
violent crime related to the drug trade. With the spread of
methamphetamine to rural areas in Georgia, Missouri, Tennessee and
other states, drug-related violence is quickly following.
emerging drug problems
Methamphetamine
Within the past several years, the problems of methamphetamine
production, trafficking and use have significantly increased. Between
1990 and 1995, methamphetamine related hospital emergencies tripled.
During this same time period, there was a dramatic increase in the
number of meth-related deaths in cities such as Los Angeles, Phoenix,
and San Diego. Even in cities relatively untouched by drug abuse,
methamphetamine was taking a terrible toll. From January 1993 to June
1994, Oklahoma City witnessed 14 meth related deaths; in the next year,
the number increased to 36, an increase of over 150 percent. Similar
patterns were beginning to emerge around the country as methamphetamine
spread. In Arkansas, meth-related investigations rose from 543 in 1988
to over 2,000 in 1995. Missouri authorities tripled their lab seizures
between 1994 and 1995. In 1995, 80 percent of Iowa's drug
investigations were meth-related.
The methamphetamine problem had previously been relatively isolated
to places like California, and some rural areas where outlaw motorcycle
gangs had operated small labs and supplied small quantities of the
drug. However, during the past several years, drug traffickers from
Mexico have taken over the meth trade and have expanded it
significantly, increasing not only the supply of meth, but the violence
associated with the trade. As previously indicated, in 1993, a total of
26 murders took place in the greater San Diego area, all of which were
the result of rivalries among meth trafficking organizations. Numerous
incidents, such as the death of DEA Agent Richard Fass in 1994 and a
recent killing of two Riverside Sheriff's deputies by a meth-crazed
gunman, graphically illustrate the tragedies spawned by
methamphetamine.
DEA has irrefutable evidence that sophisticated trafficking
organizations based in Mexico dominate the U.S. methamphetamine market.
They operate labs in Mexico and California and these traffickers have
plans to expand production and trafficking eastward. Recent seizures in
Florida, Georgia and Iowa are proof that methamphetamine is no longer a
West Coast problem.
In 1996, DEA hosted a national conference on methamphetamine, at
which time, representatives from state and local departments provided
DEA and other law enforcement agencies with information on the meth
problem, and suggested ways to address it. Many of these suggestions
were incorporated into the President's national methamphetamine
strategy and were included in the Comprehensive Methamphetamine Control
Act of 1996, which Congress passed last year.
Heroin
The heroin problem is also a serious law enforcement challenge.
Heroin has been an issue for over two decades, but today's version of
the heroin threat is critical because of the wide availability of the
drug, as well as its high potency and low price. In 1995, retail heroin
had an average nationwide purity close to 40 percent, over five times
higher than the 7 percent which was common only a decade ago. There has
been a marked increase in the number of heroin-related overdose deaths
as well. Over 4,000 people died of heroin overdoses in each of the last
three years. Today's mortality figures are the highest ever recorded,
surpassing the totals in the mid-1970's when deaths reached over 2,000.
Emergency room admissions for heroin have doubled between 1990 and 1995
and the impact of increased heroin availability has been evident in
cities such as New York, Boston, Philadelphia, Baltimore and smaller
cities, such as Orlando, Florida.
One of the most serious developments in the heroin problem has been
the emergence of South American heroin as a significant segment of the
heroin supply. During 1995, 62 percent of the heroin seized in the U.S.
was of Colombian origin, up from 32 percent the previous year. It is
cheaper, purer and more widely available than the heroin we have
previously seen in the U.S. Using already-established trafficking
networks and contacts within major urban areas, Colombian traffickers
have successfully assumed the lion's share of the lucrative heroin
market in the northeast corridor of the United States, using techniques
such as brand names, free samples and cut-rate prices to lure a new
heroin clientele. Heroin this pure can be smoked, a method of delivery
which appeals to a wider range of drug users who do not wish to inject
heroin.
At a recent heroin conference sponsored by the Drug Enforcement
Administration, state and local law enforcement officials repeatedly
told participants that the heroin problem was growing more severe in
their areas of jurisdiction, and many reported that South American
heroin was widely available from New England to South Florida and that
overdose incidents were dramatically increasing.
the u.s. law enforcement response to organized crime
DEA is working with a number of other federal law enforcement
entities--the FBI, the U.S. Attorneys' offices, the Criminal Division
at the Department of Justice, the U.S. Customs Service, the Border
Patrol--and a host of state and local law enforcement organizations, to
respond to the significant problems posed by organized crime groups
from Mexico. In order to effectively meet the challenges presented by
sophisticated drug trafficking organizations, it is necessary for us to
attack the command and control mechanisms of these organizations.
Organized crime groups from Mexico operate in a similar manner to
their Colombian counterparts, compartmentalizing their operations to
reduce the possibilities of damage should one element of the operation
become vulnerable. Working together, federal law enforcement agencies
are conducting court-authorized wiretaps that target the communications
systems of the organizations, ultimately identifying them from top to
bottom. In so doing, it is possible for law enforcement to track
criminal syndicates working from boardrooms in Colombia, to their
distribution rings within the United States.
Based on the tested premise that the only way to impact these
criminal organizations is to go after their top leadership and U.S.
based infrastructure, the Southwest Border strategy is highly
successful in targeting the leadership of these groups operating within
the U.S. However, without commensurate, consistent action by law
enforcement in Mexico, the world's most significant drug traffickers
will remain at liberty to conduct their business. We have seen
important changes in the Colombian drug trade which are the result of
the Cali leaders' incarceration. It is our goal to effect similar,
dramatic changes in the organized crime groups from Mexico.
Later in this testimony, details of Operation Zorro II, a prototype
of an organized crime investigation used in our Southwest Border
Strategy, will be discussed. Investigations such as this one are
intensive and expensive, but are worth the investment. Currently, there
are additional ongoing investigations, the details of which can be
shared with the committee in closed session.
Highlights, 1996--A Year of Results
During the past year, DEA, working with state, local and
international counterparts, targeted high level drug traffickers around
the world. A number of significant cases came to fruition, leading to
the arrest and incarceration of major drug traffickers.
Operation Zorro II.--As part of the inter-agency Southwest Border
initiative, on May 2, 1996, federal, state and local law enforcement
agencies successfully completed a unique operation which targeted a
Mexican-run cocaine smuggling and distribution network within the
United States with ties to the Colombian drug mafia. Using over 90
court-authorized wiretaps, law enforcement personnel were able to
arrest 156 traffickers from Los Angeles, Chicago, El Paso, Houston and
other cities, and seize 5,600 kilograms of cocaine, over a thousand
pounds of marijuana and almost a kilogram of crack cocaine. Operatives
of organized crime groups in Mexico smuggled cocaine over the Mexican/
U.S. border and once in the U.S., the cocaine was stored in the LA area
for eventual distribution to Miami, Chicago, Philadelphia, New York,
Newark and Richmond, by representatives of Mexican organized crime and
the Cali Colombia syndicate. Zorro II involved over 40 state and local
law enforcement agencies, DEA, the FBI, the DOJ Criminal Division, 10
U.S. Attorney's Offices and seven other federal agencies. This case was
extremely significant because it simultaneously dismantled both the
organization that owned the cocaine, as well as a second organization
that ran the transportation system.
Operation Global SEA.--In an important heroin case, federal, state
and local law enforcement officials disrupted a Nigerian-run narcotics
network which stretched from Thailand to the U.S. Working with
international law enforcement officials, the DEA, FBI, U.S. Customs
Service and the United States Attorney's Office targeted the heroin
organization which was responsible for trafficking multi-kilogram
quantities of heroin from Thailand to Chicago. Typically, heroin
couriers working for the Nigerian organization traveled with heroin-
laden suitcases through Europe and Mexico before bringing the heroin
over the Mexican/Texas border for distribution in Chicago. Forty-four
individuals were arrested in the United States and abroad. The total
amount of heroin seized in Operation Global SEA was worth between $20
to $25 million on the streets of the United States.
Mobile Enforcement Teams.--On the homefront, DEA's Mobile
Enforcement Teams (MET's) made a positive impact in many American
communities. Based on the premise that drug trafficking and drug
related violence contribute to the degradation of the quality of life
in too many American communities, DEA's response has been to
aggressively target and build cases against individuals involved in
violent drug trafficking activities.
The MET's were developed to assist state and local law enforcement
agencies in their efforts to address the problems of drugs and drug-
related violence. Since their initial deployment in 1995, these teams
have worked with state and local law enforcement agencies to address
drug-related violence in cities and rural areas around the nation. In
places such as Spartanburg, South Carolina; the Rampart section of Los
Angeles; Galveston, Texas and Toledo, Ohio, MET teams have, to date,
deployed 85 times, arrested 2,577 individuals and seized over $3
million in currency and 250 weapons. The MET program, which was fully
funded by Congress in fiscal year 1997, is based on the belief that
those who distribute drugs on the streets of the United States and
commit violent activities are part of a seamless international
continuum of drug trafficking organizations headquartered in Colombia,
Mexico and Southeast Asia.
During 1996, in just one example of how drug law enforcement
efforts can make a significant difference, a MET deployment in the
Rampart area of Los Angeles assisted state and local law enforcement
officers to help combat drug-related crime and the violence associated
with open-air drug markets. The neighborhood had been ravaged by drug
dealing and drive-by shootings, and was the most dangerous area of Los
Angeles. Between April and July of 1996, DEA, working with the ATF, INS
and the Los Angeles Police Department of Corrections, made 412 arrests
ranging from minor offenses, to violations of federal law. DEA arrested
141 individuals on drug charges, including gang members. The entire
operation netted $70,000 in U.S. currency, 28 weapons, 1,270 grams of
black tar heroin, 640 grams of cocaine, 104 pounds of marijuana and a
small quantity of methamphetamine.
After the deployment, crime and violence in the area dropped
immediately, and for the first time in five years, there were weeks
when no homicides were committed. Aggravated assaults, sexual assaults
and burglaries were down significantly.
fight against global drug trafficking: lessons learned
Over the past several years, there have been major successes in law
enforcement across the board, and many of the lessons learned from
increasingly sophisticated responses to violent crime and drug
trafficking have had an impact on DEA's operations, and the operations
of other law enforcement agencies. It is very clear, after years of
intensive and smart law enforcement efforts, that law enforcement
works. This is particularly true in places such as New York City, where
dramatic reductions in the crime rate confounded many who thought law
enforcement could not be an effective answer to the crime problem. It
was also clear that effective law enforcement costs money, and requires
that infrastructure needs be maintained in order to ensure that
personnel have the tools necessary to do the job. We have also learned
the importance of identifying and acting against emerging drug threats
in order to get ahead of the curve--a hard lesson we learned from our
response to the crack epidemic.
Law Enforcement Works.--During the late 1980's and early 1990's,
when drug-related violence rose to unprecedented levels, communities
supported the premise that federal, state and local law enforcement had
to act decisively to address crime. Consistent, energetic and targeted
law enforcement efforts resulted in dramatic decreases in the crime
rates in many cities: in New York, the murder rate has fallen by 50
percent in five years; in Houston, 49 percent; and in Boston, 62
percent. The overall crime rate in our nation has fallen to its lowest
level since 1969.
How did this happen? Communities began fighting back, and making a
difference, with smart, targeted law enforcement programs. In New York
City, a widespread philosophy of aggressive law enforcement was begun.
Increases in the police force and in the number of prison beds were
approved. No crime was too small to go unpunished. From panhandling, to
turnstile-jumping, to graffiti--all quality of life crimes were
considered serious offenses against the public good. Arrests went up
across the board, and precinct commanders were made responsible for
reducing crime numbers in their jurisdictions. Since many crimes are
committed by the same criminals, police sought to identify patterns in
these crimes, and were able to link crimes to specific individuals. By
all accounts the New York City experience is a solid example of what
happens when law enforcement targets all levels of violators, including
those who degrade the quality of life in communities: citizens can see
measurable gains. Increased numbers of police, more prisons and tougher
crime policies have paid off.
DEA contributed to the decline in crime rates by working with
state, local and other federal law enforcement agencies to aggressively
target drug traffickers operating within the United States. Through
task forces and DEA's REDRUM program, drug trafficking organizations,
and violent drug trafficking rings, were identified and dismantled
during the past decade.
Sophisticated Targets Require Sophisticated Investigations.--Drug
trafficking networks, controlled by sophisticated organized crime
leaders headquartered in Colombia, Mexico, and in many other countries,
have sophisticated technology and modern equipment at their disposal.
Organizations rely on an intricate system of communications devices--
cell phones, faxes, encrypted messages--to carry out their day-to-day
operations.
In order to penetrate these organizations, and gather information
to make solid cases against their leadership, DEA must compete on a
level playing field. Effective investigations, such as Zorro II and
Operation Global SEA, are expensive and labor-intensive. The Zorro
case, which took three years from beginning to end, depended in large
part on wiretaps. This investigation was extremely complex and labor
intensive with an estimated cost of $13 million. Many hours also go
into building complex cases: over 103,000 hours were devoted by DEA
Special Agents, and another 10,300 by Intelligence Analysts. These
costs and manpower estimates do not take into account contributions
made by state and local agencies.
In Operation Global SEA, wiretaps were used over a forty-day period
in which 23,000 calls were recorded between members of the trafficking
organization and the source of supply. A total of $2 million was spent
on wiretap-related services, such as translations and lease lines.
It is Critical to Identify and Act Quickly Against Emerging Drug
Threats.--Drug trafficking, use and abuse patterns change quickly, with
newer, cheaper, and more lethal drugs rapidly entering the scene. The
rapid growth of the cocaine and crack trade during the course of the
1980's caught law enforcement officials largely off-guard and proved to
have a devastating impact on the citizens of this country. In just a
few, short years, law enforcement and public health attention has been
refocused on methamphetamine, heroin and synthetic drugs--drugs which
have caused misery, addiction, and all too often, violence in many
American communities.
Aggressive, Effective Law Enforcement Requires Sound
Infrastructure.--The success of ongoing drug enforcement efforts is in
large part predicated upon the quality of operational support systems
law enforcement organizations have in place. Over the years, the
majority of resources provided to law enforcement have been directed
towards placing more Special Agents and police officers on the streets,
often times at the expense of the critical support and infrastructure
systems necessary for long-term enforcement productivity. Without
state-of-the-art technical investigative equipment, intelligence,
automated data processing systems and operational support facilities,
law enforcement's ability to make significant inroads in its efforts to
dismantle the operations of major drug trafficking organizations is
greatly diminished.
The drug traffickers operating on a global scale today have, at
their disposal, technology, transportation capabilities and
communications equipment which are the envy of many U.S. corporations.
Law enforcement capabilities must match, or exceed, the capabilities of
major traffickers. However, with rapid changes in technology, such as
digital communications systems, and encrypted equipment, and with only
modest assistance from U.S. manufacturers, law enforcement is facing a
difficult situation which, unless quickly addressed, will impede our
ability to do business in just a few, short years.
DEA, like many other law enforcement agencies, has had difficulty
meeting infrastructure needs over the years. Many of these needs have
taken a back seat to operational or personnel needs, and they have
finally become critical. Two such areas are the DEA laboratory system,
which is key to the success of DEA cases being made against major drug
traffickers around the world, and the DEA computer system which is fast
becoming the lifeblood of DEA investigations.
dea's fiscal year 1998 budget: equipping the agency for the future
DEA's fiscal year 1998 Budget request includes funding for
important initiatives to target the most significant drug traffickers
operating along the Southwest border of the United States, address the
methamphetamine and heroin problems which adversely affect so many
communities across the nation, and restore DEA's infrastructure needs.
DEA is requesting a total of $1,145,830,000 in direct funding,
including 7,216 positions, of which 3,358 are Special Agents. This
request includes an enhancement of 382 positions (168 Special Agents)
and $87,042,363 in new program initiatives and represents and overall
increase of $91,812,000 over DEA's 1997 appropriation level.
DEA's budget is spent on program efforts which are dedicated to
assisting communities across the nation, and fifty nations around the
world in their efforts to identify, target and dismantle the most
significant drug trafficking organizations operating at home and
overseas. DEA's budget includes support for over 7,200 personnel; a
series of state and local task forces which serve as a multiplier
effect in major cities and rural areas of the United States; DEA's
Mobile Enforcement Teams which are dedicated to addressing drug-related
violent crime; and special programs including marijuana eradication,
training, demand reduction and international investigations. DEA's
budget is also spent on technical equipment, vehicles, aircraft, and
supplies which assist DEA personnel in their day-to-day investigations
and investigative support functions.
The $87 million DEA is requesting in new program funding, is broken
into five strategic funding initiatives. These initiatives include the
Methamphetamine Initiative, Southwest Border Initiative, Heroin
Initiative, Infrastructure Initiative and a Laboratory Reconstruction
Initiative.
Methamphetamine
To address the explosion of methamphetamine abuse, I am requesting
$11 million and 74 positions, including 60 Special Agents. These
resources will allow DEA to expand its domestic enforcement efforts,
reduce the availability of the chemicals that feed the illicit
``kitchens'' that pollute the bodies of our citizens and our
environment, and provide for the safety of law enforcement personnel
through specialized hazardous waste handling training. An all out
effort against this highly addictive and dangerous drug will save
lives, protect the environment, and help ensure a safe future for our
youth. This initiative fully supports the National Methamphetamine
Strategy and is vital to stalling the momentum of this growing drug of
choice.
Southwest Border
To expand our continuing interagency effort on the Southwest
Border, I am requesting $29.7 million and 192 positions, including 96
Special Agents. These resources will purchase investigative equipment,
enhance intelligence gathering, provide increased air support to this
vast open border, and provide additional agents and support staff to
deal with the increase in investigative caseload. The increasing
concentration of DEA, FBI, and INS resources working cooperatively
along the 2,000 mile border with Mexico is not only getting results, it
demonstrates that federal law enforcement can save resources, share
information, and work effectively in joint investigative efforts. These
additional resources are the next installment in our growing border
presence and are sorely needed to cope with the huge volume of drugs
transiting this area.
Heroin Strategy
To address the growing availability of increasingly pure and cheap
heroin, I am requesting the resources to continue to build upon our
Domestic Heroin Enforcement Strategy, begun last year. For fiscal year
1998, I am requesting $5 million and 60 positions, including 12 Special
Agents. The growth in popularity of this deleterious and addictive drug
is an ominous sign to those of us who are aware of heroin's
destructiveness and the huge costs it brings to our nation's health
care system. This reemerging menace cannot be allowed to go
unaddressed.
Vital Infrastructure
For many years, DEA has been forced to build its investigative
force by eroding vital infrastructure resources and redirecting them
into operational enforcement activities. Last year, you helped us
address this problem for the first time by providing significant new
resources to restore our eroded infrastructure base. While some of the
funding for these critical investigative support components was
provided, I am requesting $33.4 million and 19 support positions to
further strengthen our infrastructure in support of law enforcement
efforts. These funds are absolutely essential if DEA is to field a
modern investigative work force. Our Special Agents must have the
computers, aircraft, and tools of technology to do their job. These
tools must be maintained, replaced, and upgraded periodically if they
are to multiply our agents effectiveness. Most importantly, I need
sufficient funds to relocate Special Agents when the job requires them
to change their place of duty. Career Special Agents should not be
denied the opportunities for development, training, advancement and
protection afforded by periodic changes of duty station.
Laboratory Reconstruction
Last year, you provided nearly $31 million in construction funding
to build a much needed training facility at Quantico, Virginia, and
seed money to begin bringing obsolete laboratories up to acceptable
health and safety standards. I am pleased to report that construction
at Quantico will begin in early April. Our laboratory reconstruction
effort is also well underway. I am requesting an additional $4 million
this year to continue the financing of a multi-year, $21 million effort
to rebuild unsafe and inefficient laboratory facilities. We owe our
chemists and support staff a safe working environment and we owe the
nation facilities that can handle the increased volume of drugs and
evidence flowing from burgeoning investigations.
In closing, I would like to again thank the Committee for its long
standing support of DEA and urge your support of these important
initiatives. I will be happy to answer any questions the Committee may
have at this time.
Commissioner Meissner's opening statement
Senator Gregg. Commissioner.
Ms. Meissner. Thank you, Mr. Chairman and members of the
subcommittee. I would like to begin today by reporting on my
recent participation in a very successful visit to the United
States-Mexico border led by Representative Jim Kolbe and other
members of the House Appropriations Committee. The trip was
important because it allowed the members and the staff of the
House committee to see firsthand the progress that INS has made
in just 3 years in fulfilling one of its toughest and highest-
priority missions. I would like to invite members of this
subcommittee to make a similar visit, if that is at all
possible, because it really is the best way to demonstrate the
improved competencies of the Immigration Service since 1994,
when we began to undertake significant management reforms of
the agency and when this subcommittee and the administration
began working together to provide the resources that INS has so
long needed.
I was particularly pleased because the Southwest border
strategy is, in many senses, a microcosm of the work that we
now know this agency is truly capable of performing.
facing Challenges
The multiyear comprehensive enforcement strategy that we
began implementing 3 years ago, centering on the busiest
illegal crossing point on the entire border, San Diego, CA,
contains all of the challenges facing the agency as a whole. It
includes the challenge of hiring and training unprecedented
numbers of new agents and other personnel, redesigning and
streamlining outmoded systems and procedures, developing,
installing, and adapting new equipment and technologies to make
us more efficient, and working cooperatively with other Federal
and local agencies, especially the Customs Service, the DEA,
the FBI, and local law enforcement officials.
These are all difficult tasks. They all started from a base
of serious performance deficiencies, and they all have occurred
against the backdrop of historically high migration pressures
from around the world.
The story of the Southwest border challenge and our
response is the story of INS overall. Mr. Chairman, as you
know, I am keenly aware of the agency's historic management
weaknesses and the problems that have emerged in attempting to
address the dramatic surge that we have experienced in our
naturalization applications. We are working internally and
drawing on help from outside experts to address these problems.
But while the problems of the citizenship program reflect
longstanding infrastructure and management weaknesses of the
Immigration Service, they do not accurately reflect the
agency's overall abilities and progress at this time.
The reality is that on many fronts, just as at the border,
we are meeting the challenges that both the administration and
the Congress have set out for us. We are applying effective new
strategies to meet a historic rise in enforcement and service
delivery needs, including implementing a new immigration law
that requires developing more than 60 new regulations and 70
new forms and training almost 20,000 staff to use them
properly.
We are effectively managing unprecedented growth in
technology and personnel resources, and most importantly, we
are facing and fixing chronic, decades-old management problems
that have plagued INS efforts in the past. And we are doing all
these things at the same time.
I am proud of the progress that we have made, working
together with the Congress, and I am pleased that that progress
has been recognized by a distinguished panel of the National
Academy for Public Administration with whom we contracted to
analyze the INS budget and priority processes that we
established in 1994. Their January report signaled approval of
our new initiatives and has provided valuable guidance on next
steps for continuing the advances.
At the same time, we know that we face major challenges in
improving the accountability, the effectiveness, and the
professionalism of the agency. Key steps to ensure that a
culture of accountability takes hold include the following:
Management reforms
We have built back our Office of Internal Audit and created
a new INSpect program with resources dedicated to top-to-bottom
reviews of all field offices on a regular 2- and 3-year cycle.
I have concluded that we need further organizational and senior
personnel changes and have developed a plan for that, which
will be forwarded to the subcommittee in the coming weeks. It
will strengthen field management and send a strong signal about
my expectations for effective management and integrity of INS
work processes.
We are also implementing competency-based criteria for
promotions as a means of overcoming seniority as the sole basis
for career advancement in the agency.
These and many other measures build on a myriad of steps
that have already been taken to bolster accountability and
professionalism in the Immigration Service.
In support of strong management reforms such as these, the
Service's fiscal year 1998 budget request contains critical
infrastructure proposals that we hope the committee will grant.
They include continued equipment and technology infusions and
status verification and files cleanup and centralization
initiatives.
prepared statement
Mr. Chairman, let me close by stating that our problems are
not intractable, as we have demonstrated in many areas of our
work, but they do require multiyear, often laborious step-by-
step efforts. INS has come a long way in 4 years. With your
continued support, I am confident we will go even further.
Thank you.
[The statement follows:]
Prepared Statement of Doris Meissner
introduction
Thank you Mr. Chairman, and Members of the Subcommittee, for the
opportunity to appear before you today to discuss the President's
fiscal year 1998 budget request for the Immigration and Naturalization
Service (INS).
Mr. Chairman, I have now been with INS for almost four years. When
I came to this agency, I was aware of the problems I was inheriting.
The INS has had a long history of neglect and management problems. In
the January 1991, GAO Report to the Congress: Immigration Management,
the auditors highlighted the history of problems at INS--I quote:
``Over the past decade weak management systems and inconsistent
leadership have allowed serious problems to go unsolved * * * Without
coherent overall direction and basic management reforms, the
organization has been unable to effectively address the changing
enforcement responsibilities and longstanding service delivery
problems.''
We have not only been challenged by past neglect and management
problems, but the agency has also experienced a continual wave of new
challenges. INS has dealt with the devaluation of the peso in Mexico,
which hit its lowest point in over a decade in 1993, just as we began
to implement our efforts to enhance border control. We have been
challenged by mass migration of both Cuban and Haitian migrants to
South Florida, as well as mass smuggling of Chinese migrants. We have
been challenged by an increase in immigration petitions and
applications, including a threefold increase in citizenship
applications. The INS is also facing the effects of implementing major
changes to immigration law contained in three pieces of legislation,
the Personal Responsibility and Work Opportunity Reconciliation Act,
the Illegal Immigration Reform and Immigrant Responsibility Act
(IIRIRA) and the Antiterrorism and Effective Death Penalty Act, all
passed last year. These new laws have required us to rewrite many of
our enforcement and service regulations, retrain our workforce, and
educate the public. All of this has challenged our often outdated
systems and procedures which we continue to reform and improve while we
manage unprecedented growth.
This Administration, you, and the other Members of the
Subcommittee, have provided continued support and increased resources
to strengthen and enforce our Nation's immigration laws. I realize the
Subcommittee has several concerns about recent problems at INS. We have
taken corrective measures, implemented improvements in planning and
operations, and provided enhanced training to our officers. We have
come a long way as an agency. In the face of numerous challenges, we
have made monumental improvements in the way INS works. However, I
recognize that there is still much work to be done.
Mr. Chairman, the fiscal year 1998 budget I present to you today
builds on our four-year effort to strengthen our borders, increase our
enforcement efforts in the American workplace, remove criminal and
other deportable illegal aliens from our streets and prisons, process
applications for citizenship and legal entry into our country
efficiently and effectively, and enhance the professionalism of our
workforce.
achievements
Before I begin discussing the 1998 budget request, I would like to
take a moment to tell you about the notable progress we have made. Our
accomplishments clearly illustrate that we are not an agency standing
still. We continue to meet the challenges we face. We have made some
mistakes along the way, but we are seeing real change.
border control achievements
First, I want to thank the Members of the Subcommittee for working
with the Attorney General and me to develop a plan for hiring the
additional personnel needed to support the President's Immigration
Strategy.
In 1994, the Attorney General and I announced a multi-year border
enforcement plan committing this Nation to a comprehensive border
enforcement strategy. Under the Administration's strategic plan, by the
end of fiscal year 1997, Border Patrol staffing will have increased by
73 percent since fiscal year 1993, for a total of 6,859 agents on-
board. Border Patrol agent growth along the Southwest border will have
increased by 85 percent over the same time period. We will also
increase the number of inspectors at ports-of-entry by over 50 percent
since 1993, which will facilitate traffic movement and commerce at
ports-of-entry and provide major improvements in meeting the time
requirements at our international airports. In fiscal year 1996, over
500 new Inspectors were deployed along the Southwest border, and 150
more will be deployed in fiscal year 1997. The combined increase in
Border Patrol agents and Inspectors will result in a balanced,
effective border enforcement strategy. To manage this growth, we have
put into place a comprehensive growth management plan, in which new
agents are being hired on an ongoing basis to meet the fiscal year 1997
target.
We surpassed our fiscal year 1996 goal of 5,778 Border Patrol
agents on-board. In fact, we exceeded our target by 100 agents. As of
March 1, we had 6,141 Border Patrol agents on-board. This includes 481
trainees at the Charleston and Glynco training facilities. Additional
classes are scheduled throughout the year to meet the fiscal year 1997
goal. As part of the comprehensive plan, we have also strengthened
recruitment efforts through more focused recruitment activities. A
competency-based assessment battery for Border Patrol agents seeking
supervisory promotions was designed and validated. These measures will
help ensure that we have qualified agents on-board and the best
qualified are promoted to supervisory positions.
The new satellite training facility in Charleston, South Carolina,
opened in April 1996, continues to provide the additional capacity
needed to train the large number of Border Patrol agents being hired.
This is the first Administration to outfit agents with the
equipment and technology to perform their jobs more efficiently and
safely. With the new vehicles, bullet proof vests, night scopes, ground
sensors, lighting along the border, encrypted radios and computer-
assisted dispatching and case processing systems, our front line agents
are better supported than at any point before.
Focusing additional resources on new Border Patrol staffing and
equipment has yielded significant results. Hours dedicated specifically
to linewatching, by agents working directly along the border, increased
by 17 percent in fiscal year 1996. The Border Patrol made over 1.5
million apprehensions for the year. In San Diego, El Paso, Nogales, and
the areas between them we are deterring illegal traffic and disrupting
smuggling operations. Operation Hold the Line has significantly
diminished illegal immigration between Ciudad Juarez, Mexico and El
Paso. In a similar fashion, Operation Safeguard has allowed INS to
regain control of downtown Nogales. Through Operation Gatekeeper, begun
in 1994, INS has gained substantial control of the Nation's busiest and
most vulnerable border near San Diego, from Imperial Beach to Chula
Vista to Brownfield. The San Diego Union-Tribune heralded the success
of Operation Gatekeeper in a July 15, 1996 article by stating that the
operation ``is transforming the region around the San Ysidro and Otay
Mesa border crossing from lawless, chaotic places into the picture of
order.'' Similar support from the community is continuously echoed. San
Diego Sheriff William Hollander was quoted last year as follows: ``I
worked the border in the 1960's and I've never seen the Federal
government make this kind of effort.''
removal of illegal aliens
The removal of criminal and other deportable aliens is one of the
key components of INS' comprehensive strategy to prevent and deter
illegal migration. In fiscal year 1996, INS removed a record 68,294
deportable aliens from the country, of which 54 percent were criminal
aliens. Of the 36,754 criminal aliens removed from the United States,
10,323 completed the Institutional Hearing Program process. This
represents an overall increase in removals of 37 percent over fiscal
year 1995. As of the end of February of this fiscal year, there have
been 34,421 overall removals, of which 19,045 have been criminal alien
removals, putting INS on target to remove at least 93,000 aliens in
fiscal year 1997.
INS bed space increased dramatically over the year. INS' ability to
detain aliens is directly linked to our ability to remove them from the
United States. In fiscal year 1995, INS maintained an average of 6,000
detention beds. In fiscal year 1996, the average increased to 8,200 and
the Service closed the year with an all-time high of 9,500 beds. As of
March 17, INS had over 11,500 beds in use. By the end of fiscal year
1997, INS is expected to have 12,050 detention beds in use. The
increased bed space is critical to meeting the requirements of the new
immigration legislation's mandatory detention provision.
worksite enforcement
To more effectively control the border, we must also strongly
enforce employer sanctions and labor standard laws in the workplace.
With the emphasis this Administration has placed on Worksite
Enforcement over the past four years, we are now seeing effects. Over
13,800 unauthorized workers were apprehended at the workplace in fiscal
year 1996, and these jobs were made available to authorized workers. In
fiscal year 1996, INS completed over 5,200 employer sanctions cases and
identified 1,555 employers who knowingly hired illegal aliens or
violated the laws pertaining to employer sanctions. Over $4.8 million
in fines was collected from employers who violated immigration laws.
We significantly increased interagency efforts in fiscal year 1996,
aimed at stopping major violators in industries with a history of
employing unauthorized workers. With the Department of Labor's
assistance, INS addressed illegal employment and the exploitation of
labor, resulting in 542 investigations, of which 329 were joint
investigations last year. The joint investigations focused on abusive
employers, particularly in the garment industry.
The INS expanded the award-winning Operation Jobs and continues to
work with State and local authorities to place authorized workers into
job vacancies created when unauthorized workers are removed from the
workplace.
The INS also made major advances in automation of the alien status
verification process and continued the expansion of the Verification
Information Systems (VIS) into new industry areas, reaching a total of
1,000 employers participating in the pilot. The inclusion of the meat
packing industry into VIS marked a major accomplishment in addressing
illegal employment in the Midwest.
Work was completed on the revised Employment Authorization Document
(EAD), which documents work eligibility for a wide range of immigrants
and non-immigrants. The Service began issuing the new card in February
1997.
technology improvements
I am also pleased to report to you today that IDENT, our prototype
fingerprint identification system, has become an effective tool which
has enhanced our border control efforts. We have now installed systems
at 80 locations along the Southwest border and expect to have 112 sites
deployed by the end of fiscal year 1997.
IDENT allows agents to identify rapidly and accurately criminal
aliens and repeat crossers who were apprehended previously. In fiscal
year 1996, IDENT matched over 10,500 individuals from the criminal
alien lookout database and helped confirm the eastward shift in traffic
as a result of Operation Gatekeeper. IDENT also helped agents identify
1,234 suspected smuggler ``guides'' along the Southwest border. The INS
has established an illegal entry recidivism database of 585,632 records
and a criminal alien lookout database of 56,006 records on the IDENT
system. With its implementation along the entire Southwest border,
IDENT provides our agents with a significant tool to support efforts to
secure our Nation's borders.
The INS also expanded the Datashare initiative with the Department
of State. The increase in the exchange of data between DOS and INS has
streamlined the Inspections and Immigration Adjudication process. A
pilot program for Immigrant Visa (IV) automation and sharing of
information is now in place in Frankfurt, Germany; Georgetown, Guyana;
and Juarez, Mexico.
In fiscal year 1996, INS also completed 14 new installations and 13
upgrades of existing sites of the Inter-Agency Border Inspection System
(IBIS)--for a total installed base of 161 major air and land border
ports-of-entry. IBIS is the core lookout system used by INS inspectors
and U.S. Customs at airports and land border ports-of-entry to identify
persons of interest.
The Dedicated Commuter Lane (DCL) project was opened in Otay Mesa,
California. We enrolled a total of 2,600 people and conduct an average
of 800 inspections per day, enabling us to concentrate our inspection
efforts on a smaller population of entrants.
The INS Passenger Accelerated Service System (INSPASS) was
recognized as the ``Best of the Best'' in Federal technology leadership
in an awards ceremony on February 11, presented by Government Executive
Magazine and the Association for Communications, Electronics,
Intelligence and Information Systems Professionals. The judges stated
that INSPASS, designed to streamline the Inspections process, goes
``above and beyond in providing enhanced service to the citizen.''
INSPASS also received a Federal Technology Leadership Award in November
1996.
In fiscal year 1996, INS worked to improve standard office
automation infrastructure and educate the user about the new
automation. The INS completed deployment of office automation
infrastructure at 143 sites in fiscal year 1996. A total of 235 sites
in 34 major INS locales are now infrastructure equipped. In fiscal year
1996, INS trained 10,210 users to bring the user population trained to
date to 19,190. We also provided over 7,500 additional users with e-
mail, for a total of 16,917 users, allowing for more efficient
communications agency-wide.
immigration services
In addition to our enforcement role, we also realize the importance
of being a service provider. In the past four years, we have made a
concerted effort to improve services and benefits to our customers.
During fiscal year 1996, initiatives such as the Telephone Service
Operation pilot initiated in June, the El Paso INSFORM kiosk, and the
Forms Center reinvention, have provided easier access to INS
information and simplified processing times for some of INS' high
demand services. Applications for immigration benefits were up by six
percent and actions taken on benefit applications also increased in
fiscal year 1996 compared to fiscal year 1995. Last year, INS reached
its goal to ensure that eligible persons will have their applications
adjudicated within 6 months of filing a citizenship application.
Customer satisfaction surveys were completed at land, air and sea
ports-of-entry and the results have been compiled and analyzed for use
in making further improvements to the inspections process. During last
fiscal year, we also began integrating customer service training with
other training activities to improve customer satisfaction.
assistance to states
We started the Law Enforcement Support Center (LESC), which is
located in Burlington, Vermont, in fiscal year 1995. Since the LESC's
inception, it has received and processed 40,763 status inquiries from
law enforcement agencies in three states. LESC pilots have been
implemented in Arizona, Iowa, and Florida.
INS participation in the Violent Gang Task Force resulted in
notable accomplishments for fiscal year 1996. Through Violent Gang Task
Force activity, 1,915 aliens were arrested, 388 of which were
aggravated felons. The Task Force seized $46,629,072 worth of
contraband, including narcotics valued in excess of $42 million.
In fiscal year 1997, INS has designated enhanced cooperation and
participation with State and local law enforcement agencies as a new
priority. So far this year, INS has begun to test the applicability of
community policing. Pilot projects will be developed and implemented in
communities across the United States. In New York, we created a formal
Citizens Advisory Panel for the New York District Office and conduct
conferences involving a variety of community organizations. We also
provide training for the vast array of intermediary agencies that
provide assistance to immigrants applying for INS benefits.
In Chicago, we developed a joint program with the Illinois
Secretary of State and the Chicago Public Library system to provide
naturalization information through the library system. We conduct
problem resolution activities in response to allegations of unfair
treatment by INS agents during worksite operations. In Chicago, we have
also become involved in diversity training, by creating educational
programs with city schools that have high concentrations of immigrants
and by conducting cross-cultural training for District staff and
Mexican consulate staff.
In San Antonio we keep local law enforcement agencies informed
about INS activities by conducting information seminars. In February
1997, we met with State and local law enforcement agencies at the Omaha
District Office to discuss mutual assistance initiatives to deal with
drug and alien smuggling on Interstate 80.
other accomplishments
In addition to our many successful activities we also provided
extraordinary support to the 1996 Olympics in Atlanta. We had the
largest presence in Atlanta of any Federal agency. The National Olympic
Planning Group, of which INS was a key player, received a National
Performance Review Hammer Award for outstanding, coordinated efforts
aimed at expediting processing for international visitors to the
Olympics.
Our achievements included creating a new Olympic Identity Card.
This card was hailed as one of the most secure, counterfeit-proof
documents ever created. We established programs and processing to
handle foreign nationals who were excluded from entering the United
States because they posed a threat to national security. In support of
the Summer Olympic Games, INS provided advanced automated lookout
capabilities, including the Portable Automated Lookout System (PALS),
the Interagency Border Inspection System (IBIS), and the National
Automated Information Lookout System (NAILS). We installed an automated
officer dispatch capability based on the system used on the Southwest
border for sensor tracking and officer dispatch (CAD) at the Atlanta
District office and the Atlanta airport. The INS also helped staff a
24-hour Response Team to address international entry matters.
concerns and issues
Although we have made significant progress during the past few
years, there have also been some problems about which we share your
concern. I realize you and this Subcommittee are keenly interested in
several problem areas. Mr. Chairman, I would now like to take the
opportunity to directly address some of your concerns.
Miami
The Inspector General's report regarding the June 1995 visit of the
Congressional Task Force on Immigration Reform to Miami substantiated
serious allegations made by employees of our Miami District. The
Inspector General found that managers in the Miami District took
actions that gave Congress a false impression of the actual work
conditions in the District. I deeply regret the damage this has done to
our relationship with Congress and this Committee.
As you know, the Department of Justice has concluded the
disciplinary process, and taken the necessary actions. The severity of
the discipline imposed--including a removal from Federal service,
several demotions, and a number of suspensions without pay--was
consistent with the seriousness of the offenses.
We have also worked hard to prevent any such incident from ever
occurring in the future. We have reinforced the message throughout the
agency, that honesty and integrity must be the core of all our work.
Numerous instructions and directives have been issued as a result of
the Inspector General's report, and we are working closely with our
managers to ensure full compliance. In response to management concerns
at the Miami District, I have filled the Miami District Director and
Deputy positions with seasoned INS managers. We have also implemented a
management review program, INSpect, which will give us regular and
systemic oversight over field operations. One of the very first INSpect
assignments examined the Krome Service Processing Center in Miami.
These management decisions and the disciplinary actions that have
been taken will mark the close of a sad and painful chapter for all of
us at INS, one from which I hope, we at INS have learned a valuable
lesson.
Citizenship USA
In the ten years before 1992, INS received fewer than 300,000
naturalization applications per year. By contrast, in fiscal year 1995,
we received more than one million applications, more than tripling our
workload in this important area. Applications increased another 15
percent in fiscal year 1996. Backlogs were at unacceptable levels.
Waiting times in some cities were approaching three years. Therefore,
in the Summer of 1995, we developed and launched Citizenship USA as a
way of meeting demands and making necessary improvements to the
naturalization process. We received bi-partisan congressional support
for our plans through the approval of the reprogramming notifications
by our Appropriations Committees in fiscal year 1995 and 1996.
The goal of Citizenship USA is to achieve timely adjudication of
naturalization applications, and reduce an unconscionable backlog
created by the surge in applications.
In hindsight, we recognize that we were using outdated policies and
procedures. Our increased demand for fingerprint checks also increased
pressure on the FBI and slowed the time period for obtaining responses.
We relied on a 15-year-old assumptive policy regarding the receipt of
FBI fingerprint checks, acting on cases where ``idents'' were not
received within 60 days on a presumption that it was an indication of
no FBI record.
We now have a fuller understanding of our most serious
vulnerabilities regarding the naturalization process and have
implemented policies to resolve those problems. We are in the process
of conducting a review--overseen by KPMG Peat Marwick at our Service
Center in Lincoln, Nebraska--of the rap sheets for the individuals
identified as having FBI records. We will make additional improvements
and initiate the necessary naturalization revocations once the Lincoln
review is completed.
Working with the FBI, as of November 1996, we have implemented
specific procedures that preclude naturalizing any person for whom we
do not have a response from the FBI, either positive or negative. In
hindsight, this should have been done previously. It is being done now.
We implemented quality control procedures to provide a documented
record of each case as it is processed. In addition to our own
oversight of these procedures, we have asked KPMG Peat Marwick to
review quality control procedures to give us an independent look at
their implementation. We have also tightened naturalization test
procedures and hired a contractor to monitor the testing entities.
Coopers and Lybrand has been selected to conduct a comprehensive re-
engineering of all aspects of our naturalization program.
I hope that Congress and the American people understand the
sincerity of our efforts. We have learned from past mistakes and are
correcting those mistakes. We remain committed to a naturalization
service that is worthy of the stewardship of the greatest benefit
bestowed by our nation.
Operation Gatekeeper
Concerning the allegations that apprehension statistics had been
fabricated to enhance the apparent effectiveness of Operation
Gatekeeper, the Office of the Inspector General's review of the
Operation is still ongoing. We have not been provided a status report
or any other information related to the investigation that can be
shared with you today. However, I would like to refer to the Inspector
General's testimony before the House Appropriations Subcommittee on
February 26, 1997 in which he said that so far, he is ``not finding the
pervasive falsification of data or the distortion of procedures that
have been alleged.'' When we receive more information in the form of a
report, actions will be taken where applicable and appropriate. We will
keep you informed.
fiscal year 1998 budget
Now, I will turn to the fiscal year 1998 budget and initiatives
included in our request. For fiscal year 1998, we are seeking a total
budget of $3.6 billion and 28,230 positions for INS to further
strengthen the Administration's comprehensive immigration strategy.
With this budget, the Administration will have increased INS funding by
142 percent over fiscal year 1993. The fiscal year 1998 budget
represents a $419 million increase in funding over the anticipated
fiscal year 1997 spending level, including $360 million in new
initiatives, and adds a total of 1,570 positions.
The goal of the Administration and the focus of the INS fiscal year
1998 budget is to continue concerted efforts to control the Nation's
borders and facilitate commerce while deterring and denying the illegal
movement of people and drugs into the country. The fiscal year 1998
budget request includes resources to firmly and fairly enforce
immigration laws and to implement the broad legislative changes enacted
in 1996. Specifically, the fiscal year 1998 budget includes continued
funding for strengthening border control, port-of-entry facilitation,
enforcement initiatives targeting U.S. worksites, increased removal of
deportable, criminal and other illegal aliens, improved processing of
naturalization and benefits applications, and resources to renovate and
update the basic INS physical and technological infrastructure.
professionalism initiative
Improving professionalism is my top priority for the Immigration
and Naturalization Service. INS' fiscal year 1998 request includes a
total of 83 positions and $23 million to address the deficiencies in
the infrastructure base and mission support. In recent years, the
Service has expanded and intensified program activities in the areas of
enforcement, deterrence and benefits. Program expansion, though, has
placed a strain on the basic infrastructure of INS and the ability of
the Service to assimilate thousands of new employees.
Under this initiative, INS will address those infrastructure areas
that historically have been under-funded. This initiative encompasses a
wide range of activities, including training for INS journeyman
employees, resources to meet new Freedom of Information Act/Privacy Act
requirements and support for the Statistical Analysis Program.
Nine positions and $6.1 million are requested to provide training
in field locations through the use of emerging technology keyed to a
distributed learning environment. This effort will allow INS to provide
continuous training for employees at or near their duty stations to
reduce travel costs. These resources will allow for increased
supervisory and managerial training within INS, a category of training
which has been neglected in the past. This funding will also provide
for individual career/professional development and for training
requirements generated by legislation and regulatory and policy
mandates.
Twenty-one positions and $1.5 million are requested to support
nationwide automation programs by augmenting the depth of support
devoted to the various information technology and mission-critical
programs of INS. The current industry standard is to have a ratio of 1
ADP specialist for 50 field personnel. The current INS ratio is 1 to
100. By the end of fiscal year 1998, INS hopes to improve this ratio to
1 ADP specialist for every 75 field employees.
An additional 37 positions and $3.1 million are requested to allow
the Service to comply with the provisions of the Electronic Freedom of
Information Act Amendment of 1996 (EFOIA). These provisions include the
Electronic Reading Room, mandated FOIA responses within 20 days, and
elimination of all backlogged inquiries, which are currently at more
than 15,000 cases.
The Service is committed to establishing a program of routine
repair and maintenance of its buildings and structures, allowing for a
healthy and safe work environment for all employees. One position and
$5.3 million are requested to establish this program.
Finally, the budget requests 15 positions and $7 million to improve
the INS Statistical Analysis Program. These resources will allow INS to
keep pace with its increasing workload and expand the quality of
professional analytical services provided to other program areas within
INS, along with external audiences. The Statistical Analysis Program
includes data on immigrants, refugees, non-immigrants, naturalizations,
apprehensions and removals of illegal aliens, as well as productivity
and resource management statistics regarding INS and its mission.
Increasing requests for information from the Congress, GAO and the
general public have created greater demand for this data. These
resources will help make improvements in the timeliness, precision,
usefulness and reporting frequency of our data.
border facilitation and control initiative
The fiscal year 1998 budget includes $152.1 million and 845 new
positions to sustain facilitation of entry and control at ports-of-
entry and expand control between the ports-of-entry along the Southwest
border. These funds will maintain the aggressive hiring and training
efforts begun in fiscal year 1996 to enable the INS to surpass the
President's goal of 7,000 Border Patrol agents by the end of fiscal
year 1998. The budget request of $62 million for 500 Border Patrol
Agents and 50 support personnel, complemented by a corresponding
increase in force-multiplying technological and other infrastructure
enhancements, will enable INS to consolidate and expand on the progress
achieved in recent years along the Southwest border.
The 500 additional Border Patrol agents will join those already
patrolling the Southwest border in California, Arizona, New Mexico and
Texas. The Border Patrol has achieved dramatic results in areas like
San Diego County in California, and the urban El Paso area in Texas.
Recent expansion of efforts into Tucson, Arizona, and the remainder of
the Texas sectors, will continue and grow.
The fiscal year 1998 budget requests $16.2 million in funding and
one position for further development and deployment of the highly
effective biometric identification systems (IDENT/ENFORCE) at most
Southwest Border Patrol locations, and expansion to the northern and
maritime borders, as well.
Also included in the request is $34.3 million to provide critically
needed maintenance, renovation and replacement of older Border Patrol
facilities along the Southwest border, funds for planning and designing
future construction projects, and resources for 11 military engineering
projects supporting the Border Patrol through construction of border
lighting, fencing, vehicle barriers and roads.
The fiscal year 1998 budget includes $19.4 million for 277
Immigration Inspectors and 12 support personnel for air ports-of-entry.
These positions will improve facilitation by continuing the processing
of passengers through primary inspection within the 45-minute standard,
and to staff two new airports in Palm Springs, California, and Medford,
Oregon; and preinspection operations in Halifax, Nova Scotia. In
addition, four positions and $2.5 million are requested to expand the
departure management initiative at air ports-of-entry, which will allow
INS to deploy automated Form I-94 equipment to 300 inspections booths,
and expand the joint INS-Department of State DataShare project to 10
new sites.
One position and $17.7 million are requested for automation and
reinvention of the inspections process at land, air, and sea ports-of-
entry. At the land border, INS will implement a joint project with the
U.S. Customs Service (USCS) to deploy license plate readers, new
Treasury Enforcement Communications System (TECS) primary terminals,
and other port permit technology. At air and sea ports-of-entry, INS
seeks to install Interagency Border Inspection System (IBIS) imaging
workstations at five sites and deploy 100 notebook computers to remote
locations to allow for queries on INS' lookout database. The budget
includes one permanent position and 11 contract positions to oversee
the deployment of automated equipment at ports and increased funding
for the IDENT and ENFORCE systems. We are also requesting resources to
expand INSPASS, a system which speeds the entry of low-risk, frequent
travelers at high-volume U.S. ports-of-entry, to 10 additional
airports, and to deploy 100 carbon dioxide detectors at sea ports-of-
entry to allow inspectors to more quickly and adeptly identify
stowaways hidden in compartments on vessels entering the United States.
remove criminal and other deportable aliens initiative
The President's fiscal year 1998 budget includes $109.7 million to
support 422 new positions to detain and remove criminal and other
deportable aliens. We estimate that we will remove a significantly
higher number of criminal and other deportable aliens in fiscal year
1998 as compared to the fiscal year 1997 target of 93,000. At this
time, however, it is not possible to provide an exact estimate. Much
will depend on how great an increase in operational efficiency the INS
will gain from the new enforcement provisions of IIRIRA and the extent
to which legal challenges alter or delay full implementation of the new
law. The resources requested for fiscal year 1998 will increase INS
detention and removal capabilities and allow the agency to better
respond to the detention requirements of IIRIRA and sustain INS'
current efforts toward removing non-criminal deportable aliens. The INS
will increase the amount of detention space and removal resources by
3,000 beds, bringing total INS detention space to over 15,000 beds.
Included in the request are 181 positions and $48.3 million to
increase detention capacity as follows: (1) 119 positions for an
expansion of 300 additional beds for the Buffalo Service Processing
Center; (2) 300 beds for the Krome Lockdown Facility, which is part of
the Krome Service Processing Center; and (3) 30 positions to staff an
increase of 400 detention beds in the San Diego area. For non-INS state
and local bedspace capacity, the request includes $6.9 million for 95
beds and alien removal costs and 14 beds for juvenile detention. In
addition, receipts from the Immigration Detention Account are projected
to support 1,136 additional state and local bedspaces in fiscal year
1998. Of the amount requested, 24 positions and $2.6 million will
provide legal support generated by the additional workload and an
additional eight positions to provide administrative support.
The fiscal year 1998 budget request includes 36 positions and $12.1
million for detention and deportation personnel to locate and remove
deportable aliens who have completed the appeals process. These
resources will also fund an additional 230 beds. Four positions will
provide the necessary attorney and legal support to try cases, prepare
briefs and ensure all legal requirements are met throughout the
process. In addition, two support personnel will provide management and
administrative functions for hiring, training, and procurement of the
additional equipment and staff.
A total of 90 positions and $20.6 million is requested to expand
the Local Jail Program. Of these, 34 investigative positions will
manage the interview process and identify deportable aliens who are
incarcerated in local and county jails. This expansion requires support
by 46 detention and deportation personnel. Four attorneys and two legal
support personnel will review Orders to Show Cause, prepare cases
before Immigration Judges, and perform other functions related to
immigration hearings. Four support personnel will provide management
and administrative support for this initiative. In addition, resources
are included to acquire an additional 375 bed spaces for this
initiative.
The budget requests 43 positions and $5 million to respond to the
increased number of queries at the Law Enforcement Support Center
(LESC) and provide a permanent source of funding for the LESC. In
addition, resources requested will fund a total of 36 temporary
positions to perform status verification in response to queries from
other law enforcement agencies.
A total of 66 positions and $9.5 million will expand criminal alien
record holdings in the FBI's National Crime Information Center (NCIC).
The INS will install NCIC terminals in 45 additional locations
nationwide and increase the number of records, including records in the
Deported Felon File. New personnel will code, validate, audit and
conduct quality control of the data being entered. Resources will also
provide an additional 150 bed spaces and three attorneys and one legal
assistant to assist with the deportations resulting from the expansion
of the NCIC. Three support personnel will perform the management and
administrative functions related to this initiative.
Finally, the request includes $14.2 million in funding for new
construction and renovation of the Krome and Port Isabel Service
Processing Centers as well as planning and site design resources for
the El Centro, Florence, Varick Street and additional Port Isabel
renovation projects.
interior deterrence initiative
The fiscal year 1998 budget includes $21 million to support 156 new
positions for worksite enforcement, employer compliance and
verification services. This initiative will expand efforts to deter
illegal employment and increase investigation and prosecution of
employers who intentionally violate immigration and labor laws. These
funds also will promote compliance by providing information support to
employers and employment verification services. The budget request also
will fund expansion of employment verification pilot programs required
by statute to allow employers to quickly verify the employment
eligibility of newly hired employees.
The budget request includes 73 positions and $7.8 million to
increase targeting of major violators by pursuing those employers who:
(1) employ unauthorized aliens and violate criminal statutes such as
document fraud, smuggling, harboring, inducement and slavery; (2)
violate other regulatory requirements such as labor laws; or (3)
continually depend upon unauthorized labor. In addition, these
enforcement resources will be used to develop capabilities to better
target sweatshops and other abusive employment situations. Thirteen
detention and deportation positions, 12 attorneys and four support
staff, are included to aid in the removal of aliens when the initiative
is fully implemented.
The budget includes 14 positions and $1.2 million to establish a
national telephone bank to respond to questions on the employment
eligibility process, employing permanent and temporary foreign workers,
changes in employment-related immigration law, hiring foreign students,
independent contractors, asylum-based work authorization, hiring under
NAFTA, hiring nannies and domestic workers, and the retention of
documents. In addition, an employer Internet service will be
established for employers that will provide an easy-to-use, cross-
referenced information source for employers.
Employment verification allows employers to quickly verify the
employment eligibility of a newly hired non-citizen. Twelve million
dollars are requested to fund 69 technical and clerical positions and
expand the verification pilot programs to include additional
participants and a variety of verification approaches. The enhancement
will also provide resources to continue to improve immigration records
supporting verification, to design and deploy improved verification
business practices, and to reengineer existing business practices that
support welfare reform legislation enacted in 1996.
improving services and benefits initiative
We will also improve customer services for legal immigrants by
continuing and improving the Citizenship USA naturalization initiative
and increase staffing and automation for other benefit applications.
The INS is requesting a total of 64 positions and $54.3 million to
improve INS services and support components to better serve customers.
These resources also will allow INS to keep pace with the expected
fiscal year 1998 workload of approximately five million applications,
including more than 1.6 million for naturalization, and to meet the
challenges posed by new legislation and the increased demand for a
broad range of immigration information.
The Service's customer base has been growing rapidly; however, the
records and information infrastructure has not kept pace with this
growth. The Service requests four positions and $15.6 million to
implement an information network for records restructuring and
centralizing existing files in preparation for the transition to
electronic filing and electronic immigrant files (A-Files). The records
centralization proposal incorporates a national and comprehensive data
improvement strategy to improve data integrity for the Service. This
initiative also includes resources to provide a catastrophic backup
capability for the IDENT system.
The Service is requesting $13.8 million in resources to enhance its
centralized computer-based information repository, the Central Index
System; enhance the fingerprint collection and clearance process to
have the capability to electronically capture, store and eventually
transmit fingerprint data between the INS and the FBI; and expand the
current telephone improvements efforts and establish a sole 1-800 line
that will act as a front-end to all non-enforcement related inquiries.
We are also requesting 50 positions and $3.4 million to create a
corps of representatives in district offices to strengthen customer and
community relations and provide customer relations training to INS
service-related employees. The budget also includes $1.7 million in
funding to expand the Direct Mail Program to the San Francisco, Newark
and Baltimore Districts. These modifications will allow INS to more
effectively process naturalization applications and gain control of the
massive records workload in those districts. The resources associated
with this transfer of naturalization cases will provide for additional
records contract support in the Service Centers, and for mail, file,
and data entry operations. In addition, $1 million is requested to fund
a contractor study of the demographic aspects of the INS customer base
to determine if the current location and configuration of INS offices
meets customer needs.
The budget request includes $2.6 million to support ongoing direct
mail initiatives and fund the increased volume of FBI fingerprint
clearances and naturalization ceremonies. In addition, a total of 10
positions and $4.4 million is requested to improve Service
responsiveness to the customer's needs for forms and information.
A total of $1.8 million is requested to provide comprehensive
reception and settlement services that could not be accommodated
through base funding for the 15,000 Cuban nationals anticipated to
arrive in the United States in fiscal year 1998 through the Cuban legal
migration program.
The budget requests $4.2 million to provide for the deployment of a
naturalization module to Service Centers through the modification of
the CLAIMS system. In addition, $1 million is requested to expand the
case scheduling functions now available in CLAIMS at the Service
Centers.
The budget request also includes $4.8 million to continue the local
office record contract concept to maintain pilots in seven district
offices. Finally, the adjustment of status provision of the Immigration
and Nationality Act expires on September 30, 1997. By requiring a
substantial fine for adjustment of status, Section 245(I) penalizes
individuals who may not have had legal immigration status but who are
now legalizing their status. We project that revenue from 245(I)
receipts will enable us to fund 1,136 detention beds in fiscal year
1998. Our budget request includes language to repeal the sunset date so
that we can continue to receive this revenue.
conclusion
These new fiscal year 1998 resources will give INS the personnel
and tools needed to carry out the effective immigration strategy begun
four years ago. I look forward to continuing to work with the
Subcommittee, and with your support of this budget request, we can
carry forward the momentum of the last few years to make our
immigration system the best it can be. As I mentioned earlier, I want
to work with you to alleviate your concerns and build your trust so
that the many accomplishments over the past four years are not
overshadowed by the few mishaps we have encountered along the way.
This concludes my formal statement on the 1998 budget request for
INS. I would be happy to answer any questions which you, Mr. Chairman,
and Members of the Subcommittee may have.
Senator Gregg. Thank you, Commissioner.
I think we will limit questions on the first round to 10
minutes. I know that Senator Hollings has an amendment on the
floor, so why don't I yield to you, Senator?
Senator Hollings. That is all right. You go ahead.
cooperation between FBI and DEA
Senator Gregg. All right. Why don't I start with you,
Director Freeh, on a couple of questions? First, since we have
you and the folks from DEA here and even INS, I would be
interested to know what sort of structural efforts have been
made to cooperate? I know that you and the Administrator work
very hard to cooperate. This was a big problem for many years,
the lack of cooperation and the turf fights that had occurred
between the different agencies. I am wondering what sort of
structural, systematic programs have been put in place to
survive personalities so that we have long-term cooperation.
Specifically, if you could comment on this, Administrator:
as we build the new building for you in Quantico, which is a
separate building for DEA, one of the advantages, I think, has
been that DEA and FBI agents have been trained together at
Quantico. They have gotten a personal relationship there that,
hopefully, they can build on throughout their career, and,
therefore, it cuts down on turf fights. Is there going to be a
formal effort made to continue to interface and mesh the early
relationships that can evolve over time?
Mr. Freeh. Senator, just let me answer part of it, and I am
sure the Administrator can supplement this. The relationships
between the agencies are really outstanding, and I do not say
that without a lot of sincerity. When I came to this job, I
found out that the former Director and Administrator used to
make appointments to speak to each other, which is not a good
way to communicate anywhere, but particularly in Washington for
two law enforcement agencies.
We have by our own very close personal and professional
relationship, set a very important tone and message for our
field divisions. Every SAC in the FBI and the DEA know that the
Administrator and I do not want to hear about people in the
field or headquarters fighting or not getting along about
things which have to do with our simple unified mission. People
know that there is a great expectation that that will not
occur, and for the most part, it does not occur.
Structurally speaking, we have done a number of things to
ensure that this relationship, which is better now than it has
ever been, is perpetuated. We have exchanged, for instance,
very high level SES members. For instance, the former head of
the intelligence unit at the DEA, who just retired, was an FBI
agent. The individual who was the principal FBI official
responsible for drug and organized crime programs, until he
retired, was Doug Wankel, a senior DEA agent. These are people
who had line authority in both agencies.
We have several field offices where FBI supervisors or DEA
supervisors are in charge of particular projects where both FBI
and DEA agents work together. We have a very successful
operational program, which I think the committee is aware of,
where we fund together and work together and have collocated
together to give us the intelligence, particularly along the
southern tier, to put into effect strong operations and good
cases.
We have joint training. We have joint SAC conferences. We
interchange and work directly on legislative matters, and on
budget matters. There have been times when I have asked
committees to give support and resources to the Drug
Enforcement Administration, even though those would be taken
away from the FBI. So the relationships, I think, are very
good. I think they are being institutionalized.
Perhaps Mr. Constantine can talk about the training
academy. We have structured this new building at Quantico in a
way that we will fully utilize it for both agencies, and it is
not going to, in my view, put any separation between us.
DEA and FBI training at Quantico
Mr. Constantine. Well, it is tough for me to say what the
relationships were like before I came to Washington and to the
Federal Government. Before coming to Washington, I had heard
things. I come from an experience in law enforcement where it
is essential for agencies to get along with one another merely
for their own physical survival. In many instances, since I
have been here, I have not had a conflict with anybody in the
law enforcement community, and I think we have worked out a
number of issues that may have existed before, especially
involving maybe the DEA and the FBI at the level that they do
not presently exist.
Insofar as the academy is concerned, we recognized--and the
Attorney General has also recognized the need for more space.
We will still share many of the joint facilities. The firearms
range, the practical training area, and the emergency vehicle
operating course, will be shared.
We have formed committees to ensure that we share the
faculty of both DEA and FBI training staff and so that we can
exchange them where each has an area of expertise. We will be
establishing joint evening training sessions for FBI and DEA
agents so they carry with them the same types of experiences. I
think the fact that they now have space, each of them, to be
trained and now have an ability to keep the major buildings at
Quantico in good shape, the library and the gymnasium, I think
will be to the benefit of both agencies.
I have also seen from young managers in the DEA that I deal
with directly, a sense of cooperation with the FBI, and all of
the other agencies. They recognize that the people of this
country are very concerned about crime and drugs, but they are
also concerned about their tax dollar. The last thing that they
want to hear is that a bunch of bureaucrats in agencies are
fighting with each other over whose name is in the paper or who
gets credit for something. And that is a message we send
continually, and I think it is working.
Interagency cooperation
Senator Gregg. Thank you.
Do you have any comments you want to make on this effort of
interagency cooperation?
Ms. Meissner. I would simply add that the Immigration
Service participates very directly in the same spirit that has
been outlined here, most importantly in joint task force
efforts among the Federal law enforcement agencies. Our added
value is the authority that we have. Obviously, where
noncitizens or illegal aliens in the country are concerned, our
efforts often converge with crime initiatives that the FBI and
the DEA are in the lead on. At the Southwest border, we are the
first line of defense where drug trafficking and other criminal
endeavors might be concerned. That relationship has worked
very, very effectively.
Border control
Senator Gregg. What percentage of the people that are
coming into the country illegally do you feel you are actually
apprehending?
Ms. Meissner. Well, that is difficult to say. The really
critical thing about what has been going on in the last several
years and what is being demonstrated on the Southwest border is
that we are beginning to achieve control and deterrence. The
best enforcement, where illegal immigration is concerned, is
preventing it from occurring in the first place. And what you
have now in California, in an area that had accounted for one-
half of the illegal crossings into the country historically, is
basically, we estimate, about 85 to 90 percent control.
Senator Gregg. If you had that estimate in California, what
is your estimate for, say, New Mexico, Arizona, and Texas?
Ms. Meissner. Arizona is coming along very, very well. I
would not want to give you an estimate right now without
checking some numbers. It is clearly not 85 to 90 percent, but
it is getting close. The investments in Arizona have been
outstanding. We have work yet to do in Douglas, AZ, where we
are just about to build a fence which will give us the missing
piece that we need to support the personnel we have put there.
Our major efforts now are to shore up Texas and to counter the
movement of traffic that has occurred because of the efforts we
have already made in Texas, particularly in El Paso, where we
are seeing spillover into New Mexico.
We are adding resources there as quickly as we can,
consistent with providing the infrastructure, equipment, and
technology that is required to put a comprehensive effort
together. We think that in the next 2 to 3 years, as we
continue to build the budget and build the effectiveness of the
strategy, that we will have stable border control along that
Southwest border.
Senator Gregg. So you think within 2 or 3 years we will
have stable border control along the entire border of Mexico?
Ms. Meissner. That is what we foresee at the present time.
Senator Hollings. You think that is going to happen?
Senator Gregg. She is from Maryland. Those of us from the
Northeast, we do not know.
Ms. Meissner. You really need to see California. I really
hope you will be able to come.
Senator Hollings. I have been to California. Have you cut
out the checkpoints 50 miles inland? Are you still doing that?
Ms. Meissner. No; checkpoints are extremely important.
Checkpoints, particularly in----
Senator Hollings. They do so good that you put them 50
miles inland and try to catch them a second time?
Ms. Meissner. No, no. You need checkpoints because of the
organized movement of aliens, which is increasingly the problem
as we become more effective with border control. You simply
have areas, particularly in more remote locations, where it
will never be cost effective to have the concentration of
Border Patrol that we have in the heavily trafficked areas.
Therefore, we have to close off the transportation routes into
the interior of the country.
coordination between INS and FBI
Senator Hollings. Well, with respect to the coordination
being so superb, what about the coordination between
Immigration and FBI? As I understand it, a lot of the so-called
immigrants came in at election time without the proper
background checks, and you sent over fingerprints to the FBI
asking that they be given checks within 60 days, and when INS
did not get a response from the FBI in 60 days and the aliens
were naturalized. Turns out many had criminal records. Where is
the coordination there?
Ms. Meissner. Well, I think that we have all recognized
that the workload faced as an agency in the citizenship arena
in the last 2 to 3 years was absolutely unprecedented. We have
seen doubling and tripling of the caseload of people applying
for naturalization, and that meteoric rise is continuing.
We have simply not had the infrastructure, either in the
FBI or in the Immigration Service, to effectively handle the
fingerprint checking pressures that the caseload requires. We
recognized several months ago, in the fall, that although there
had been a great deal of contact and communication at the
working level on these issues, they had not received the level
of senior management attention that they deserved. The FBI and
the INS, certainly since September, and very intensively since
then, have been engaged in this effort, and we are finding
solutions.
Senator Domenici. Would the Senator yield?
Senator Hollings. Yes.
Naturalization efforts
Senator Domenici. Let me just ask you about this subject,
and let's be specific. How many felons did you go ahead and let
become American citizens in that extraordinary let's hurry up
and create a bunch of citizens so they can vote episode? How
many felons did you let in, and what are you doing about that?
Ms. Meissner. Well, let me first say that this was not a
let's hurry up and let them vote effort. This was an effort to
be timely with an unprecedented caseload, a doubling and
tripling of the caseload that we had been given to handle.
Senator Domenici. Call it what you may. How many felons did
you let in?
Ms. Meissner. We have undertaken an audit of the entire
caseload of decisions that we made last year. That audit is
taking place under the guidance of an outside accounting firm.
At the present time, we have identified 168 cases of
individuals that were improperly naturalized because of
criminal backgrounds. There will probably be a slightly larger
number than 168 cases when the audit is complete. The audit
will be completed within the next 2 months. Those cases that
were improperly naturalized will all be subject to revocation.
The cases are out of 1.1 million people that were naturalized.
Senator Domenici. Thank you for yielding, Senator.
construction of Facilities
Senator Hollings. Yes; I wanted to get those same figures.
The FBI is building a new $130 million FBI laboratory at
Quantico, and yet the DEA is asking separately for $25 million,
Mr. Director, to reconstruct their own aging labs, and Treasury
has got in another appropriations bill a $55 million request
for another lab for the Bureau of Alcohol, Tobacco and
Firearms.
Senator Mikulski. The ATF.
Senator Hollings. Yes; what about that coordination? The
Vice President set up the so-called DIAP, the Department of
Justice coordinating position or Director for Investigative
Agency Policy, but I do not know what they are coordinating.
Mr. Freeh. With respect to the laboratories, this issue
came up, actually, well over 1\1/2\ years ago. As the Director
of the Office of Investigative Agency Policies, I specifically
tasked the agencies to sit down and talk about the existing
laboratories and the ones which were proposed to make sure that
there was coordination. And the question I asked is: Should we
have one laboratory where we have the FBI, DEA, and INS
together? The experts went out and studied that. They came back
and unanimously recommended to myself and the Attorney General
that it would not be cost effective to combine FBI, DEA, and
INS laboratories. So based on that study, we did not put a
consolidated lab together. We certainly did study it and very
carefully looked at that possibility.
Senator Hollings. Well, Ms. Meissner, with respect to the
Charleston Border Patrol facility, we are turning out some
1,600 Border Patrol agents per year down there. I happen to
know that they are really enthused about it. It is working
extremely well. But, again, for the coordination financially,
they got a request up at Treasury for another $14 million for
duplicative facilities down at Glynco when the existing school
is working well.
Now, I asked from the Government standpoint why waste the
$14 million per year when the Charleston Border Patrol Academy
is working extremely well. I can use it for taxpaying entities
to go in there, so it is not a parochial interest in a sense,
and yet it is in the Government's interest. Do you know about
that? Do you know any reason why we ought to start building
another school when you have one working extremely well in
already established Government facilities?
Ms. Meissner. I am sorry. I cannot speak to that request.
That is, I believe, a Treasury Department request, because that
is where the Federal Law Enforcement Training Center funds come
from.
Senator Hollings. But you pay the bill. We appropriated $20
million for a firing range for the FBI, another $30 million for
training facilities at Quantico for DEA, and here we have got a
bigger Border Patrol school for the cost of only $8 million.
And yet they are coming from Glynco and asking for another $14
million per year to build another school down at Glynco.
Ms. Meissner. I cannot help you with that. What I can tell
you is that the Charleston facility has, as you said, been an
extremely positive effort. It has been and continues to be a
vital resource for us in meeting the requirements that we have
for bringing very large numbers of Border Patrol agents into
the Service, and we are very pleased with the outcome of that
effort.
FBI laboratory
Senator Hollings. Director Freeh, what about this statement
in the Washington Post to the effect that McVeigh and the
Oklahoma bombing has gotten its biggest break when the Justice
Department investigation showed shoddy practices at the FBI
crime lab, and another Post story that the FBI learned of
serious inadequacies in the lab nearly a decade before the
Justice Department inquiry documented the failings there?
Mr. Freeh. Senator, it is hard to comment on the McVeigh
case because the judge, as you know, has an order against that
and it is a pending matter. I read what has been in the
newspapers. I have certainly heard what the defendants'
attorneys have said. I am confident, having spoken to the
prosecutors, that the case and the interests of the U.S.
Government have not been compromised by anything and that the
court will fairly determine any claims that anybody has.
As to the second part of your question, the inspector
general's report, which will be out next week. It will comment
and very carefully track the history of prior problems or
allegations in the laboratory going back, I think at least to
1989.
Senator Hollings. Well, what do you know, though, Judge?
The Justice Department has identified at least 50 criminal
cases where evidentiary problems created by questionable
forensic analysis by the FBI laboratory may have resulted in
improper prosecutions. That is Deputy Attorney General
Gorelick's quote.
Mr. Freeh. Yes; I think she later said in some detail that
they identified 50 cases where issues had been raised and
matters have now been raised which, in due diligence and
because of our Brady obligations, should go to prosecutors and
ultimately to defense lawyers to make any motions. I do not
know of any FBI case that has been compromised by any of the
matters which are addressed in that report. I think what she
said very clearly is that this was not only a required but a
prudent move by the Department of Justice to make sure that if
there is any evidence relating to a prosecution or a
conviction, that defense lawyers with a view to making a motion
have it. But that does not mean, in my view, that 50 cases have
been compromised. It means in 50 cases there is a possibility
that some information in the prosecutor's view and ultimately
the judge's view might be relevant to a motion, and I do not
think it--I certainly know it does not mean that there are
problems with 50 cases.
certification of Mexico
Senator Hollings. In my limited time, one more question,
please, Mr. Chairman. Over on the House side, Mr. Constantine
you testified, and I quote:
I think it is also important to say that despite the fact
the Government of Colombia was decertified, the United States
Government, and particularly the Drug Enforcement
Administration, recognize the enormity of the challenge faced
by the Colombian National Police as they work hard to defeat
the Cali mafia. I have expressed deep admiration to the head of
the Colombian National Police, General Serrano, and have
commended him and the chief prosecutor, Alfonso Vallievaesio,
for their exemplary commitment in the face of grave obstacles.
Both are true heroes in the joint struggle in which we are
engaged.
Now, if you have heroes in Colombia and ne'er-do-wells down
in Mexico--I believe you said you could not trust anybody in
the police operations down in Mexico--why is the United States
Government certifying Mexico and decertifying the ones that are
making heroic efforts. How do we explain that?
Mr. Constantine. Well, I think as I have mentioned in much
of my testimony, I do not certify or decertify, nor do I make a
recommendation of certification or decertification.
Senator Hollings. So you are not responsible?
Mr. Constantine. Well, I would not say that. I give people
my analysis of the facts on law enforcement cooperation.
Senator Hollings. Who is responsible? If you do not do it,
who does?
Mr. Constantine. Well, those decisions are mostly made by
the State Department and other people who look at a whole host
of policies. But those statements that you read were my
admiration of the police officials and prosecutors in Colombia.
Senator Hollings. Well, if Colombia's national police are
doing an outstanding job, we ought to make a public record of
it and let them know rather than decertify them. If they are
taking their lives in their hands trying to help the United
States, whereas we are not getting the help down in Mexico,
something isn't right here. I think we have got it backward. We
ought to be certifying Colombia and decertifying Mexico.
Thank you, Mr. Chairman.
Senator Gregg. Do you want to comment? Or was it not a
question?
Senator Hollings. That is all right.
Senator Gregg. Senator Campbell.
Senator Campbell. Thank you, Mr. Chairman.
There is one thing I think these agencies all have in
common, and that is that as they apply pressure in one area,
the problem seems to move along the line of least resistance.
And I am not sure where we are going to resolve it, whether it
is drugs or immigration, until we deal more with demand rather
than supply. It seems to me if you cut down the demand, then
you begin to cut down supply. But I thank them for appearing.
I have no questions of Director Freeh except to thank him
for the effort he has gone to to make sure that our G-7
conference in Denver is going to be done safely. There is some
concern, obviously, in our State with the heads of seven
countries in conference there and the McVeigh trial going on at
the same time. The security has become kind of a major question
for many of our folks in Colorado, so I thank you for that.
HIDTA funding
I do have a couple of questions, one for Administrator
Constantine, though, and that deals with the high intensity
drug trafficking areas [HIDTA] program. Congress established a
HIDTA program in Colorado last year, and I think it has been
pretty successful. I mentioned it in my opening statement, the
number of arrests that were recently made, and I think HIDTA
was active in that, even though they just really got off the
ground in the last year. But originally we funded that to the
tune of $3 million. When we originally did that, we did not
know that there was also going to be a branch in Laramie, WY,
and a branch in Salt Lake City.
I met with the chiefs of police of the six metro areas
around Denver a couple of weeks ago, and I asked them their
feeling of the HIDTA program, and they were very, very
supportive and very happy that it had been established there.
But they did think, since it was now divided into three areas,
that the funding level was not enough to be able to do what
they wanted. And I would ask if you could respond to that.
Mr. Constantine. As the HIDTA program has developed, there
seems to be an enhancement of the money in the out-years. In
the original authorization and appropriation of money, it is
really difficult to project how successful it is going to be,
how receptive the local chiefs and sheriffs are going to be to
a HIDTA program, what are their needs in technology, what are
their needs in buy money for investigations or informant money,
which is how most of the funds are used in the HIDTA program.
It is my experience, for example, in talking to Dave
Michaud, the chief in Denver, and the various people from the
Colorado Bureau of Investigation and the chiefs of police in
Colorado Springs that people are very receptive to the HIDTA
program. There have been some major joint investigations, and
they recognize the need for money because we are dealing,
again, in Denver, with some powerful international organized
crime syndicates who have come to Denver. And the same problem
exists in Salt Lake.
My suspicion was that as we look at the budget this year
and, I believe the budget authority for the HIDTA programs is
in the Treasury-General Government Subcommittee, that there may
very well be an enhancement. I would be glad to recommend the
needs and issues that are developing in that tristate HIDTA,
because they are often connected. The events that happen in
Denver seem to have an effect especially in Wyoming and to a
degree in Utah. And my suspicion is there will probably be
enhancement in the out-years.
Methamphetamine strategy
Senator Campbell. You also mentioned the dramatic increase
of methamphetamines, and you include some new funding in your
request for expanding the work to target, investigate, and
prosecute those folks that are in the labs. Is there anything
you can tell us publicly about what you intend to do to expand
that--I know there are some things you probably should not
discuss publicly.
Mr. Constantine. Fifty-four of the agents that are in that
program will actually go into enforcement groups which go after
criminal organizations who are directing this activity, most
often in the west coast States, the Rocky Mountain States, and
in the Southwest. An additional number of agents will go into
what is called the clandestine laboratory training program
where we will train and, to a degree, try to equip deputies,
patrol officers, and detectives in police agencies throughout
the country, because often the investigation of methamphetamine
trafficking results in a raid on a manufacturing site. The
entry into the lab is very dangerous because of the chemicals
that are being utilized and the lack of safety precautions for
the people who are involved in the manufacture. In addition, a
lot of the airborne pathogens in all of the material that is in
these laboratories are very volatile and could blow up, and
have, in fact, blown up on the manufacturers. So we will use a
substantial amount of that money to train local law enforcement
for those issues.
The third part will be in laboratory personnel. There will
be an additional number--I believe the number is 12--laboratory
technicians who will be available to assist in not only the
investigation but the analysis of the evidence. When we seize
heroin or cocaine, it has already been manufactured. The test
is fairly easy. You can do a field test. You would have
probable cause and get an indictment.
With methamphetamine or amphetamine, when we interrupt the
process, it may be three-quarters of the way to becoming the
actual drug. We then have to take that product to a laboratory,
do a quick-turnaround laboratory test to be able to say in
court that there is a level of probable cause or beyond a
reasonable doubt that these chemicals are being used to make
methamphetamine. We have had a 146-percent increase in our labs
seizures alone in the last calendar year, and police agencies
in your State and in the Western States have had at least that,
and maybe more. Much of that laboratory work tends to create an
additional load on a laboratory. So that is where we will be
spending that money.
illegal immigration in Colorado
Senator Campbell. OK. Thank you. One last question, Mr.
Chairman, of Commissioner Meissner. I think, as you mentioned
in your testimony, the INS is probably moving along and kind of
come a long way, but I live kind of on the border of the
Southwest, in western Colorado, and if our area is included in
the Southwest border strategy, I would have to say it has not
been a resounding success. The number of illegal immigrants in
Colorado, and particularly western Colorado, has gone up by 100
percent in just 2 years. I am told by law enforcement people on
the western slope of Colorado that when they stop vans,
sometimes dangerous vans, unlicensed drivers and so on and they
find illegal immigrants in it, they notify the INS as to the
procedure they are supposed to use, and they are being told to
let them go because there is no place to hold them. Is that
correct?
Ms. Meissner. Certainly that is not entirely correct, but
let me just start with the terms. We would consider Colorado
and the problems that you are experiencing part of our interior
enforcement responsibilities. In other words, obviously the
border is the first line of response, and that is where we have
put our highest priority effort. But what we are now seeing
more and more of--Colorado has been a real hot spot in this
regard--is changing transportation patterns and much larger
groups of illegal migrants traveling together because of the
success we have had at the border. In other words, there is far
more smuggling now and far more desperate measures being taken
by the smugglers to move loads of illegal immigrants.
The good news is that we are beginning to understand and
focus on intelligence to the point that we are seeing the
linkages. We are beginning to be able to trace back to where
those people have crossed the border, and who they rented vans
from for transportation. We have begun to put special
operations into place. Operation Mountain Pass was a good
example in Colorado where we did a major blitz to interrupt
this kind of traffic. But we do not have the resources in the
interior of the country yet to sufficiently interrupt that
traffic, and that----
Senator Campbell. That gets back to my original question.
Are local police being told to let them go?
Ms. Meissner. Sometimes that occurs. We try very hard to
prevent that. We are building up our detention capacity by
leaps and bounds. We added 3,000 additional beds last year.
This year, we are adding 3,000 more beds. We basically have
doubled our detention capacity in the last 2 years in a
combination of contract jail space, rented space, et cetera.
But there are instances where we are unable to respond. We are
reducing that as quickly as we can, and we hope to be able to
get better and better intelligence in order to interrupt those
smuggling patterns.
funds for local Law enforcement
Senator Campbell. I am supportive of your budget request,
which I understand goes up by about 100 percent in the last 3
years, and you have added about 5,000 employees. What I am
trying to do is connect it to our local law enforcement, and I
wanted to know if any of those funds are dedicated to local law
enforcement or county sheriffs to help them with the problem?
Ms. Meissner. We do have new authorities under the
immigration law that was passed in September to engage local
law enforcement more directly, and we are working at the
present time on what the respective roles and responsibilities
between the Federal authorities and local authorities ought to
be. We are in very close communication with local law
enforcement, and we want to find the best arrangements so that
we can respond to their needs.
policy on Illegal workers
Senator Campbell. Can you just, in my last minute or so,
explain the catch-and-release policy for illegal workers? Is
the term used in INS for that, catch and release?
Ms. Meissner. I am not familiar with that term.
Senator Campbell. Well, it seems to be what is happening.
We are catching them, and you are releasing them. But there is
no official term for that?
Ms. Meissner. Well, I should hope not. If we have run out
of time, I will be happy to talk with you or your staff further
about how some of these things work.
Senator Campbell. OK. Thank you, Mr. Chairman.
Senator Gregg. Senator Domenici.
Senator Domenici. Thank you very much.
Senator Mikulski. Hello. I have to go to a hearing.
Senator Domenici. Senator, you go ahead.
Senator Mikulski. Well, no. I will go by the rules. I have
to leave, so I would like to ask unanimous consent to place
my----
Senator Domenici. Senator, you go ahead. I----
Senator Mikulski. No, no, Senator, that is fine. I will be
happy to go. I just was not aware that is the way we were doing
it. I really do need to talk to these two men about Baltimore
and Washington. If I could just maybe ask one question about
Prince Georges and----
Senator Domenici. Of course.
FBI agents in Maryland
Senator Mikulski. I thank the Senator from New Mexico for
his courtesy. You have just put 50 agents in Prince Georges
County?
Mr. Freeh. Yes, Senator.
Senator Mikulski. And I want to thank you for it. Do you
want to describe what your intention is to follow up? Because
we have different kinds of border problems.
Mr. Freeh. There are currently five task forces in
Maryland. What we found in speaking to Chief Farrell, as well
as other local enforcement officers, is that the Washington,
DC-Prince Georges border was particularly problematic in that a
Federal infusion of resources with some permanent followup was
necessary to deal with the very unique geographical problem.
We assigned 50 special agents beginning on March 10 for a
60-day phase 1 period. Now, they are working directly and
closely with John's people, and I think very successfully, from
what I have heard. We are going to follow up that initiative
either by continuing the presence of those agents or, in any
event, it will be followed up by the formation of a permanent
safe streets task force with Prince Georges County. We think
that will give us an impact there that we have not previously
had.
Senator Mikulski. What will the task force do?
Mr. Freeh. The task forces will focus on violent crimes,
particularly directed to the people who are transiting in and
out of the District committing crimes and transporting guns.
Heroin use in Baltimore
Senator Mikulski. Well, we want to thank you for that
because we have a problem in the Northeast corridor, just as
our colleagues have problems with borders. We have I-95, which
instead of being a corridor of opportunity, has become a
corridor of death with trafficking in guns and drugs, which
takes me then, if I could, to one question for Mr. Constantine.
What is the heroin issue in Baltimore?
Mr. Constantine. Well, heroin in the United States has
always----
Senator Mikulski. No, no; in Baltimore. Is it distribution,
is it----
Mr. Constantine. There is a distribution and a usage
problem in the city of Baltimore for some unique reasons. It
has become one of the largest per capita groups of people
addicted to heroin. I have heard figures of 50,000 people in
the city of Baltimore addicted to heroin, which is virtually 1
in every 10, I think, close to the population base of the city.
It has always been a drug that has been focused in cities
since the early 1920's. Heroin has been an addiction problem
for poor people. Now you have this tremendously powerful
infusion of heroin from South America and Colombia. So the
purity rate is about 90, 95 percent.
Senator Mikulski. Mr. Constantine, I would imagine that
this is the kind of conversation we should have privately about
the Baltimore situation. I find that a shocking, a truly
shocking and chilling statistic, because we are a port and
major transportation. I did not know if we had become kind of
the premier warehouse, distribution center, which would be a
sad description in and of itself. I need to discuss with you
the accuracy--I do not dispute the accuracy, but these very
chilling numbers, and then what we see as a plan of action.
I know everyone talks about this as a public health
problem, and I would agree with that. But it is also an
enormous public safety problem.
To my colleagues, really, from the West and from the South,
Baltimore was making it. I think so many of our cities were
making it until we were just being overrun by drugs. We were
just being overrun. And I do not place this all on immigrants,
legal or illegal. They come for two reasons. They either bring
dreams, or they bring drugs. And I am on the dream side. So
let's talk privately.
Mr. Freeh, thank you for everything and let's talk about
that.
Thank you, Senator.
Senator Domenici. You are welcome.
Senator Mikulski. Thank you very much.
Senator Gregg. Senator Domenici.
naturalization of Immigrants
Senator Domenici. Mr. Chairman, I am not sure which
committee is going to have a hearing with reference to the huge
legalization of immigrants that occurred in the year starting
September 1995 and ending in 1996. I do not have enough time to
go into it, but it is an extraordinary year in terms of how
many people were made American citizens. I am not making any
accusations as to why, but I think it is pretty obvious, from
the little bit of records that I have, that when you try to do
that, you make big mistakes and you end up with an immigration
system that does not have credibility.
I would just add, of the cases that were reviewed by the--
what is the name of the company that did it?
Ms. Meissner. Peat Marwick is the accounting firm that we
are working with.
Senator Domenici. Peat Marwick Mitchell. Actually, the 2
percent or 168 immigrants which were found to be ineligible
because they had felony records, that is not the whole story.
There is 29 percent, or 2,800, that they have been unable to
decide whether they qualify or not, and that is out of just a
small total of 9,500 cases. So I hope everybody learned a
lesson of not taking on more than they can handle, which
seriously harmed the credibility and the reliability that the
American people deserve from an agency that is supposed to
determine whether somebody is of good enough character to
become a citizen. I am going to let that go, unless you want to
comment.
Senator Gregg. Senator, if I can tell you the status
relative to this committee, we have sent to the INS an
interrogatory, which we just received a response to last night.
It is a very extensive response. It was an extensive
interrogatory.
We may ask for further hearings on this issue. The
Commissioner has gone through an extensive hearing process on
the House side. We do not want to have to repeat what the House
went through because we have got their information. We have
that background. But the Senator's point on felons is an
appropriate one. In fact, our number comes close to 10,000
felons being admitted. What their level of crime is is an issue
as versus violent crime as versus some sort of other felony. So
this is a major concern. It may be, after reviewing this
documentation, we will ask for another hearing with the
Commissioner on this. We have not decided. If the Senator from
New Mexico sought such a hearing, we would certainly pursue it.
Senator Domenici. Thank you. Mr. Chairman, I have two sets
of questions I am going to submit to Commissioner Meissner
regarding the backlog the INS has and how they are handling it,
and 10 questions with reference to the staffing on the entire
border. Rather than use my few minutes to go through each one,
I am just going to submit them and ask that, whatever your
timing is, they be answered. Are you asking for a couple weeks?
Senator Gregg. Whatever you desire and whatever the
Commissioner feels----
Senator Domenici. Could you do those in 2 weeks?
Ms. Meissner. Absolutely.
Senator Domenici. OK. You are going to have the record open
at least that long, aren't you?
Senator Gregg. Yes.
sponsorships of legal Aliens
Senator Domenici. Now, I want to talk a little bit about
another subject. When we were engaged up here in this
monumental job of reforming welfare, one of the side issues
that we found had to do with legal aliens who came to our
country under the sponsorship of American citizens who were
supposed to be their sponsors. In the early days of that law,
it was literally thought that the legal alien that was coming
in would be a ward, not of the Federal Government, but a ward
of the sponsor. When we finally, after decades of doing
nothing, inquired, we found something startling: that over an
entire decade, only 13 out of literally millions of such
sponsor relationships had ever been adjudicated as improperly
followed through by the sponsors. Out of millions, only 13
cases--which meant we had closed our eyes as to whether the
sponsors were meeting their responsibility or had put them all
on our welfare programs from Medicaid to food stamps, and a
variety of things.
We think we have changed that for the future, and so I
would like to ask just a very preliminary question regarding
this. In our new law, affidavits of support are required for
sponsored immigrants, which are legally binding on the sponsor
so that their ward does not become a public charge. We put that
in the law, and we said that to meet the responsibility, there
could be public charge bonds. Those are the words, public
charge bonds.
So I bring in some relatives from Italy who are old, and
under our wonderful policy of family unification, we bring them
in. I am supposed to be responsible for them, not our SSI
program. Courts would never help us in our previous law, so
Congress said I can meet my responsibility by putting up a
bond.
I will ask you: How many people have been admitted under
sponsorship arrangements since we enacted the new law? What is
happening with reference to trying to get an enforceable
relationship of sponsorship versus the legal alien? Are there
any court challenges to our new statute? Could you give us some
answers to those questions?
Ms. Meissner. I will give you what I know at this point,
and I will provide some additional information.
The implementation of the provisions you have just cited is
part of a whole range of regulatory requirements that we have
in implementing the law. We have developed the new affidavit of
support, the actual form, and it is, I believe, in the final
clearance processes at OMB. Forms have to be approved.
We are writing the regulations. The regulations are not yet
complete. They will then obviously go through a circulation and
a comment period as well. Until the new form and the actual
regulations are published, we are not yet implementing the
provisions. But that is on a very fast track, and we have a
very aggressive effort underway on the entire regulation-
writing front. We will be happy to keep you apprised how that
is developing as we move along.
Senator Domenici. Mr. Chairman, I believe, as the
appropriating committee for the ongoing operational budget for
the INS, it is imperative that we see to it that this law is
complied with, or we will be right back in the muddle. Somebody
will--in 6 or 8 years--find that we have legal aliens here and
sponsors will not be taking care of them, and then they will
say nobody can enforce the law. We ought to be able to follow
this policy pretty rigorously, and I urge that you do that
however you can in the appropriations process.
Senator Gregg. I would be happy to get any suggestions the
Senator has, and if the Senator has language he wishes to put
in this bill to this effect, we would be happy to put it into
the bill.
effect of Welfare Act
Senator Domenici. One last issue on which I would like you
to get us some numbers. Currently there are naturalization
waiting lists of over 2 years in some jurisdictions. After the
welfare reform bill of last year, noncitizens had a grace
period of 1 year to complete the naturalization process before
being terminated from the welfare rolls. That is what I
understand the law was.
Can you tell us or could you dig up the information as to
how much of the influx in applications is due to noncitizens
affected by the welfare reform bill?
Ms. Meissner. We will try to provide that information. It
is not a question that we have asked on the naturalization form
or that we ask in the interview. People apply for
naturalization. They pay a fee in order for their
naturalization application to be adjudicated.
There is no question that the incredible increase in
naturalization applications that we are receiving this year and
over the last 2 years has something to do with changes in
Federal policy not only where welfare is concerned, but with
the overall tightening of enforcement of the immigration law.
But as to the extent to which we could disaggregate that within
the application pool, I have some doubts. We will try.
requirements for Citizenship
Senator Domenici. I think we ought to know for the record
that INS has already, Mr. Chairman, by regulation waived as
part of expediting citizenship, the English requirement, and
they are easing other barriers so they can take care of this
backlog.
Ms. Meissner. Well, let me be clear. We do not waive
anything unless there is a statutory basis. There is not an
English requirement for the elderly, for people that are 55
years old and 15 years in the country or 50 years old and 20
years in the country. But we are certainly not waiving
requirements without a statutory basis.
Senator Domenici. I did not think you were doing anything
illegal. If you promulgated rules to do it, you probably found
the justification in the statute.
Ms. Meissner. Right, absolutely.
Naturalization backlog
Senator Domenici. I am raising this because in an effort to
get these applications through, we are doing extraordinary
things. Much of the blame is being placed for this big backlog
on welfare recipients who want to become citizens. I think it
would be helpful if we could find out how much of that is true.
Ms. Meissner. Well, we do know that we have very large
numbers in our application pool of naturalization applicants
who have been in the country 15, 20 years, a very long time of
permanent residency. One could only ask the question why are we
naturalizing them now. It has to do with changes in policy of
which welfare policy changes are among the principal ones.
But I want to be very clear here, as I tried to be in my
statement, that the effort that we have been making to handle
naturalization applications is a response to historic levels of
applications. These are applicants who pay for the service of
having their applications adjudicated, and we have a
responsibility to handle those applications in a timely
fashion.
We also have a responsibility to do it with integrity and
according to a process that is correct, and there is no
question that we have had a systemic weakness that we did not
foresee sufficiently. We have taken strong measures to address
it. We now do a 100-percent fingerprint check. We are working
daily with the FBI, and have implemented a whole series of
measures to make that work more effectively. So we are
committed to the proper balance between timeliness and
integrity.
Drugs entering through the port of entry
Senator Domenici. My last question has to do with all three
of you, but in particular to the two law enforcement gentlemen
who are here. I thank both of you for your wonderful work and
great coordination. Things are much better in terms of DEA
working with the FBI.
What we are hearing on the border is that most of the drugs
coming into the United States are not coming through some
newfangled airline system that is bringing them in. They are
coming in right through our ports of entry; that is, they are
coming in under the hoods of automobiles and trucks. Recently
they found one vehicle where they had literally built a new
metallic impoundment in the block of an engine so that they
displaced some of the engine block and they stuffed that with
heroin. Are we putting in modern equipment? Are we engaged in
an operation to modernize these ports and their techniques and
capability? This is the biggest way illegal drugs are coming
in. Could you just give us a quick observation?
Mr. Constantine. If you are talking about people in
interdiction, you are really talking about Customs enforcement
and port inspectors.
Senator Domenici. Yes.
Mr. Constantine. About 80 percent of the successful hits
are intelligence-driven. That means usually there is an
investigation, in the United States, or a DEA or FBI agent
overseas who has an informant or a major investigation
involving a wiretap who is able to predict the plane, the ship,
the car.
One of the things that we know is that a substantial amount
of the cocaine on the Southwest border is coming through in
either personal vehicles or large transportation vehicles. And
it varies from building what we call traps in the trunks of
vehicles that would be not easily found on a cursory
inspection, or something as elaborate as taking the tanks and
refinishing the inside of those and filling them with cocaine.
I have talked with Mr. Weise, the Commissioner of Customs,
and the head of the Coast Guard, and they are spending a
substantial amount of money in research and development to come
up with some types of scanning devices that are able to pick up
the chemical or radioactive specific properties of specific
drugs. You have probably been there, too, Senator, at many of
these border crossings, where there are hundreds of thousands
of vehicles or trucks coming across every day.
Picking which vehicles to search is approximately 80
percent intelligence-driven. But you still frequently need
these types of technologically advanced searching devices.
Probably the Customs officials would be the best to answer
that, but I know they are working on it.
Senator Domenici. I think so, Mr. Chairman. Maybe I could
ask Customs.
Senator Gregg. What is your chance of developing that
system?
Mr. Constantine. I am not an expert. I have listened to
people in Customs as they have discussed the things that they
are working on. They seem to be hopeful that they will be able
to find some types of devices, especially along the border, for
the most part in commercial cargo. They hope to be able to scan
the whole box on a tractor trailer and then pick out a correct
hot spot for secondary inspection. But I have not seen a
demonstration of it, and to tell you the truth, it is just a
skill that is beyond my present capacity.
Senator Domenici. Thank you very much.
Senator Gregg. Thank you.
Senator Hutchison.
Illegal immigration and drug enforcement in Texas
Senator Hutchison. Thank you, Mr. Chairman.
I have heard a lot of frustration here. Count me in as
frustrated. I am almost hopeless about our situation in Texas.
We have an estimated 500,000 illegal immigrants in our State.
We are now becoming the center for the entrance of drugs. When
I talk to ranchers in our border areas, they tell me stories
about not being able to go out on their lawns without a gun
because they will meet someone with an AK-47 in their front
yard. Customs agents on our side tell me that they are told to
look the other way as someone brings in cocaine and heroin, and
if they do not, their relatives in Mexico will come to harm or
death.
Now, my concern is great because I do not think we are
doing enough to solve the problem. I appreciate, Mr.
Constantine, that you came to my office, and you are trying to
address my concerns. I do appreciate that. But the facts are
California has 140 miles of border; Texas has 1,200 miles of
border. And yet there are 265 DEA agents in all of Texas in one
Houston office; in San Diego, CA, they have 147; and in Los
Angeles, they have 261. We have the same number of DEA agents
for 1,200 miles of border that they have in just the Los
Angeles office, for 140 miles of border.
Now, I am not against California having help because it too
is a transit area for drugs and illegal aliens, there is no
question. But it is time to start with a fresh slate. It is
time now that we had some accommodation on 1,200 miles of
border, Border Patrol agents.
Ms. Meissner, we have authorized 1,000 new Border Patrol
agents. Last year most of the newly developed agents went to
California, even though McAllen and El Paso have more drug--$2
billion went through McAllen last year. McAllen is now the
second highest sector in the number of illegal aliens
apprehended and in marijuana coming across the border. We
deserve and need more Border Patrol agents.
So forgive me if I am harsh, but it is not complying with
the law to come in with a budget for only 500 agents,
especially at a time when we have been shortchanged in Texas.
And I am not saying take anything from California. I am just
saying go the full 1,000 and give Texas its fair share. In some
places, we have fewer Border Patrol agents today than we did 5
years ago.
My question to each of you is: What are you going to do
about this huge inequity at a time when we are being overrun
with illegal aliens and with drugs that are not only coming
into the country through our sectors--which Senator Domenici
correctly pointed out is the main source, but people who live
in the remote areas of Texas fear for their lives. When I go to
Alpine, when I go to Marathon, small communities that do not
have the resources in their county budgets to deal with a drug
dealer, that is where these people are defenseless. It is
almost a lawlessness on our border. It is like the old frontier
days. We do not need Judge Roy Bean, but we do need help from
the Federal Government.
So I am going to ask each of you to address these concerns.
Tell me what your plans are that will make me at least be able
to go home with a straight face and tell my constituents that
we are doing all we can.
Mr. Constantine. I will go first. I share your frustration
and your concerns. I have testified up here again and again as
to the scope and power of these criminal organizations. I do
not think anybody should underestimate their ability to corrupt
and intimidate law enforcement on both sides of the border.
We have seen a demonstration of what their impact is in
Mexico. I think we should be very careful to recognize the fact
that, given the amount of money and power that they have and
the ruthless attitude that they have toward life, I see no
indication that they would respect our borders.
I have been to McAllen. I have been to Rio Grande City. I
have been to Laredo. I have been to Alpine. And I have sat with
the ranchers in Eagle Pass where, in effect, the border
probably has the potential to disappear because people who own
ranches along the Rio Grande River are afraid to go down to
their boat dock for fear that they will see a murder or see a
body and become a witness, and by becoming a witness that they
will become vulnerable and will be exterminated.
What has happened is they have put their property up for
sale, and we find that there are shell corporations from the
traffickers purchasing the property. Once that happens, there
in essence is no border as far as drug trafficking is
concerned.
I can only speak for DEA. Virtually every available major
enhancement that I have been able to get--really, I have not
gotten it; you have given it to me, both the House and the
Senate--has gone to fight these major trafficking
organizations. I have done that and filled those agent
vacancies before I have filled them in New York or Chicago or
Philadelphia.
We recognize that there are powerful organizations that
infiltrate the United States in Texas and in California, and
they are equally as powerful and equally as dangerous. And to
move the resources out of one place and to put them over in
another place will only, as somebody mentioned, open the
opportunity for the damage to continue, the damage to continue
unaddressed.
So the last two budgets that we have put in have requested
major enhancements in Texas and in California and New Mexico
and Arizona, and virtually every operational dollar that I can
find for translation costs, for wiretap investigations in the
United States has been directed against these entities. If you
look at the actual budget, probably 20 to 25 percent--and that
is a lot of money nationwide or worldwide for operations--has
been addressed in those four States, including Texas.
So I share your concern. I have testified again and again
that these criminal organizations is not a border issue. It is
a criminal organization issue, Senator. They have to be
addressed and they have to be addressed very vigorously. And
that is what we have tried to do.
Senator Hutchison. Mr. Constantine, before I go to Ms.
Meissner, two of the three largest drug cartels are operating
in Juarez and Matamoros, across from McAllen and El Paso. You
have your agents in Houston. Is there any hope that we are
going to be able to see some movement toward those areas where
we are looking at two of the largest three. Clearly the
resources--I understand what you are saying about the
resources, but the resources have been allocated in a very
inequitable way. And I am not saying move them, but I am asking
what you are going to do to have some equity here for the key
areas. You talk about moving them causing problems, but the
lack of help in these areas is also causing that to become a
bigger problem.
Mr. Constantine. Maybe I can help, and maybe I have not
been clear. The enhancements in Texas and California for the
last 3 years have been similar in numbers and percentages. We
have offices in Houston, a major division in Dallas, and we
have 70 people in El Paso. We also have offices in McAllen,
Brownsville, and Alpine.
This budget that we have includes 96 people for the
Southwest border. A substantial amount of that will be going to
those four States. There is a major increase of 54 agents for
the methamphetamine program. A lot of that involves the border
issue.
So what we have been trying to do is address it. We also
are looking, as I mentioned in the office the other day,
because of the nature of the trafficking, to make El Paso a
separate division. Currently, New Mexico and Las Cruces are
covered out of our Denver office. Really, the relationship on
drug trafficking is much closer between El Paso, TX, Las
Cruces, and the rest of New Mexico. And if we did that, that
would be the third division in the State of Texas, and there is
only one other State in the Union that has three divisions,
California. So our largest commitment has been to California
and to Texas.
Senator Hutchison. Well, I am really looking forward to
that El Paso component because I think you can see from the
statistics that it is warranted.
request for Border Patrol agents
I have only got about 1\1/2\ minutes left, and I would like
to talk to you Commissioner Meissner, if you would tell me what
you are going to do on the Border Patrol issue. Tell me you are
going to increase your 500 Border Patrol agents to 1,000.
Ms. Meissner. Well, let me say first that we are extremely
concerned about Texas, particularly south Texas. We recognize
that the investments that we have made in California and in
Arizona are creating problems in Texas simply because we have
tightened up and the pressure is now in Texas.
We have put very large numbers of resources into Texas in
the last 2 or 3 years, but we will be putting much more in in
the next 2 to 3 years. The difficulty is that we can build up
our resources only so quickly and still do it in a way that is
effective.
Let me just give you McAllen, which is the major source of
concern at the present time. This year, we are putting into
McAllen almost a 50-percent increase, about a 47-percent
increase in personnel resources. That is straining our
capability. That is as far as we think, responsibly, you can
increase the number of agents and still have those agents be
properly supervised, have the equipment get to them and be used
effectively. You cannot double and triple these sectors all in
1 year. It has to be a multiyear effort. But that multiyear
effort is underway. There are large numbers of sensors, large
numbers of scopes that have come into Texas and that will
continue. Our experience is that it takes 3 years, maybe more,
to get the whole package put together so that the fences are
built, the roads are built, the training is completed, the
supervision is intact, and the intelligence is working in a way
that has us focusing where we need to focus.
In terms of the 500 Border Patrol agents this year, we had
to make the very difficult choice between infrastructure
investment and additional personnel. We have been growing so
quickly in this agency, particularly in the Border Patrol. The
Border Patrol will have increased by 85 percent on the
Southwest border in the last 3 years. That is a huge, huge
increase, but the infrastructure to support it has not kept up.
We have equipped the agents, but some of the deeper needs that
we have, to replace our vehicles on a timely basis, bring
enough buses into the system to sustain the detention that has
to support the border efforts, improve our detention at Port
Isabel, for instance, are a major aspect of our budget proposal
for this year.
There are lots of infrastructure improvements that support
the Border Patrol's effectiveness in this budget. We simply
felt that we had to have balance in the growth at this point.
Senator Hutchison. Thank you, Mr. Chairman. I know my time
is up. Ms. Meissner, this is the same thing that Ms. Reno has
said. But I have to tell you that Congress has passed a law to
deploy 1,000 Border Patrol agents every year for the next 5
years. That is the will of Congress. I understand what you are
saying, but I do not think that not deploying the full 1,000 is
the right way to go when we have the problems that we have. And
I hope we will be able to discuss it more in the future. And I
apologize, Mr. Chairman.
Senator Hollings. Mr. Chairman, the Senator from Texas
wants more agents, and the Senator from New Mexico wants more
equipment. And I have been attending hearings and have been
hearing about wonderful hearings of coordination now for 25
years; yet the drug situation gets worse each year and we get
more frustrated.
Senator Domenici, when you and I were chairmen just 10
years ago, this Justice Department was $4 billion. It is now up
to $19 billion. Of course, we are going to get up on the floor
in a little while and say let's cut spending, cut spending, cut
spending--and taxes, by the way, the wherewithal to pay for any
of this, which is a wonderful exercise. But in my opinion,
Pete, you and I have got to get some money in education. When I
went around--and I have been in 36 of the 46 counties. These
cops on the beat are working. And the majority of my cops on
the beat have found themselves not on the beat just in the
streets in the afternoon, but in the schools--and in the
schools lecturing on drugs.
Senator Domenici. No doubt.
Senator Hollings. You know, nobody here has been smoking--
if we had had this hearing when John Pastore was the chairman,
ashtrays would be out and you would have to ask the staff to
please open the window here because you could not breathe,
literally. But we have learned. And as long as 5 percent of the
population is going to snort 50 percent of the drugs in this
world, the Senator from Texas, the Senator from New Mexico, and
the Senator from South Carolina are going to come here
continually frustrated and nothing happens. It just gets worse.
We had General Chapman 20 years ago who wanted to take
these porous metal strips that you put for a temporary landing
strip during World War II, to erect them in a perpendicular
fence, a Maginot Line, all along the Rio Grande for 2,000
miles. We have had every idea in the Lord's world. Senator
Hutchison, you are right. They are coming over in the
thousands, but all you have to do is go down to Tijuana. How
many people cross into the United States from Tijuana in a day,
cars and people?
number of Border crossings
Ms. Meissner. You mean cross through the port of entry?
Senator Hollings. Yes; cross the port of entry.
Ms. Meissner. It is the busiest crossing port in the world.
Senator Hollings. Yes; but how many? Thousands and
thousands. You cannot expect everyone with----
Ms. Meissner. Tens of thousands.
Senator Hollings [continuing]. The right equipment to look
at how they inspect all those trunks and autos. As long as
America is going to snort it, as long as we have got the
demand, I can tell you they are smarter than we are. They will
get it in here. We, you know, chase the flowers from Colombia.
I burned the poppy fields in Turkey. I have been up in the
Golden Triangle in Burma, destroyed the factories in Marseille.
We are just wasting time. We just all act like we are
responsible, and it is the most irresponsible activity I know
of to continue and not get on with the education part of it. We
have got to do it. It is in the little schools in your State
and mine.
Senator Hutchison. I just want to say that I think that the
points you are making are right on target. But there is one
difference between police on the streets and Border Patrol
agents and DEA agents, and that is, we cannot fund every police
department in America. That is not a Federal responsibility.
But there is no alternative to the Federal responsibility of
patrolling our borders. That is why, if I have to choose
between those two, I am going to choose for the Federal
Government to do the job that only it can do and do well. Our
borders are under siege, and it is a Federal responsibility to
prevent that.
Senator Hollings. Well, I agree with you on the Federal
responsibility. That is a good political science course answer.
But the reality of the world in which we live is that the best
way to patrol that border is to cut back on the need of the
patrolling because it is physically and financially impossible
for the Federal----
Senator Hutchison. Absolutely. You are right.
Senator Hollings [continuing]. To answer up to their
responsibility. We can build fences. We can do it, and then
they will come back around. Like we have run them out of some
of the ports on the east coast, not Baltimore and not
Charleston. We have the problem there. But it is going to come
in, Pete. You know that. We have got to do something else.
Senator Domenici. Could I respond?
Senator Hollings. Yes.
Senator Domenici. I noticed that you asked me to stay a
while.
Senator Hollings. Yes.
Senator Domenici. I appreciate the thoughts. We have worked
on a lot of things together, including this committee, for a
long time. I am not as pessimistic as you because in the not
too distant past we had much less drug use in America than we
do today. I am not suggesting that was all attributable to us
having less drugs coming into America by law enforcement, but
we had less drug use. It is now on the upswing. It is moving up
dramatically again.
I would agree to the extent that we ought to be doing both.
We ought to clearly be working on the American people and our
young people with reference to educating them on not using
illegal drugs. I think at the same time, however, a country
like ours should not do the minimum on the border; we have got
to do the maximum. Clearly, these people are burdened with drug
cartels that have a lot of money and a lot of resources.
We are engaging in a pretty good war on drugs on the
border. It is much better than it was 3 years ago, and the
plans we have got will make it even better in the future. I
want to stick right with it, and give them the resources they
need. I also want to parochially indicate that while I agree
with the Senator from Texas on everything she said, I would
want you to know that in the written questions that I
submitted, I asked you about New Mexico before she asked you
about Texas. [Laughter.]
Senator Hutchison. Mr. Chairman, may I also submit another
question for the record that I did not have a chance to ask?
Senator Gregg. Yes.
We have a vote on. Did you have another question you wanted
to ask?
INS coordination with Police
Senator Hollings. Well, yes. Ms. Meissner, look here it is
headlines in my local newspaper: ``Police arrest illegal
aliens, INS will not get involved.'' It is the same thing that
Senator Campbell was getting into. We not only have it at the
border. At least you have an office in Texas. I do not even
have an office in South Carolina. I have to call North
Carolina. And when we call North Carolina, Immigration, they
say, oh, do not worry about them, let them go.
Ms. Meissner. But you are getting an office now.
Senator Hollings. Ma'am?
Ms. Meissner. You are getting an office this year.
Senator Hollings. We are going to get one?
Ms. Meissner. Yes.
Senator Hollings. Good enough. I hope we can move
Constantine down there.
Border control
Senator Gregg. I do not want to keep you here, so I have a
series of questions that I am going to send to all of you.
There are a lot of issues which we have questions about that go
to the specifics of the budget.
I expect some of us will be here 2 or 3 years from now,
Commissioner, and your statement that the borders will be
pretty much secure in 2 or 3 years is something we are going to
hold you to.
Ms. Meissner. I said stable.
Senator Gregg. Well, stable is a much further term than
where we are presently. We are going to give you the resources
you need to do that, and, hopefully, you can accomplish it. It
sounds to me to be a very ambitious goal, but something that we
certainly need to accomplish. We will also give DEA and the FBI
the resources needed to do their jobs.
I think the problem has been identified, though, by all the
members here, and we certainly understand it. There will be
problems as long as the demand for drugs is $7 to $10 billion.
We are a capitalist world. We have established that
incontrovertibly, and there are going to be people out there
who want to make the money. Whether education can reduce that
demand, I do not know, but somehow we have to look at the
demand side. We cannot blame it all on Mexico. If I were a
Mexican, I would be upset that basically the demand from
America has corrupted my entire government, or a large
percentage of my government. The demand issue is a major part
of the equation.
Additional committee questions
But you folks are on the enforcement side. You are doing a
good job. We appreciate it. There are people who put their
lives at risk on a daily basis for us, and we very much
appreciate that. Therefore, you need the support, and we will
continue to give it to you. But we do have some specific
questions we will submit.
[The following questions were not asked at the hearing, but
were submitted to the agencies for response subsequent to the
hearing:]
Questions Submitted by Senator Judd Gregg
Federal Bureau of Investigation
national crime information center
Question. What capabilities will NCIC 2000 not have that were
planned for when we first appropriated funds for this effort? Do you
anticipate additional costs over and above the estimated cost?
Answer. NCIC 2000 will have the same capabilities that were planned
when Congress first appropriated funds for the system. The FBI has made
some technical changes in two areas. After contract award, the FBI
removed the requirement for an on-line expert system based intrusion
detection capability because no product existed that could satisfy the
requirement and a prototype being requested in another application
proved ineffective. Instead intrusion detection will be accomplished
using an audit and analysis sub-system that will run in the background.
Also, the original NCIC 2000 contract required the use of Government
Open System Interconnection Profile (GOSIP) compliant communications
protocols. When the GOSIP mandate was dropped, the FBI decided to use
more modern communications that are in line with the protocols criminal
justice agencies will use to access NCIC 2000.
The FBI does not anticipate any additional costs over $183.2
million.
integrated automated fingerprint identification system [iafis]
Question. What additional costs do you anticipate now that the
IAFIS completion date has been revised to July 1999?
Answer. The FBI has implemented a build to cost approach to the
development of IAFIS. This will provide currently defined requirements
to the user at the baseline budgetary cost of $640 million. The IAFIS
budget is not expected to change unless Congress mandates additional
requirements on the program, or there are major changes in operational
user requirements. The FBI does not foresee this happening at this
time; however, changes can and do occur in large, complex software
development efforts such as IAFIS.
fbi laboratory investigation
Question. Can you help me understand where we are with the FBI
Laboratory? While we have provided funding for a new lab, modernization
of equipment and the quality assurance unit, what additional
requirements are anticipated as a result of the Inspector General's
investigation?
Answer. More than 3 years ago, the FBI began a large number of
initiatives to improve the quality and timeliness of examinations
performed by the FBI Laboratory. These initiatives include taking the
initial steps needed in order to apply for independent accreditation of
the Laboratory, obtaining funding for construction of a new state-of-
the-art Laboratory facility, and bringing in more scientific expertise.
In addition, in order to more efficiently and effectively support the
needs of the law enforcement community, the FBI Laboratory is in the
process of implementing a reorganization involving, among other things,
a more prominent role for the Quality Assurance Unit and a
restructuring of the Scientific Analysis Section. These efforts are
just part of the FBI's constant work to re-evaluate and improve both
the scientific processes and the equipment of the Laboratory. The
findings and recommendations are being considered in concert with
ongoing and new initiatives of the Laboratory; however, no additional
requirements specifically attributed to the Inspector General's report
have been identified.
Question. Please help me understand whether any of the supervisors
that were removed from the lab were accused of intentionally altering
evidence? Were any of them promoted? Has any action been taken against
them?
Answer. When the FBI received a copy of the Inspector General's
draft report, temporary personnel actions were taken with respect to
four Laboratory employees, of which only two were supervisors,
including Roger Martz, then Chief of the Chemistry-Toxicology Unit, and
J. Thomas Thurman, then Chief of the Explosives Unit. Although not
accused of ``intentionally altering'' evidence, Martz was accused of,
among other things, fabricating evidence in the VANPAC matter. The
Inspector General found no merit to that accusation.
Thurman had been accused of, among other things, altering auxiliary
examiner reports dictated by Frederic Whitehurst. The Inspector General
found that when acting as principal examiner, Thurman (and certain
other FBI Laboratory employees) had altered some of Whitehurst's
auxiliary examiner reports. However, the Inspector General did not
identify a single instance in which those alterations were made with
the intent to bias an FBI Laboratory report. Moreover, of the 13 cases
in which the Inspector General concluded that Thurman made substantive
alterations to Whitehurst's dictation, none resulted in prosecution.
Whitehurst first complained about Thurman's alteration of dictation
in 1992, at which time Thurman was instructed to stop such alterations,
and he apparently did so. Subsequently, in 1994, the FBI Laboratory
undertook a review of Thurman's files to determine the impact of his
alterations. That review was still ongoing in December 1994, when
Thurman was promoted to Chief of the Explosives Unit. Because no final
determination had been reached with respect to Thurman's alteration of
dictation at that time, we do not believe that the Career Board, which
considered Thurman's promotion, was aware of or considered the
alteration of dictation issue.
Since January 24, 1997, Martz has temporarily been assigned to the
FBI's Washington Field Office and Thurman has temporarily been assigned
to the Bomb Data Center, where he does not perform or supervise any
scientific analysis. The FBI has requested the Department of Justice to
determine what action, if any, is appropriate with respect to the
Inspector General's findings against Martz and Thurman, as well as the
other employees criticized in the report.
laboratories for fbi and dea
Question. Director Freeh and Mr. Constantine, what differences do
you see with the work that is done at the FBI, DEA, Secret Service, and
Bureau of Alcohol, Tobacco, and Firearms (ATF) laboratories? With
discretionary spending going down, have you considered consolidating
some of these laboratories? By designing the new capability into the
new FBI lab, is it possible to consolidate DEA's field labs in the lab
at Quantico?
Answer. In October 1995, at the request of the Deputy Attorney
General, Director Freeh directed the Office of Investigative Agency
Policies to examine the consolidation of the FBI, DEA and INS
laboratories. A document known as Resolution 11 served as the guideline
for this examination.
Resolution 11 established the Interagency Laboratory Working Group
(ILWG) to examine the feasibility of collocating or consolidating the
laboratories of the INS and the DEA into the new FBI Laboratory
facility.
After a three-month study, the ILWG members reported the finding to
the Director of Investigative Agency Policies (DIAP). In the
recommendation of the ILWG to the DIAP, the report states ``All members
of the ILWG are in agreement that the consolidation would provide
minimal savings in the sharing of equipment. There would be no savings
in terms of personnel costs through consolidation and that there would
be minimal savings in terms of space considerations * * *.'' In
addition, it was the position of the ILWG that ``* * * it is not
possible under consolidation, to maintain the same important services
to the DEA and INS by their respective laboratories, if such
consolidation were to take place.''
The mission of the DEA's laboratory system is to serve as a
national and international leader in the field of forensic drug
analysis; to provide scientific and technical assistance and service to
the special agents of the DEA, FBI and other Federal and state law
enforcement agencies. These services are also provided to the criminal
justice system at large for the enforcement of controlled substances
laws; the development and dissemination of scientific information, and
the coordination of scientific activities with other Federal, state and
local law enforcement agencies. Through DEA's Office of International
Operations, these scientific services are provided at an international
level. The FBI, Secret Service and ATF laboratories provide specified
support based on their congressionally dictated charters and mission
statements.
The DEA laboratories do not duplicate services which are offered by
any other Federal law enforcement laboratory. The DEA laboratories'
primary function is to analyze evidence for the presence of controlled
substances, and to provide fingerprint identification services related
to the seizures of controlled substances. Interagency agreements have
established the DEA laboratories as the exclusive providers of drug
analysis support for the FBI, USCS, Border Patrol, and HUD. Analytical
support is provided to the United States Park Police, the United States
Capitol Police, the United States Secret Service, ATF, National
Institutes of Health, and state and local law enforcement efforts when
requested. In addition, specialized, highly developed forensic science
services related specifically to drug law enforcement, are offered
worldwide. No other laboratory system provides this uniquely focused
capability.
Consideration has been given to consolidating Federal laboratories.
The assumption being that by combining services thought to be
``duplicated'' by these laboratories, operating costs would decrease,
resulting in substantial savings to the government as well as increased
efficiency of all services provided. With this idea in mind, an ILWG
was established to determine the feasibility of consolidating the FBI
Laboratory, the DEA Special Testing and Research Laboratory, and the
DEA Mid-Atlantic Laboratory.\1\ This group consisted of two laboratory
representatives each from the DEA, FBI, and the Immigration and
Naturalization Service. Representatives from the Department of Justice
and the United States Marshals Service were also participants in this
process. The overall objective was to demonstrate a savings which would
result from merging laboratories and/or sharing facilities,
instrumentation, technical knowledge and expertise. This task was
accomplished by reviewing the different laboratories operational costs,
mission essential programs, and the needs of the individual
laboratories' agencies. The consensus of the ILWG was that
consolidation was not a viable option because such an effort would
adversely affect the missions of those laboratories involved.
---------------------------------------------------------------------------
\1\ Pursuant to Attorney General's order number 1814-93, Resolution
11 concerning Department of Justice laboratories was issued.
---------------------------------------------------------------------------
This conclusion was supported by the following facts:
--Consolidation would provide minimal savings in the sharing of
equipment among the laboratory scientists. Laboratory equipment
is calibrated and configured mechanically for specific kinds of
analyses such as: the analysis of drugs, the analysis of arson
residues, or the analysis of trace evidence such as fiber or
plastics. Mechanical modifications of spectrophotometers and
chromatographs for use in other types of analyses involve major
expenditures of time and money. These reconfigurations of
equipment would offset any potential savings resulting from the
sharing of instruments. Additionally, the numbers of each type
of equipment are based on the staff size meaning that each
piece of equipment is effectively in full-time use.
--Consolidation would result in marginal savings in terms of space
considerations. Forensic science laboratories must be
configured to receive, analyze, store and process specific
kinds of evidence. In the case of drug evidence, storage and
destruction can involve amounts ranging from trace amounts to
multi-ton quantities. Given the dollar value of the contraband,
tightly controlled access and accountability procedures have
been developed. The same process applies to safeguarding trace
evidence and biological samples including serological
specimens. Consolidating evidence handling facilities would
present significant problems in the areas of accountability,
specimen integrity, and biohazard dangers to staff members.
Each type of evidence requires a specific kind of storage
facility and specially trained people to handle the specimens
submitted for examination.
--Consolidation results in a centralized system of laboratory
support. United States Government forensic science laboratories
were established to provide front line, tactical support, and
to address specific analytical requirements.
All eight DEA laboratories provide analytical services in the
examinations of controlled substances, and fingerprints in controlled
substance enforcement investigations. Consolidating the DEA
laboratories would mean removing them from the geographical areas where
their impact over the past twenty-four years has been felt at all
levels of law enforcement.
The issue of consolidating DEA's field laboratories with the new
FBI laboratory at Quantico, would be neither cost effective nor
practical from an operational perspective to consolidate DEA's seven
field laboratories and DEA's Special Testing and Research Laboratory
with the new FBI Laboratory at Quantico. Along with direct analytical
responsibilities in the laboratories, there are also accompanying
responsibilities for all laboratory directors to provide training to
state and local forensic science analysts and enforcement personnel
working primarily to enforce state drug laws in all fifty states. The
DEA Special Testing and Research Laboratory scientists provide
specialized forensic drug analysis training at DEA international
forensic chemists seminars at least once a year, and at state and local
forensic chemists seminars at least five times a year. What sets the
DEA laboratory system apart is the fact that scientific personnel are
strategically located around the United States to provide enforcement
assistance in controlled substance examinations, including clandestine
laboratory seizures, within a a matter of hours.
The General Services Administration (GSA) prospectus development
study of 1992, the interagency laboratory working group study of 1995,
the interagency budgetary adversary council review of 1995, and the
Inspector General's (IG) report issued at about this same time have
examined the feasibility of consolidating the DEA laboratories into one
geographical area, or consolidating DEA's laboratories with other
government laboratories. In each case, the conclusions were the same--
the logistics, finances, and mission support impact would severely
hamper United States drug enforcement efforts. The IG report reflected
a 97 percent satisfaction rate for DEA laboratories' services in the
enforcement and legal communities.
There are currently more than 190 forensic chemists assigned to the
eight DEA laboratories. The primary responsibility of these
laboratories is to provide operational support to this country's drug
enforcement efforts. This mission is achieved through the analysis and
evaluation of suspected controlled substances. These analyses of
controlled substances are accomplished with one goal in mind--to
facilitate the enforcement of the drug laws passed by the United States
Congress. At the same time, all DEA chemists are tasked with providing
testimony in state and Federal courts in their laboratories' respective
geographical areas of responsibility.
From a building design perspective, the examinations of drugs
requires an isolated laboratory designed to accommodate large
quantities of chemical vapors, and hazardous chemical disposal
capabilities. The existing DEA laboratories are in need of replacement
because of age and new environmental laws. New DEA laboratories are in
the design phase to comply with environmental and safety standards.
These laboratories are being designed with specialized air handling
systems and increased analytical capabilities. In the Administrator's
Congressional Appropriations Testimony of March 19, 1997, before the
House Appropriations Committee, Subcommittee on Commerce, Justice,
State, Judiciary, and related agencies, regarding fiscal year 1998
appropriations, Mr. Constantine requested funding for laboratory
reconstruction. The Administrator reinforced his commitment to ``safe
and efficient laboratory facilities.'' He voiced his support for
providing ``chemists and support staff a safe working environment * * *
that can handle the increased volume of drugs and evidence flowing from
burgeoning investigations.''
In summary, consolidation of DEA's field laboratories with the new
FBI laboratory at Quantico is not practical. The price in dollars would
be very high. More importantly, however, there would be an accompanying
negative impact on the enforcement efforts of DEA in providing
strategic, operational, and scientific support for drug law enforcement
initiatives in this country and abroad. With the current laboratory
system infrastructure, DEA has been successful in providing a service
which works for Federal drug law enforcement.
fbi disciplinary office
Question. Has the FBI created a new disciplinary office? Would you
help me understand why such an office should not report directly to the
Attorney General?
Answer. Yes. The FBI recently consolidated under a new, independent
Office of Professional Responsibility (OPR) disciplinary functions that
were previously located in its Inspection and Personnel Divisions. The
new FBI OPR reports directly to the Deputy Director. The FBI hired a
career Federal prosecutor to lead the OPR and provided additional
staffing to ensure the Office has the resources needed to conduct its
investigations thoroughly and on a timely basis. The reprogramming
request for the additional staffing was approved by the Congress on
January 8, 1997.
On November 8, 1994, the Attorney General issued a Departmental
Order that gave the Director the responsibility for exercising
authority in all FBI personnel matters. The Order also established
reporting and oversight procedures to permit the Attorney General and
her staff the ability to exercise supervision of an OPR matter when
necessary.
FBI disciplinary procedures are designed to address routine cases,
which are the great majority of matters handled. Procedures also exist
however, to address unique, sensitive situations which allow for FBI
resources to be assigned directly to the Department of Justice to
investigate and/or adjudicate these matters. As a practical matter,
disciplinary authority is so intimately intertwined with the exercise
of other personnel and managerial authority that it can only be
exercised in coordination with and not independently of those other
functions, as in those rare cases provided for by the Attorney
General's November 1994 order.
telecommunications carrier compliance
Question. Why is the FBI requiring simultaneous wiretapping
capability in dozens of areas where no taps have ever been requested?
Shouldn't the FBI place a higher priority on areas where there is a
demonstrated need for simultaneous tapping capability?
Answer. In its review of historical interception activity, law
enforcement recognized that there were a number of geographic areas
that did not exhibit interception activity during the time period
studied (January 1, 1993, through March 1, 1995). This does not mean
that these areas never experienced interception activity; rather, that
interceptions did not occur in these areas during the 26-month study
period. Experience has shown that criminal activity or exigent
circumstances can occur anywhere and at any time. In view of this
circumstance, it would not be prudent to establish capacity
requirements of zero as it would not provide even minimal flexibility.
In addition, the absence of capacity requirements in a particular
geographic area would largely undermine the intent of CALEA, which is
to preserve law enforcement's existing ability to conduct
interceptions. Law enforcement must be capable of preserving some level
of interception ability in all geographic areas.
Consequently, in counties with little or no historical interception
activity, a minimum actual capacity requirement of two and a maximum
capacity requirement of three were established applicable to
telecommunications carriers offering local exchange service. Likewise,
in wireless market service areas with little or no historical
interception activity, a minimum actual capacity requirement of two and
a maximum capacity requirement of four were established applicable to
telecommunications carriers offering cellular and Personnel
Communications Systems services.
The capacity requirements will serve to advise telecommunications
carriers of their obligations for supporting future potential law
enforcement interceptions. These obligations will exist regardless of
whether a particular telecommunications carrier receives reimbursement
for complying with the capacity requirements out of CALEA funds. Those
carriers who have significantly upgraded, replaced or otherwise
undergone a major modification must comply with the capacity
requirements post carrier statement submission without the benefit of
recovering costs through CALEA. What is important to note is that law
enforcement will apply CALEA appropriated funds in a prioritized
manner. CALEA expenditures will be made in such a way as to ensure that
those geographic areas with the highest interception activity and
existing technological impediments are addressed first.
Question. Regarding CALEA who are you negotiating with? If the FBI
has not started to negotiate cooperative agreements with carriers, how
can Congress reasonably expect the FBI to meet the September 1 deadline
for the implementation of these agreements? Why is the FBI insisting on
standards that no one in the telephone industry believes are necessary
and, if implemented, would be subject to legal challenges due to the
invasion of privacy?
Answer. The FBI is in the process of negotiating cooperative
agreements with telecommunications carriers and the manufacturers with
whom they will subcontract. Actual awarding of cooperative agreements
will begin upon Congressional approval of the FBI's March 27, 1997,
reprogramming notification to begin the obligation of appropriated
funds. The September 1 deadline does not apply to the implementation of
cooperative agreements. Since January 1997, the FBI has had several
general meetings to explain to the telecommunications industry the
purpose and process for the cooperative agreements. Additionally, the
FBI has had several one-on-one meetings with carrier/manufacturer pairs
for the purpose of negotiating terms and conditions and resolving
technical issues associated with each individual contract. To date, the
process is moving forward in a positive manner, and it is anticipated
that the first cooperative agreement will be executed in the near
future.
In order to aid the telecommunications industry in meeting the
assistance capability requirements and as part of the consultative
process mandated by CALEA, law enforcement has submitted comments and
made recommendations to the industry's standards setting process. These
comments and recommendations have been aimed at educating the industry
on what is necessary to comply with the requirements of electronic
surveillance statutes, the rules of evidence, and in court. Failure to
meet these requirements could jeopardize the ability of the United
States Government to use electronic surveillance evidence in a criminal
proceeding. Although the standard presently proposed by industry does
not include a few of the recommendations suggested by law enforcement,
the parties participating in the cooperative agreements are willing to
table the disagreements regarding particular requirements in order to
allow for a systems engineering and cost analysis to be conducted on
all of the requirements. It is hoped that the results produced by the
first set of cooperative agreements will assist both industry and law
enforcement in assessing the complexity and reasonability of the
requirements. It will also go a long way toward moving the
implementation process forward.
With regard to the standard, the FBI recognizes that the
telecommunications industry has advocated the adoption of a
``minimalist'' standard. Such a standard could potentially create new
electronic surveillance problems and shortfalls, which CALEA was
intended to avert. Therefore, the FBI and other Federal, state, and
local law enforcement have recommended that the industry adopt a
standard which is consistent with the requirements of CALEA, electronic
surveillance statutes and the rules of evidence. There is nothing among
law enforcement's recommendations for inclusion into the standard that
is inconsistent with existing electronic surveillance law and would
represent an unlawful invasion of privacy.
Immigration and Naturalization Service
citizenship usa
Question. Can you provide me with the status of denaturalization
and deportation proceedings against the 168 or more naturalized aliens
determined to be ``presumptively ineligible''?
Answer. The Naturalization Review Team is currently reviewing the
FBI rap sheets and immigration records of the 71,112 individuals
naturalized from August 31, 1995, to September 30, 1996, identified as
having potentially disqualifying arrest records. This first phase of
the review consists of sorting these individuals into the categories of
properly naturalized, presumptively ineligible, and requires further
inquiry. This phase of the review is ongoing and no final number of
presumptively ineligible individuals has yet been determined. The
second phase of the review will not begin until the first phase is
completed.
During the next phase, the records of all individuals identified as
presumptively ineligible will be reviewed to verify that no further
action is necessary. INS will then initiate revocation proceedings in
all appropriate cases. During the second phase of the review, priority
will be given to those presumptively ineligible individuals who are
nearing the end of the 2-year period to initiate administrative
revocation proceedings.
Question. Can you provide me with the status of background checks
for the 180,000 naturalized aliens for whom no background check was
conducted? Am I correct that INS cannot compel fingerprints from the
individuals in question? If so, lacking fingerprints, how will INS
conduct the necessary background checks?
Answer. The INS is currently investigating procedures for checking
the criminal records of citizens who may have been naturalized without
an FBI fingerprint clearance. One option is to request the 179,524
citizens to voluntarily resubmit fingerprint cards to the INS for
clearance by the FBI. However, the INS does not have authority to
compel submission of fingerprints from naturalized citizens. Therefore,
the INS would have to rely on name checks run against the FBI's full
Criminal Justice Information System (CJIS) database for those
individuals who do not voluntarily resubmit fingerprint cards. CJIS
name checks were completed for 113,126 of these individuals before
naturalization. Another option would be to rely solely on CJIS name
checks for the entire population of 179,524 individuals.
Regardless of which option is pursued, any criminal records
identified by the background checks would be reviewed against the
individual's naturalization record in accordance with procedures
established by the Naturalization Review Team, which is currently
reviewing decisions for individuals naturalized between August 31,
1995, and September 30, 1996, who have felony arrest records.
Question. Recognizing the paramount importance of restoring and
maintaining the integrity of the naturalization process, how many
naturalization applicants do you estimate that the INS can properly
handle in fiscal year 1998? Help me understand why we should not limit
the number of naturalization applications processed? What do you
suggest to bring INS' workload in line with its capabilities?
Answer. The INS anticipates receiving 1.8 million naturalization
applications in fiscal year 1997. There is no current estimate of how
many naturalization applications the INS will receive or be able to
process during fiscal year 1998. Limiting the number of naturalization
applications processed by INS each year would not be an appropriate
measure to ensure the integrity of the naturalization process. It would
be unfair to the vast majority of naturalization applicants who are
eligible and anxious for the benefit of citizenship. Rather than
limiting the number of naturalization applications processed each year,
the INS must adhere to systematic and standardized naturalization
procedures, and continue to strengthen its quality assurance measures.
Question. There are concerns that Designated Fingerprint Services
providers are even more susceptible to fraud than civics and language
testing contractors. What objection, if any, would you have to limiting
fingerprinting to INS and law enforcement agencies? Would it be less
objectionable if INS and law enforcement agencies could charge a fee
for service?
Answer. The critical factor affecting the integrity of the
fingerprinting process is to ensure that the fingerprint submitted to
the FBI belongs to the applicant. A verification step in the
fingerprint process would maximize the security of the process without
regard for who collected the fingerprint, or who controlled the
fingerprints after collection.
If INS performs fingerprinting and receives the applications at INS
offices, this security risk is minimized but not completely eliminated
because we are using ``picture verification'' on identity documents to
confirm identity and we are not verifying that the individual is the
same at the time of interview. The impact of this alternative is
diminished service levels to the customer due to an additional trip to
INS offices and higher cost to the INS and customers because the INS
will have to open new satellite offices to handle the volume. This
option would also require long trips for many applicants to the nearest
INS office. To add full security, INS would have to implement
biometrics verification at interview time. This cost for this should be
paid by the customer through an exam fee. The implementation of such an
alternative can take between 6 to 12 months to set up new offices and
will require a fee change.
In INS's experience, many law enforcement agencies (LEA's) are
unwilling to do fingerprinting for immigration benefit applicants,
which has become even more onerous with the requirement that
fingerprint cards must be sealed and signed in a specific manner. Many
LEA's see fingerprinting of immigration benefit applicants as an
unwelcome burden, which is inconsistent with their misprints taken by
LEA's for immigration-related purposes is not consistently high. This
is because LEA's often use lesser trained clerks and volunteers to take
fingerprints for INS applicants, reserving better trained officers to
take fingerprints for law enforcement purposes. In addition, monitoring
and terminating LEA's for quality problems would be complicated with
one LEA monitoring another. Finally, to prevent applicant fingerprint
substitutions, LEA's would need to accept applications, which would
require them to accept and provide receipts for payment. Given that
LEA's already can charge a fee for fingerprint services, such a fee
does not make this alternative less objectionable.
consolidation
Question. It is my understanding that the positions of Associate
Commissioner for Finance and Associate Commissioner for Human Resources
and Administration have not been filled in order to improve efficiency
and accountability by ``flattening'' the INS hierarchy. I commend you
for your efforts. What consideration have you given in doing the same
for the Offices of Associate Commissioner for Enforcement, Associate
Commissioner for Examinations, and Associate Commissioner for
Information Resources Management?
Answer. In 1994, we implemented a number of institutional reforms
as a first step in long-range managerial efforts to overcome severe
problems within the Service. A proposed 1997 reorganization takes a
second step in this long-range institutional reform. After several
years of experience with the 1994 changes, we identified the need for
additional organizational change in several areas. In some cases, the
need follows efforts to fulfill and extend the 1994 reorganization.
Other areas result from dramatic changes in the Service's work during
the last three years.
The goals of the current reorganization proposal are to strengthen
the integrity of Servicewide programs and operational activities, to
build a professional workforce for the 21st Century, and to provide an
organizational structure that facilitates effective and efficient
implementation of the immigration laws. We are currently developing
detailed plans to implement these goals, which will result in some
changes to the current structures within the Office of Programs, Field
Operations, and Management. I believe that these changes will improve
efficiency and accountability within the INS.
Drug Enforcement Administration
war on drugs
Question. Would you comment on where you see where the United
States is on the war on drugs? Would you agree that this war is not
going to stop the way we are addressing it now?
Answer. The Drug Enforcement Administration (DEA) has documented a
number of trends suggesting that both international crime and the
illicit drug trade have undergone a radical shift in recent years. The
drug trade has expanded from a cottage industry into many sophisticated
organized criminal enterprises of global proportions. Drug trafficking
organizations within the United States are controlled by criminals
sheltered beyond its borders. Drug syndicates--particularly ones in
Colombia and Mexico--have become the most powerful criminal
establishments, and the influence and power exerted by these drug
traffickers threatens the governments of their nations, as well as the
citizens of the United States.
Yet despite their reach and power, these drug trafficking
organizations remain vulnerable in certain respects. U.S. law
enforcement has demonstrated that one of the best ways to dismantle
organized crime syndicates is to attack their leadership and
infrastructure; this disrupts their ability to continue their illicit
operations and causes them to decline in disarray. This was the
strategy used to diminish the significance of La Cosa Nostra in the
United States to a shadow of what it was in the 1950's. In a similar
way, the Colombian National Police (CNP), with the assistance of the
United States, crippled the Cali Cartel, one of the most powerful
criminal organizations in the world.
In order to be successful, this strategy must be a collaborative
effort relying upon the cooperation of various governmental entities.
The federal law enforcement and intelligence communities, in
partnership with state and local authorities, should target the
communications, and command and control centers of the drug trafficking
organizations and develop compelling criminal cases against their
leaders and members. Once arrested, these criminals should be
prosecuted fully and serve meaningful sentences commensurate with the
gravity of the offenses committed. Prosecutions should be pursued
vigorously in the country where the interests of justice are most
likely to be served--if this is not likely to occur in the country of
arrest, then the defendant should be expelled or extradited to the
United States to stand trial here.
Trends in Drug Trafficking
DEA has identified and described six drug trafficking trends as
follows:
Threat to democracy.--Today's international drug syndicates have
garnered such power and influence as to threaten the democracy of
nations, compromise governments and institutions, and weaken economies.
Sophistication and technology.--Drug trafficking organizations with
their vast wealth command state-of-the-art equipment and expertise.
They employ the top attorneys, accountants, bankers, financiers,
chemists, linguists, technicians, computer designers, and
transportation and communications experts. These drug syndicates are
well-organized and have networks of counter-intelligence experts to
protect their enterprises. Their resources rival those of many
sophisticated international corporations--especially, with respect to
wireless and secure communications, transportation networks, and
computer systems.
Syndicates are maturing faster.--Drug trafficking syndicates are
developing at a faster rate than at any previous time. For instance, La
Cosa Nostra, rose to power in the United States over a 75-year period;
ethnic-Chinese gangs in United States matured over several decades;
Colombia's Medellin Cartel developed in 15 years; the Cali Cartel
evolved in 10 years; and the syndicates in Mexico, the most immediate
threat, reached their power in less than a decade. This trend is
significant because (1) law enforcement has greater difficulty staying
ahead of the criminal organizations, if they develop so rapidly; and
(2) the global nature of the drug trafficking industry and the
advancements in communications, technology, air travel, and banking,
enable drug traffickers to have a more direct and immediate impact upon
citizens of other nations.
The establishment of syndicates in Colombia and Mexico.--In the
late 1980's, Colombian traffickers were the dominant drug trafficking
organizations that controlled the supply of cocaine to the United
States. However, in the early 1990's, the Colombian organizations began
searching for new transportation routes and turned to criminal
organizations in Mexico who controlled smuggling corridors into the
United States.
Early in their alliance, Mexican traffickers settled for a
relatively small cash percentage derived from each cocaine shipment
transported into the United States. Eventually, Mexican drug
traffickers, looking to expand their own influence, re-negotiated their
arrangements with the Colombian trafficking organizations; instead of
receiving cash payments for their transportation services, the Mexican
traffickers demanded a percentage of the cocaine transported--in some
cases, up to half of each cocaine shipment. Over time, this arrangement
enabled the Mexican drug traffickers to establish their own
transportation and distribution networks in the United States. With
this increasing power, Mexico-based trafficking syndicates solidified
control over the markets of other drugs, such as black-tar and brown
heroin, methamphetamine and precursor chemicals, and marijuana.
Today, drug traffickers comfortably insulated in Colombia and
Mexico control the U.S. cocaine market through their associates in the
United States, working to expand their share of the U.S. market.
Colombian traffickers largely control the East Coast drug markets,
while Mexican traffickers dominate the West and Southwest markets; both
groups are converging on the Midwest markets. Recently, however, there
have been some indications that Mexico-based organizations have made
some inroads into the cocaine markets on the East Coast, formerly
controlled by traffickers from Colombia.
Drug-related violence.--Colombia- and Mexico-based drug trafficking
organizations are responsible for much of the drug-related violence in
the United States. On several occasions, U.S. authorities have
identified and arrested violent offenders that had been dispatched by
the Colombian and Mexican drug traffickers to execute their violence in
the United States. In the West and Southwest, the surrogates of Mexican
drug trafficking organizations have forged strong alliances with street
gangs, such as the Crips, Latin Kings, and Brown Assassins, to
distribute drug shipments and carry out violent acts, including
murders.
Emerging organizations and alliances.--The drug trade has given
rise to new trafficking syndicates and criminal alliances around the
globe. U.S. authorities have identified several representatives of
major Colombian traffickers meeting with criminal leaders in Italy and
Russia in an apparent attempt to forge agreements for importing drugs
into Eastern Europe and other nations in transition. Furthermore, there
have been indications that criminals in Albania, Bosnia, Croatia,
Herzegovina, Serbia, and Slovenia are beginning to enter the drug trade
and stand to gain power from their position along the Balkan
trafficking routes. In addition, Mexican traffickers have attempted to
purchase coca directly from the suppliers in Bolivia--a move that, if
successful, could impact the role of Colombian traffickers in the
cocaine trade.
Among the most striking trends is the rise of West African
criminals in the world heroin trade. Nigerian criminals are well-
organized and sophisticated and have formed close alliances with
criminals in Thailand and other parts of Southeast Asia.
Fighting Drug Trafficking Organizations
DEA's National Investigative Survey is anchored in three major
initiatives that focus resources where they will have the most impact--
(1) on the sophisticated criminal syndicates from Colombia and Mexico
that control the vast majority of the drug trade in the Western
Hemisphere; (2) their U.S.-based distribution infrastructure; and (3)
the surrogates used by the trafficking organizations (often violent
drug gangs) to peddle their poison on the streets of our country.
First, DEA directs its investigative assets against the
communications systems of the command control functions of the major
organized crime syndicates from Colombia and Mexico. Second, DEA
attacks the U.S.-based infrastructure of these organizations that
direct and control the flow of thousands of tons of cocaine, heroin,
and methamphetamine into the United States. Third, DEA targets violent
drug trafficking groups operating within the borders of the United
States. In support of these three initiatives, DEA is actively involved
in the following programs:
Southwest Border Initiative.--The Southwest Border Initiative
(SWBI) targets the major drug organizations on both sides of the U.S.-
Mexico border. The strategy's objectives are to dismantle Mexican drug
trafficking organizations, strip them of their illicit assets, and
arrest, prosecute, and incarcerate their criminal leaders for terms of
imprisonment commensurate with the offenses committed. The SWBI is a
result of a close, collaborative effort involving the DEA, Federal
Bureau of Investigation (FBI), U.S. Attorneys, U.S. Customs Service,
the Department of Justice's Criminal Division, the High Intensity Drug
Trafficking Area (HIDTA) program, and state and local law enforcement
agencies.
Mobile Enforcement Teams.--The initiative of the Mobile Enforcement
Teams (MET's) is designed to assist local police agencies with DEA's
expertise and necessary resources to target, arrest, and remove violent
drug offenders from communities and reduce the threats posed by drug
trafficking organizations within these communities. By early 1997,
MET's had been deployed to more than 90 jurisdictions across the
country, and they accounted for more than 3,000 arrests of violent drug
offenders, and the seizure of large quantities of illicit drugs and
millions of dollars in assets.
Organized Crime Drug Enforcement Task Force Program.--The Organized
Crime Drug Enforcement Task Force (OCDETF) Program, administered by the
Department of Justice's Criminal Division, is an inter-agency law
enforcement program which targets the highest-level drug traffickers in
the country. DEA, and eight other federal agencies participating in the
OCDETF program, act in concert with numerous state and local agencies
and have, over the years, achieved unprecedented levels of cooperation
and coordination.
The United States is years away from an end to drug abuse and
trafficking and the drug-related violence facing this country.
Nevertheless, we must continue to work towards a solution--which is not
a question of choosing among law enforcement, interdiction, education/
prevention, or treatment. Instead, we must adopt an integrated,
comprehensive approach to incorporate all perspectives and viewpoints.
We must strive to protect future generations from the slow misery and
decay caused by drug abuse, while trying to rescue the present
generation from the immediate harm posed by drugs.
mexico
Question. What course do you believe we should take with respect to
Mexico?
Answer. Despite the achievements that the Government of Mexico has
accomplished in combating drug trafficking, there is much more that
needs to be done. We believe that the solution lies not in cordoning
ourselves off from them, but, rather, in working with and supporting
President Zedillo's counternarcotics efforts. Mexico is an
indispensable partner in combating drug trafficking.
The U.S. Government therefore should support the Government of
Mexico in what will be a long-term effort to build an effective law
enforcement capacity. In the meantime, we should offer assistance to
the special law enforcement units developed by the Government of Mexico
that will lead the attack against the traffickers, while continuing our
own aggressive campaign against these criminal organizations
domestically.
To that end, DEA is providing assistance in the following ways to
the Government of Mexico:
--DEA is providing assistance to the Government of Mexico in
selecting and screening candidates to become a member of
Mexico's special counterdrug enforcement units. The U.S.
Government has offered assistance and technical support
throughout the ``vetting'' process, which includes: (1)
security questionnaires and background interviews; (2) medical
and psychological screening (records review and aptitude/
profile testing); (3) initial and random urinalysis; and (4)
polygraph examination.
This ``vetting'' process, combined with enhanced training, a
minimum time commitment [the U.S. agencies have suggested a
three year minimum assignment]--and a premium pay to reflect
the additional training--would increase our confidence in the
special counterdrug enforcement units, indicating that they are
substantially free of corruption and have competent personnel
to combat the highly sophisticated and violent drug trafficking
cartels. Although the ``vetting'' process is no panacea, it is
a step in the right direction by the Government of Mexico.
--DEA has provided and will continue to provide significant training
programs to the new recruits of Mexico's special counterdrug
enforcement units. In mid-August 1997, the first class of
Mexican counterdrug agents completed a four-week intensive
investigative analysis training seminar conducted by DEA, FBI,
U.S. Customs Service (Customs), and Department of Justice
personnel. A second session is now underway and others will
follow as the U.S. agencies work to provide these Mexican
enforcement units with up-to-date training.
--DEA is providing assistance to the Government of Mexico in
establishing an internal affairs unit which will conduct in-
service integrity checks on Mexican law enforcement agents. It
is essential to have an integrity assurance program in place.
Unless these specialized enforcement units are trustworthy,
informants who cooperate will not be safe, undercover
investigations will be compromised, and the information-sharing
process will not function smoothly.
Border Task Forces.--DEA is devoting additional agents and
resources to establish and develop strong and solid law enforcement
investigative units in Mexico. On July 30, 1996, U.S. and Mexican law
enforcement officials signed a Memorandum of Understanding establishing
bilateral drug law enforcement units along the U.S.-Mexico border known
as Border Task Forces (BTF's). The BTF's were poised to be the key
units for U.S.-Mexico cooperative enforcement efforts targeting major
drug trafficking organizations along the U.S./Mexican border. DEA, FBI,
and Customs are working with the Mexican Attorney General's Office
(PGR) and counternarcotics enforcement offices/agencies to create and
establish three bilateral Border Task Forces in Juarez, Tijuana, and
Monterrey.
The U.S. Government and the Government of Mexico anticipate that
complete staffing of the ``vetted'' BTF's will include 18 Mexican
counterdrug agents, one Mexican prosecutor, and six U.S. ``commuter''
agents [DEA, FBI, and Customs agents who reside in the U.S. and cross
the border each day to join the BTF's], complemented by a 30- to 50-
person response unit for each BTF location. This bilateral effort holds
the greatest potential for success in developing compelling cases
against the major trafficking groups--with the everyday exchange of
important U.S. and Mexican law enforcement information, the joint
analysis of that information, and the development of strong cases
leading trafficker convictions.
The success of the BTF's depends upon the participation of both the
in-country agents assigned to the resident officers and the 22
``commuter'' agents. If one of these two entities is unable to
participate in the BTF's, the effectiveness of the BTF's will be
impeded. Because drug traffickers disregard international borders, the
ability of BTF's to perform the envisioned function will be severely
limited without the participation of the ``commuter'' agents.
Regrettably, however, the BTF's have not realized their potential
effectiveness and continue to be impeded by administrative and
operational problems. To date, the BTF's have faltered and have not
achieved their primary objective: the immobilization of the Juarez and
Tijuana Cartels. Indeed, both the Amado Carrillo Fuentes Organization
and the Arellano Felix Organization continue to operate.
--Despite the documented threat to law enforcement (see below) along
the U.S.-Mexico border, the Government of Mexico has not
approved the U.S. request for U.S. law enforcement ``commuter''
personnel to carry firearms for self-protection. Because we
have not yet been able to resolve with the Government of Mexico
our grave concern for the safety of our agents assigned to the
BTF's in Mexico, we have been forced to curtail the
participation of U.S. agents who would be crossing the border
daily to carry out their duties. Without the direct
participation and guidance of U.S. agents--the resident in-
country agents and the ``commuter'' agents--the BTF agents are
not likely to pursue and competently develop investigations
against major trafficking organizations independently.
--The BTF's have suffered from corruption within their leadership.
For example, 17 Mexican law enforcement officials, including a
federal prosecutor, military officers, and law enforcement
officers, were arrested between June 3 and June 9, 1997, for
the theft of 476 kilograms of cocaine from a PGR office in the
state of Sonora. The cocaine had been seized by the Mexican
Army and turned over to the PGR three weeks earlier, and the
stolen cocaine has not been recovered. All BTF staff will now
be fully ``vetted.''
--Although the Government of Mexico has committed to provide full
support to the BTF's once they are completely ``vetted,'' these
resources have not yet been made available. The Government of
Mexico initially pledged $2.2 million to the efforts of the
BTF's; however, to date, the Government of Mexico has furnished
approximately $600,000 in equipment, and small purchases. This
figure falls far short of the nearly $6 million available from
seized assets previously forfeited by the U.S. Government and
shared with the Government of Mexico for bilateral law
enforcement purposes.
Despite the shortcomings of the BTF's, DEA will be adding more
resident agents to the existing offices in Tijuana and Juarez. On July
11, 1997, the Government of Mexico formally authorized an increase of
six DEA Special Agents and six FBI ``Resolution Six'' Special Agents to
be assigned to duty in Mexico. These resident agents will serve as an
interim stop-gap support to the BTF's until the ``commuter'' agent
concerns are satisfactorily resolved.
Dissolution of the INCD and Establishment of the Special
Prosecutor's Office for Crimes Against Health.--On April 30, 1997, the
Narcotics Institute to Combat Drugs (INCD) was dissolved, and the
Special Prosecutor's Office for Crimes Against Health (FEADS), headed
by Mariano Herran Salvati, was named by Attorney General Jorge Madrazo
as the Mexican federal agency responsible for counterdrug law
enforcement efforts. The dissolution of the INCD and the reorganization
of the principal Mexican drug law enforcement agency, although
necessary, have further slowed any progress.
The ``vetting'' process for the new PGR units, including the FEADS,
is proceeding, but faces many difficulties. On July 29, 1997,
Commissioner Herran stated that all personnel of FEADS will be subject
to the full ``vetting'' process. The ``vetting'' process will be
accomplished in two phases--the first will focus on administrative
personnel at FEADS Headquarters in Mexico City, and the second phase
involves the ``vetting'' of personnel assigned to the Bilateral Border
Task Forces (BTF's). Thus far, 150 FEADS agents have been ``vetted.''
Of the 39 FEADS agents who have completed their ``vetting'' and the
above-described training program in the United States, 10 are now
assigned to the Organized Crime Unit (OCU). Of the 29 remaining FEADS
agents, two have been assigned to the BTF's and the other 27 will be
assigned to the BTF's upon completion of the PGR Training Academy. On
September 8, 1997, 40 additional FEADS agents began training in the
United States; they will similarly be assigned to the BTF's and OCU.
At this time, the transformation of counterdrug enforcement
agencies in Mexico is still a ``work in progress.'' Many of the INCD
officers remain in place as the ``vetting'' process is beginning for
the FEADS replacements. Further, the PGR must contend with the fact
that nearly 700 agents dismissed for corruption by former Attorney
General Antonio Lozano from the pre-existing INCD have now been
reinstated after successfully challenging certain procedural flaws in
the dismissal process.
Today, the FEADS, as an organization, lacks any real infrastructure
support--their agents have typically not been issued credentials,
badges, or weapons, and they only have limited resources with which to
work. Until a sufficient number of personnel are fully ``vetted'' and
the reinstated INCD personnel who do not survive the ``vetting''
process are removed, the organization cannot move forward with
effectiveness or confidence in security and integrity.
Safety Along U.S.-Mexico Border.--The severity of violence along
the U.S.-Mexico border continues to increase at an alarming rate. The
trafficking organizations responsible for this violence continue to
operate. The U.S. Government's repeated requests to the Government of
Mexico to enable U.S. agents to carry firearms for self protection
continue to be denied.
Since March 1997, DEA has recorded 49 incidents of threats against
both the U.S. and Mexican law enforcement personnel and their sources
of information along the U.S.-Mexico border. The escalation of
violence, as demonstrated by the increased number of kidnappings,
shootings, and murders along the border, remains largely unchecked.
Drug traffickers continue their brazen attacks against both U.S. and
Mexican officials and their informants. This situation places U.S. law
enforcement personnel operating along the border in an extremely
dangerous and precarious environment.
Organized Crime Law.--In November 1996, the Government of Mexico
passed an Organized Crime Law, which included: (1) authorization to
conduct electronic surveillance; (2) a witness protection program; (3)
plea bargaining; (4) conspiracy laws; (5) undercover operations; (6)
the use of informants by police; and (7) asset forfeiture. Having the
law on the books is not sufficient; these authorities must be fully
implemented. Guidelines and policies for these new procedures need to
be promulgated by the PGR, and competent, trustworthy judges need to be
identified for these sensitive cases. Until these are accomplished, the
efforts of the BTF's and other Mexican special investigative units will
continue to be hampered in conducting the necessary information
gathering activities authorized by the Organized Crime Law.
To conduct effective law enforcement investigations in Mexico,
these specialized units must utilize state-of-the-art investigative
techniques, including court-authorized electronic surveillance. In
order to conduct electronic surveillance properly, the Government of
Mexico must identify a cadre of competent and trustworthy prosecutors
and judges to apply for and approve court-authorized electronic
surveillance and other sophisticated investigative techniques, without
the fear of compromise.
The Organized Crime Law not only mandated that the Government of
Mexico form an Organized Crime Unit (OCU) to conduct investigations
pursuant to these authorities, but further stipulated that the laws
could not be enforced until the OCU was formed and properly trained.
The OCU is now, at least, partially in place and consists of 55
officers to investigate crimes specified under the law. DEA and FBI
have worked and will continue to work with the PGR to establish the
OCU. It is anticipated that the OCU will pursue investigative leads
provided by U.S. law enforcement agencies and will share information
with their U.S. counterparts.
Southwest Border Initiative.--In our continuing efforts to
dismantle the Mexican drug trafficking organizations and disrupt its
operations, the continuation of the Southwest Border Initiative is
critical (as described previously). Since its inception, the SWBI has
proven to be an important and effective coordinated effort focusing on
drug trafficking across the U.S.-Mexico border. The SWBI is law
enforcement's collaborative response to the substantial threat posed by
Mexican groups operating along our Southwest Border.
Question. Will the 96 agents you are adding this year help address
the Mexican Cartels that have gone unchecked to this point in time?
What can we do to help you?
Answer. The enhancement of the 96 Special Agents in DEA's 1998
budget request will augment and complement DEA's existing counterdrug
force. DEA will use some of the positions assigned to Mexico to
establish new offices in the key strategic border towns of Juarez and
Tijuana, and personnel assigned to these offices will be used to
support and strengthen the operations of the BTF's, as described above.
DEA's counterdrug enforcement operations along the Southwest Border
are geared toward attacking and dismantling the command and control
structures of the major Mexican trafficking organizations. These
organizations are responsible for smuggling vast quantities of cocaine,
heroin, marijuana, and methamphetamine into the United States. The 96
positions requested in the 1998 budget will be used primarily to
enhance DEA's information gathering capabilities in Mexico and along
the Southwest Border and will enable DEA to track and investigate the
major Mexican trafficking organizations and their activities within the
United States.
DEA's enforcement operations are sophisticated and labor-intensive;
therefore, the agency's staffing requirements are continually growing.
DEA is grateful for the funding support provided by Congress for its
operations along the border last year and appreciates any further
assistance provided in 1998.
Question. What can you share with the Committee about the
distribution of narcotics between Mexico and the Northeast?
Answer. The distribution of narcotics between Mexico and the
Northeast United States can best be explained and described based upon
the particular drugs and unique markets, as follows:
Cocaine.--Typically, Mexican drug traffickers transported cocaine
shipments from the Southwest Border only as far as the Midwest.
However, recently, there have been instances where Mexico-based
traffickers have emerged in the New York City cocaine market. For
example, in March 1997, 1.6 metric tons of Colombian-owned cocaine were
seized in the New York City area, where a Mexico-based organization had
transported the cocaine shipment in carrot crates from Mexico to New
York City.
In addition, during 1996, a unique OCDETF operation, code-named
ZORRO II, documented that Mexico-based organized crime drug groups had
moved beyond the role of transporters and were involved in wholesale-
level cocaine distribution in the United States. Once transported from
Mexico to the United States, the cocaine was stored in the Los Angeles
area for eventual distribution to buyers in such cities as Newark, New
York City, and Philadelphia. Operation ZORRO II documented the
increased and more diverse role played by major Mexico-based
traffickers in the U.S. cocaine trade.
The multi-district, multi-agency investigations known collectively
as Operation Reciprocity further revealed Mexican drug traffickers'
eastward expansion across the United States and into New York City.
These coordinated OCDETF investigations targeted several drug
trafficking cells of the Amado Carrillo-Fuentes Organization. Seizures
of drugs and money as well as other evidence clearly demonstrate that
Mexican traffickers are displacing at least some of the Colombian
cocaine organizations which have traditionally dominated drug
trafficking along the East Coast of the United States. Operation
Reciprocity resulted in the seizure of 7.4 tons of cocaine, 2,800
pounds of marijuana, and over $11 million in U.S. currency. Indictments
and complaints charging 48 people with drug and money laundering
offenses are pending in four districts. Thirty-five defendants have
been arrested.
Marijuana.--Mexico-based drug trafficking organizations, through
extensive networks in both Mexico and in the United States have
supplied the U.S. drug market with marijuana and heroin for more than
20 years. From distribution hubs along the Southwest Border, wholesale
distributors ship marijuana to cities along the Eastern seaboard using
a wide and ever-changing array of motor vehicles, as well as couriers
aboard commercial aircraft.
In addition to overland smuggling, traffickers have resumed routing
large quantities of marijuana from Mexican suppliers and other sources
through the Caribbean region, to destinations along the East Coast.
Package delivery services also have been identified as a significant
means of transporting marijuana from Southwest Border areas to
destination cities throughout the Eastern United States.
Methamphetamine.--Although methamphetamine use has historically
been concentrated in the western and southwestern parts of the United
States, it is now spreading to the Midwest and to the East. Organized
crime drug groups operating from Mexico are responsible for producing a
significant amount of the methamphetamine distributed throughout the
United States. Methamphetamine distributors in other areas of the
country, including the Northeast, obtain much of their methamphetamine
from these organizations operating along the Southwest Border. One
recent investigation revealed that distributors in Buffalo, New York,
were acquiring pound quantities of methamphetamine from sources in the
San Diego, California area and shipping the drugs via express mail
services back to the Buffalo area.
Heroin.--The heroin market in the northeastern United States is
largely dominated by high-purity, white powder heroin from South
America, Southeast Asia, and Southwest Asia. Mexican black-tar and
brown heroin is usually of lower purity and therefore, is generally not
competitive in this market. As a result, Mexican heroin is encountered
in the Northeast in only isolated instances.
methamphetamine labs
Question. Would you help the Committee understand how you are
addressing the growing problem of methamphetamines?
Answer. Halting the trafficking of methamphetamine is one of DEA's
leading enforcement priorities. In May of 1995, while attending the
annual meeting of the International Association of Chiefs of Police
(IACP), Narcotics and Dangerous Drug Committee in San Diego,
Administrator Constantine was approached by California Narcotics
Officers Association (CNOA) members as well as personnel from the
California Bureau of Narcotics Enforcement (CBNE). These groups
dramatically brought to the Administrator's attention the magnitude of
the methamphetamine problem in California and also shed light on
additional evidence of what their fellow state and local law
enforcement officers across the country were confronting.
At the same time, DEA was developing information on some very
disturbing national trends. Our agents and intelligence analysts became
aware of increasing incidents of abuse and trafficking of
methamphetamine all across the country, an alarming change to what had
once been largely perceived as a West Coast problem.
For example, drug abuse warning network statistics revealed that
methamphetamine-related hospital episodes were skyrocketing. From 1990
to 1995, they more than tripled. In fact, the dramatic increase of
methamphetamine-related deaths in cities such as Los Angeles, San Diego
and Phoenix strongly supported the concerns of the CBNE and CNOA. Also
startling was the fact that similar statistics were being compiled in
America's heartland (and across the rest of the United States).
Based on these findings, it was clear that methamphetamine was fast
becoming a national problem, and a national approach was needed. As a
result, in February 1996, DEA sponsored a National Methamphetamine
Conference in the Washington, DC area, the first of its kind. The
Conference included the participation of 240 attendees from across the
nation, including representatives from Federal agencies, state police
and investigative agencies, police departments in large and small
cities, and sheriff's offices in both rural and urban counties. In
addition, professional law enforcement organizations also sent
representatives, including the IACP, the National Sheriffs'
Association, the National Association of District Attorneys, the
Clandestine Laboratory Investigators Association, the National
Narcotics Officers Association and the National Drug Enforcement
Officers Association. Invitations were also sent to numerous prevention
and treatment professionals.
In the past, the methamphetamine trade was dominated by members of
loosely structured outlaw motorcycle gangs. Today, all of this has
changed. It has become increasingly clear that we are now dealing with
an entirely different element. Methamphetamine production is now
controlled by international organized criminal groups from Mexico who
are responsible for the wholesale distribution of methamphetamine
across the United States.
Clandestine laboratories, operating in the United States (mostly in
California) and in Mexico are the primary source of the methamphetamine
available in our country today. Mexican organized crime groups
frequently establish large laboratories capable of producing from 150
to 200 pounds of methamphetamine during a 48-hour manufacturing cycle.
There are hundreds of other labs across the United States--in the
Midwest, the Southeast, as well as in the Southwest and California--
which are operated on a smaller scale, but are no less a threat to the
well being of Americans. In many of these smaller labs, methamphetamine
manufacturers rely on ephedrine and pseudoephedrine products to make
methamphetamine.
Some of the big names in methamphetamine trafficking are already
known as major traffickers of heroin and cocaine: the Amezecua-
Contreras Organization, the Amado-Carillo Fuentes Organization, and the
Arellano-Felix Organization. These new, international organized crime
groups are far more wealthy, powerful and connected than the outlaw
motorcycle gangs could have ever imagined.
We know, for example, that the Amezecua-Contreras Organization has
developed international connections in Europe, Asia and the Far East,
to provide ton-quantity shipments of the chemicals they need to make
methamphetamine. DEA has documented the international diversion of 170
metric tons of ephedrine to Mexico from mid-1993 to early 1995. This
quantity of ephedrine could have produced 120 tons of methamphetamine.
In a 1994 case, two ephedrine shipments totaling 5.7 metric tons,
were seized at the Dallas-Fort Worth Airport bound for Mexico. This
ephedrine could have produced almost four tons of methamphetamine. The
ephedrine had been produced in China and was smuggled from Hong Kong
through Long Beach, California, into Mexico.
With their ability to obtain wholesale multi-ton quantities of
precursor chemicals on the international market, their access to
already-established smuggling and distribution networks, and their
control over laboratories capable of large-scale production and
distribution of methamphetamine, these criminal groups from Mexico now
dominate wholesale methamphetamine trafficking in the United States.
Since February 1996, when DEA co-sponsored the first National
Methamphetamine Conference, our nation has made significant progress in
working together on the methamphetamine problem. Following the
President's announcement of the National Methamphetamine Strategy in
April 1996, DEA has refocused its attention and adjusted its resources
accordingly.
The National Methamphetamine Strategy incorporates the
recommendations from a broad spectrum of the law enforcement community.
It recognized that in order to tackle the mathamphetamine and precursor
chemicals problem, the government must adopt a multi-disciplinary
approach, including legislation, law enforcement, training, chemical
regulation, international cooperation, environmental protection,
education, and treatment. Therefore, the Strategy called upon the
collective wealth of experience and expertise of the Departments of
Defense, Education, Health and Human Services, Justice, State, and
Treasury, the Environmental Protection Agency, the Office of National
Drug Control Policy, and other noted experts and scholars.
First, we had to recognize that methamphetamine trafficking was an
organized crime problem. American law enforcement agencies have
successfully attacked organized crime in this country and abroad by
aggressively targeting its leadership and persistently attacking its
membership at all levels. It is a model that has a proven track record,
and we are now successfully applying it to the methamphetamine problem
and the organized criminal groups controlling the drug's trade. This
strategy includes the following elements.
--Department components are attacking organized crime groups through
the Southwest border initiative [SWBI]. The SWBI is an
integrated, coordinated strategy that involves law enforcement
at the Federal, state and local levels in a focused effort to
dismantle the sophisticated trafficking organizations operating
on both sides of the United States-Mexico border.
Since 1996, DEA has contributed over $17 million, supporting over
100 organized crime investigations in over 30 cities. Over
1,000 wire taps, including almost 400 this year alone, have
been employed to identify and incarcerate the members of these
criminal groups. Much of the focus of this effort has been
directed at those groups trafficking in methamphetamine. Since
January of 1996, methamphetamine investigations under the SWBI
umbrella have accounted for the seizure of 682 pounds of
methamphetamine and the arrest of over 150 members of organized
crime groups.
--DEA refocused its investigative resources to address the
methamphetamine problem in other parts of the country. In 1996,
DEA conducted over 2,500 methamphetamine investigations, up
from approximately 1,700 actions in 1995. In the 1998 budget,
we have requested over $11 million and 74 positions to further
enhance our ability to combat the methamphetamine threat.
--One of the major concerns expressed by state and local law
enforcement officers at last year's Conference was the need for
specialized training to conduct clandestine laboratory
investigations. In response, DEA increased clandestine
laboratory training schools from 7 in 1996, to 13 in 1997. By
the end of this year, 540 state and local officers will have
been trained, with another 800 projected for next year.
--DEA has expanded its clandestine laboratory certification program
in Quantico, Virginia, by adding training facilities in Kansas
City, Missouri and San Diego, California. This regionalized
approach will allow training to be provided to more officers
and to be tailored to the particular needs of the affected
area.
--We are developing a National Clandestine Laboratory Data Base
located in the El Paso Intelligence Center [EPIC], in
partnership with the California Bureau of Narcotics Enforcement
[CBNE] and the Western State Intelligence Network, to assist
law enforcement across the nation in methamphetamine
investigations.
--This year, DEA has earmarked $850,000 to initiate Special
Enforcement Programs directed at the methamphetamine problem.
We have already seen some tremendous successes in
investigations developed in one of these programs, Operation
Backtrack. This program targets ``rogue'' companies which
provide three specific precursor chemicals to illegal
methamphetamine laboratories in the United States; ephedrine,
pseudoephedrine and phenylpropanolamine. Started in February,
this program has already resulted in seizures of over 10.5
million pseudoephedrine tablets destined for distribution by
``rogue'' convenience and liquor stores. The DEA Domestic
Operations Section instituted a Special Enforcement Program
entitled Operation Velocity, which targets major
methamphetamine organizations as well as independent
traffickers in the United States.
--Our San Francisco Methamphetamine Conference emphasized the need
for government and industry to work more closely together. To
help accomplish this, DEA invited 98 senior executives to
attend a meeting in Arlington, Virginia, on June 16. The
invitees represented industry associations, major wholesale
distributors, manufacturers, and retail distributors. The
meeting provided a forum for DEA and the affected industry to
further develop cooperative efforts to identify and prevent the
diversion of legal drug products containing key precursor
chemicals. Working groups were formed to address the following
areas: (1) identify points of diversion; (2) technological
issues; and (3) training and education programs. DEA and
industry officials are acting as co-facilitators for each of
the working groups which are expected to meet again within the
next 30 days.
As an example of how effective cooperation between government and
the business community can be, DEA formed a partnership with
Wal-Mart in April to control large-scale purchases of two key
over-the-counter products: pseudoephedrine and
phenylpropanolamine. This means Wal-Mart will now restrict
sales of allergy/cold/diet preparations which have increasingly
been diverted from legitimate use and seized in clandestine
laboratories throughout the West, Southwest and Midwest.
In other examples, Price Costco in California and Schuck's
Markets in St. Louis have both initiated voluntary programs to
control diversion of over-the-counter products.
--Finally, in order to reduce methamphetamine abuse, the Partnership
for a Drug-Free America will run a media campaign to educate
young people on the dangers of methamphetamine. The Partnership
will feature prime-time television commercials, magazine
advertisements, and other educational material aimed at our
nation's teens. DEA will produce and distribute posters,
awareness brochures, and a video on methamphetamine abuse.
In addition to these major initiatives, DEA will participate in an
interagency prevention group formed by the Attorney General to work
with local agencies and private organizations in developing public
awareness programs about methamphetamine addiction and abuse.
In conclusion, methamphetamine presents a serious threat that will
impact heavily on both our law enforcement community, as well as our
prevention and treatment specialists. There was a time when many
thought the heartland would never suffer the ravages of drugs, crime
and violence. In addition to aggressive law enforcement actions, it
will take an all-out effort in our schools, communities, and workplaces
to educate all Americans, especially our young people, about the
dangers of methamphetamine.
Over the past year and a half, we have seen many positive
developments in the national fight against methamphetamine trafficking,
use and abuse. As a nation, we have worked to develop a national
strategy and have implemented many new programs to attack both
methamphetamine production and use. We must, however, continue to move
forward to ensure that we prevent the onslaught of another drug
epidemic, one which could be even more serious than the crack epidemic
experienced in our recent past.
colombia
Question. What is the United States' position on Colombia? A
reasonable person might suggest we take quite a bit stronger action
toward Colombia based on the performance of its president and what is
being sent to the United States from Colombia. What does it take to
tell us that this government is an adversary? Based on Samper's
statements, what opportunities do we have at this time?
Answer. The Administration's position with respect to Colombia
remains under constant review by the National Security Council and
other relevant government agencies.
While the U.S. Government is convinced that the Samper
Administration has been tainted by the traffickers, DEA has continued
to expand its work and contacts with the Colombian National Police
(CNP). DEA's position on Colombia continues to focus on a cooperative
bilateral law enforcement effort to combat the threat of drug
trafficking affecting both countries. The Department of Justice has
continued to work with the Colombian Chief Prosecutor's Office and many
agencies joined to urge the Government of Colombia to enact the
legislative reforms in money laundering, asset forfeiture, and enhanced
narcotics penalties now in place. The U.S. Government continues to
press Colombia for the extradition of its nationals--especially, the
narcotics kingpins.
The demise of the Cali Cartel can be largely attributed to the
dedicated efforts of the CNP under the direction of General Serrano,
working in conjunction with DEA and other U.S. agencies. Nevertheless,
we now see the emergence of other powerful trafficking organizations
from other parts of the country, including the Norte Del Valle group
headed by the Henao-Montoya brothers. As soon as the Cali Cartel
crumbled, such groups forged ahead to position themselves smartly in
the drug trafficking markets and developed close alliances with Mexican
and other trafficking groups to achieve the common goal of distributing
illicit narcotics--namely, cocaine and heroin--on the streets of the
United States.
In 1995, Colombian-processed heroin represented 62 percent of the
heroin seized in the United States. In cooperation with the CNP and
other Colombian law enforcement authorities, DEA has implemented
several new programs and enhanced other initiatives targeting the
production and transportation infrastructures of the major trafficking
organizations.
Question. How will decertification affect Colombia?
Answer. DEA will defer to the State Department with regard to the
effect that decertification will have on Colombia.
On a law enforcement level, the initial decertification of Colombia
in early 1996 forced the Government of Colombia to focus its efforts
more acutely in cooperating with the United States in the fight against
the spread of illicit drugs. These efforts resulted in operational
successes and in meaningful legislative reforms. The effects of the
subsequent decertification in 1997, however, remains to be seen.
In recent years, the Colombian National Police and DEA have forged
a strong bond with common objectives and mutual goals. Our law
enforcement officers have continued to work uninterrupted and
effectively, despite the Administration's decision to de-certify
Colombia. To illustrate this point, on June 26, 1997, the CNP, with the
assistance of the DEA, seized more than 2,500 kilograms of cocaine in
Puerto Rey, Department of Cordoba, Colombia. Also, on March 11, 1997,
the CNP seized more than $4 million in assets (including sophisticated
communications equipment) owned by the Cali Cartel. These seizures are
a direct result of continued outstanding bilateral cooperation between
the CNP and DEA.
Question. It appears that the heroin market is expanding because of
the ease with which it is manufactured and supplied. What is your plan
to stop the expansion of this market?
Answer. The expansion of the heroin market in the United States is
the result of several factors. While drug abuse was on the rise across
the board in the 1970's, the use of heroin was stigmatized and its
popularity was held in check. Due to the low purity of heroin available
at the retail level, the only effective method of administration at the
time was through injection, a method that most drug users found
unpalatable and not the least glamorous.
Today, heroin is readily available and is much purer than in years
past. In the 1970's and early 1980's, the purity of heroin at the
retail level averaged between 2 and 7 percent. Now, it is not uncommon
to find heroin as high as 80 percent pure being sold on our streets.
According to results of DEA's Domestic Monitor Program, the nationwide
average purity for retail heroin from all sources was 39.7 percent in
1995, over five times higher than a decade ago. At this purity level,
heroin can be administered effectively through several methods, all far
more alluring than injection and safer than using dirty needles.
Snorting, and to a limited extent, smoking, also called ``Chasing the
Dragon,'' are the preferred methods of ingestion by first-time and
casual users. However, as the user gains tolerance, more heroin is
needed for the high and snorters and smokers soon turn to injection.
The second and probably the single greatest reason for the
emergence of heroin is its portrayal as what is being called ``heroin
chic'' by members of the entertainment and fashion industry. A recent
article in Newsweek magazine reported that the fashion industry is seen
as glamorizing the junkie look in fashion photos and shows. In the last
several years, many people in the film and music industry have been
associated with heroin.
The annual number of heroin-related emergency room mentions
increased from 34,000 in 1990 to 76,000 in 1994. The Cornell University
Hospital reports the number of middle class people requesting treatment
for heroin addiction has increased tenfold in the past two years.
According to the Office of National Drug Control Policy, about 50
percent of users seeking treatment in 1995 used needles. During 1996,
according to a sampling of large treatment programs in selected cities,
that figure was up to 75 percent. As the addict population grows older,
that figure can be expected to increase. Those users injecting heroin
now have the highest rate of new HIV infection. Further exacerbating
the problem is the fact that when novices accustomed to other methods
of administration switch to needles, the high quality of heroin that is
often available on the street greatly increases the risk of overdose.
Between 3,000 and 4,000 heroin abusers die of overdoses annually.
According to the DEA's Heroin Signature Program results in 1995,
South America was the predominant source area for heroin seized in the
United States for the first time, accounting for 62 percent of the
total heroin analyzed, an increase over the 1994 total of 32 percent.
High grade Colombian heroin is smuggled into the United States by
couriers who use ingestion or body carries to get the drug into the
country, mostly in one-to-three kilo quantities. Aggressive
interdiction programs at Miami International Airport and New York's JFK
Airport have accounted for nearly half of all samples analyzed.
There is no question that heroin produced in and controlled by
groups in Colombia is being aggressively marketed throughout the
Northeast, and more recently, the Midwest. These two areas have, by
far, the largest portion of the heroin addict population in the United
States. Colombian traffickers have been attempting to make inroads into
the United States heroin market for several years. Reports of
substantial opium poppy cultivation in Colombia began in 1990. By 1992,
couriers from Colombia with one to two kilograms of heroin were being
arrested on a regular basis at Miami International Airport and JFK.
Within the United States, the same groups who are distributing
cocaine are now also trafficking in heroin. To compensate for their
late entry into the heroin trade, and to establish themselves in the
marketplace, Colombian traffickers provided high-quality heroin, 80 to
99 percent pure, to a fiercely competitive market where high purity is
essential to establishing a clientele and maintaining user loyalty. To
further entice customers, they offered their product at cut-rate
prices. Heroin prices have been relatively stable for years. High-
quality Southeast Asian heroin costs $150,000 to $200,000 per kilogram,
and Southwest Asian heroin, not consistently as pure as that from the
Golden Triangle, sells for approximately $120,000 to $150,000 per
kilogram. Lesser quality Mexican heroin is often priced under $100,000
per kilogram, but because of its inconsistent quality and black tarry
appearance, it has never gained popularity outside the West and
Southwest regions of the United States.
Colombian traffickers began offering their highly pure product at
$90,000 per kilogram and gave perspective customers free samples to get
a foothold. Other methods used to establish market share were to allow
customers to take multiple kilograms on consignment, and forcing
cocaine customers to accept quantities of heroin along with their
cocaine shipment as a condition of doing business. The other dilemma
faced by these traffickers was a lack of connections to the mid-level
wholesalers in the urban heroin trade, which they quickly solved by
enlisting Dominican gangs to bridge the gap. This was a natural choice
due to the Dominican nationals having already established ties in this
area through their position as mid-level cocaine wholesalers. We have
seen these independent groups using similar tactics in other major
cities such as Boston and Detroit, where they are pushing high-grade
heroin on to the streets, at extremely low prices to wrest the heroin
trade from Middle Eastern and Mexican traffickers.
Because the heroin industry is more decentralized and diversified
than the cocaine trade, a different approach is necessary to blunt the
impact of growing heroin problems. DEA's primary enforcement strategy
is to identify those individuals and organizations within the United
States responsible for heroin trafficking, and to target these
individuals and organizations, with the ultimate goal of arresting
them. DEA also seeks to ensure that these drug traffickers serve long
sentences and to provide follow-up effort in source countries to
identify and incarcerate the sources of supply.
Domestically we are targeting our investigative resources at the
organized Chinese and Nigerian gangs who control the Southeast Asian
heroin. In 1995, the Chicago Field Division identified a Nigerian Cell
operating in Chicago that was receiving 20 kilograms of heroin monthly
from Bangkok and redistributing it to street gangs in Chicago. All of
this heroin was smuggled into the country in five-kilogram quantities
concealed in suitcases; most couriers were female of either British or
American nationality and under the age of 25. Through an interagency
effort including DEA, USCS, and other agencies, we were able to arrest
21 individuals belonging to this relatively small cell of violators. In
conjunction with the USCS, we are also intensifying our interdiction
efforts at key international airports, and through our cooperation with
state and local officials around the United States, supporting
Operation Pipeline, an interdiction effort targeted at cocaine and
heroin being moved cross country via passenger vehicles.
The response to the expanding heroin market must be a comprehensive
effort, addressing prevention and treatment in addition to interdiction
and enforcement. In recent months, several significant enforcement
operations have been initiated to address the expanding heroin problem,
particularly in the northeastern and southeastern United States where
heroin from South America has had the greatest impact. For example, in
New York City, the nation's largest heroin market, DEA's New York Field
Division has been monitoring the distribution of heroin in the
metropolitan New York area and the proclivity of many organizations to
identify their particular brand of heroin by stamping brand names on
the glassine envelopes containing the heroin. The use of brand names
allows the organization to package its product in a manner clearly
designed to facilitate market loyalty and discourage competitors from
infringing on there customers. Examples of common brand names found on
the streets of New York City are being found in upstate communities as
well, highlighting the scope of the current heroin problem affecting
New York and the rest of the country. In addition, because South
American heroin is transported to Puerto Rico directly from Colombia as
well as through other nations in the Caribbean Basin, the San Juan
Field Division has initiated a five-year plan--designated as a priority
within the Caribbean Strategy--to coordinate major heroin trafficking
investigations in its area of responsibility.
The DEA hosted a National Heroin Conference in Reston, VA, February
3-6, 1997. This conference served to heighten the awareness of law
enforcement personnel, from around the country, to the increasing
heroin threat. DEA is in the process of developing Special Enforcement
Operations aimed at heroin traffickers. DEA realizes that enforcement
initiatives are not the only way to address this problem. We also need
to reduce the demand for heroin. DEA's Demand Reduction Program seeks
to alert the public to the real dangers of heroin. DEA's Demand
Reduction Program is trying to reach the youth of America through
programs in schools and national youth groups such as Boys and Girls
Clubs and the Boy Scouts of America. The Demand Reduction Program shows
gritty, real-life films depicting the dangers of heroin abuse. It will
take a combination of strong law enforcement pressure and the education
of our youth to the dangers of heroin to curb the expansion of the
heroin market.
The heroin problem facing the United States at the current time is
serious and must be addressed quickly to ensure that we do not have
another epidemic, as we had with crack in the 1980's. The recent
overdose deaths and coverage of the heroin issue in the press have
focused attention on heroin, and I believe that is the first step if we
are committed to addressing this issue seriously. DEA continues to work
diligently at home and overseas to dismantle the world's most
significant drug trafficking organizations. We appreciate the support
we have been given from the Congress, and we look forward to working
with Congress in the coming years to ensure that our nation's citizens
are safe and free from the drug scourge which has taken far too many
lives.
puerto rico
Question. What can the Committee do to help you with the challenges
you have in Puerto Rico?
Answer. DEA has determined that drug trafficking organizations are
responding to the increased enforcement along the Southwest Border by
increasing their use of the Caribbean and South Florida points of entry
to move their product to United States markets. DEA estimates that the
Eastern Caribbean is now the second most active drug trafficking route
into the Western Hemisphere. Another reason for the Caribbean's re-
emergence as a significant trafficking area may be in part a result of
the United States's recent success against the Cali leaders.
Current manpower and resources in the Caribbean do not compare with
those in the Southwest Border, and the task at hand is no less daunting
than that of the Southwest Border. The congressional committee would be
able to assist the Caribbean Field Division of DEA by: strengthening
its manpower, both agents and support staff; providing greater air
support to the region; providing additional technical equipment and
vehicles necessary to improve intelligence gathering and surveillance;
and increasing the training for state, local and foreign law
enforcement agencies. Many of these items are being considered at the
Department of Justice as part of the 1999 budget request.
______
Questions Submitted by Senator Pete V. Domenici
Immigration and Naturalization Service
naturalization application increase--interaction with welfare reform
Question. Currently, there are naturalization waiting lists of over
2 years in some jurisdictions. After the Welfare Reform Bill of last
year, non-citizens had a grace period of a year to complete the
naturalization process before being terminated from the welfare rolls.
How much of the influx in applications is due to non-citizen
affected by the Welfare Bill?
Answer. The Immigration and Naturalization Service (INS) does not
have information available about why people naturalize. The current
surge in citizenship applications appears to be the result of several
factors, including the passage of the Welfare Reform Law, changes in
INS procedures, as well as a significant increase in the number of
eligible persons. In fiscal year 1997, INS anticipates as many as 1.8
million naturalization applications, up from 1.2 million in fiscal year
1996. During the next 3 years, the INS expects applications to increase
by approximately 300,000 to 400,000 per year, for a total of more than
one million additional applications.
Question. How many of those who will be affected by the Welfare
Bill and eligible for citizenship, will be able to be naturalized
within the next two years if we accept the President's recommended
levels?
Answer. The INS does not have data regarding the number of non-
citizen who may be affected by the Welfare Reform Law and who are
eligible for citizenship. Some of this information may be available
from the Social Security Administration or the Food Stamp Program.
affidavits of support and public charge bonds
Question. Last year's immigration bill made the affidavit of
support for sponsored immigrants legally binding and emphasized the use
of ``public charge'' bonds.
How many people have been admitted into the country under a
sponsorship arrangement since enactment and how many public charge
bonds were collected?
Answer. Most family immigrants admitted since enactment of
legislation have had nonlegally binding affidavits of support filed on
their behalf. The new legally binding affidavit of support and the
implementing regulation are currently being reviewed within the
Administration and will be promulgated in the near future, with
implementation beginning, as provided in statute, 60 days later. During
this period, the INS will print the new form and with the State
Department, disseminate it to INS offices and consular posts worldwide.
Sponsors must obtain, complete, and file the new legally binding
affidavits of support on behalf of prospective immigrants who file
applications for immigrant visas or adjustment of status beginning on
the effective date.
The public charge bond pilot described in Section 564 of the
Illegal Immigration Reform and Immigrant Responsibility Act of 1996, is
currently being designed for implementation in five INS Districts.
Under this pilot program, certain family-based immigrants in the
selected five districts will be required to post public charge bonds in
addition to having affidavits of support filed on their behalf.
Beginning 9 months after implementation of the pilot, as required by
statute, the Attorney General will report on the effectiveness of the
pilot program.
Question. Have there been any court challenges to making the
affidavit of support legally binding?
Answer. We are not aware of any legal challenges to this new
requirement. The Service, however, has not yet promulgated the new
affidavit of support form; nor have the related regulations entered
into force. The need for extensive and in-depth consultation with other
agencies has prevented the Service from meeting the implementation date
specified by the statute. The new requirement will not enter into force
until the form and regulations are promulgated. Consequently, no one
has been affected by the new requirement in a way that would give them
standing to challenge the requirement.
special immigrant status for certain juveniles
Question. At a recent Subcommittee hearing at which the Attorney
General testified, I asked her to examine a provision adopted in the
1990 Immigration Act entitled ``Special Immigrant Status for Certain
Juveniles.'' At that time it was my belief that this provision was
being severely abused by certain students who come to the United States
from foreign countries on student visas. During the hearing with the
Attorney General, she informed the Subcommittee that she would look
into the matter and report back to us.
Madam Commissioner, as your staff has been looking into the issue
of Special Immigrant Status for Certain Juveniles in support of the
Attorney General's commitment to this Subcommittee, do you have
anything to report back to us about it at this time?
Answer. Yes. Balancing the issues related to the best interests of
a juvenile alien and the deference owed to state juvenile courts who
are experienced in dealing with juvenile issues with the immigration
enforcement mandate of the INS has been a difficult task. Although we
believe that the intent of the provision was to assist abandoned,
neglected, or abused children with no lawful immigration status, the
language of the provision contains no such limitation and is open to
the interpretation that it is available to other juveniles.
naturalization backlogs
Question. In New Mexico, I have one constituent, a Holocaust
survivor, who married a GI and immigrated to the United States 50 years
ago. She has since been widowed. Having married a United States
serviceman, this woman has long been under the mistaken impression that
she was a United States Citizen. Recently, however, she received a
letter from the Social Security Administration indicating that she is
not in the agency's records as being a citizen. She is now anxious to
naturalize.
I must thank the distinguished Subcommittee Chairman and his staff
for assisting me in monitoring this ongoing situation. I also thank you
for the detailed responses you gave to my several questions on this
issue last year.
I know that the Department is currently undergoing the deployment
of additional Border Patrol agents and other law enforcement and
support personnel along the border. The interim plan now being
implemented also redeploys some 200 Border Patrol agents to the
Southwest border. I understand that this deployment plan will be
finalized this month under the original schedule.
Commissioner Meissner, could you give the Subcommittee a brief
review of the interim deployment plan for Border Patrol agents and
support personnel?
Answer. The INS is in the process of deploying 714 Border Patrol
agents and 100 support staff of the new personnel received in fiscal
year 1997. Chart A lists these positions by state. The deployment plan
for the remaining 286 Border Patrol agents has recently been approved
as submitted in the original deployment schedule.
CHART A.--DEPLOYMENT OF FISCAL YEAR 1997 BORDER PATROL AGENT (714) AND
SUPPORT (100) POSITIONS
------------------------------------------------------------------------
Border
Sector/State/Station patrol Support Total
agents
------------------------------------------------------------------------
Del Rio, TX:
Bracketteville............... 5 ........... 5
Carrizo Springs.............. 5 ........... 5
Eagle Pass................... 27 1 28
Sector HQ.................... ........... 5 5
--------------------------------------
Total...................... 37 6 43
======================================
El Centro, CA:
Calexico..................... 24 ........... 24
El Centro.................... 12 ........... 12
Sector Headquarters.......... ........... 3 3
--------------------------------------
Total...................... 36 3 39
======================================
El Paso, NM:
Deming....................... 13 ........... 13
Las Cruces................... 13 2 15
Santa Theresa................ 26 ........... 26
El Paso, TX:
El Paso...................... 21 ........... 21
Sector Headquarters.......... ........... 5 5
--------------------------------------
Total...................... 73 7 80
======================================
Laredo, TX:
Laredo North................. 18 ........... 18
Laredo South................. 16 ........... 16
Sector Headquarters.......... ........... 6 6
--------------------------------------
Total...................... 34 6 40
======================================
McAllen, TX:
Brownsville.................. 81 1 82
Harlingen.................... 30 ........... 30
McAllen...................... 28 ........... 28
Mercedes..................... 20 ........... 20
Harlingen.................... ........... 2 2
Kingsville................... ........... 1 1
Sector Headquarters.......... ........... 12 12
--------------------------------------
Total...................... 159 16 175
======================================
Miami, FL: Miami Station......... ........... 1 1
Detroit, MI: Sector Headquarters. ........... 2 2
New Orleans, LA: Sector
Headquarters.................... ........... 1 1
Ramey, PR: Ramey................. 8 1 9
San Diego, CA:
Brownfield................... 7 ........... 7
Campo........................ 6 1 7
Jacumba...................... ........... 1 1
Chula Vista.................. 7 ........... 7
El Cajon..................... 6 1 7
Sector Headquarters \1\...... 175 26 201
--------------------------------------
Total...................... 201 29 230
======================================
Tucson, AZ:
Douglas...................... 90 3 93
Nogales...................... 76 2 78
Naco......................... ........... 1 1
Wilcox....................... ........... 1 1
Sector Headquarters.......... ........... 9 9
--------------------------------------
Total...................... 166 16 182
======================================
HQ, SC: Charleston Training
Facility........................ ........... 5 5
HQ, PA: National Firearms Unit... ........... 1 1
HQ, TX: El Paso Flight Operations ........... 2 2
Blaine, WA: Blaine Sector
Headquarters.................... ........... 2 2
Yuma, CA: Yuma Sector
Headquarters.................... ........... 1 1
WOR, CA: Regional Office......... ........... 1 1
--------------------------------------
Servicewide total.......... 714 100 814
------------------------------------------------------------------------
\1\ All trainees will EOD at San Diego Sector HQ and further be assigned
primarily to the mainline stations.
Question. Of the 1,000 new agents approved for fiscal year 1997,
how many have actually been deployed?
Answer. Of the 1,000 new Border Patrol agents, Congress has
approved the deployment of a total of 714 positions.
Question. How many of these agents are being sent to the El Paso
sector for New Mexico?
Answer. The El Paso Sector received 73 of the 714 Border Patrol
agents, 52 of the 73 were deployed to New Mexico stations.
Question. How many Border Patrol agents (BPA), investigators, and
support personnel are currently deployed in New Mexico? Would you
please provide this information by station?
Answer.
----------------------------------------------------------------------------------------------------------------
BPA Investigators Support
----------------------------------------------------------------------------------------------------------------
Lordsburg....................................................... 26 .............. 1
Truth or Consequences........................................... 12 .............. 1
Las Cruces...................................................... 80 2 6
Alamogordo...................................................... 55 .............. 2
Carlsbad........................................................ 3 5 1
Deming.......................................................... 85 1 2
Silver City..................................................... 2 .............. ..............
Albuquerque..................................................... 2 12 ..............
Santa Teresa.................................................... 100 .............. 1
-----------------------------------------------
Total..................................................... 365 20 14
----------------------------------------------------------------------------------------------------------------
Question. Of the remaining agents to be deployed (286), how many do
you anticipate will be deployed to New Mexico?
Answer. In June 1997, the INS reevaluated each sector's operational
needs and made final recommendations to the Appropriations Committees.
The recommendations were approved as submitted, which means that New
Mexico stations will receive another 24 Border Patrol agent positions.
Question. The Border Patrol deployment plan is scheduled to be
finalized in April. Is the Department on schedule to complete that in
April?
Answer. The INS submitted a proposed deployment plan for the
remaining 286 Border Patrol agents to the Appropriations Committees in
June. That plan was approved as submitted.
Question. Could you please provide the Subcommittee with the final
distribution of the 200 redeployed Border Patrol agents including where
they were transferred from and where they were actually redeployed?
Answer. The INS has moved 73 Border Patrol positions to the
Southwest border with an additional 127 workyears of redirected border
control activities. This will improve the overall border control
capability of the Border Patrol by 200 agents. Chart B provides the
locations of redeployment.
CHART B.--REDEPLOYMENT OF BORDER PATROL AGENTS--NEW AGENTS AND REDIRECTED WORK-YEARS
----------------------------------------------------------------------------------------------------------------
Positions
Border Patrol Sector Redirected Deployed to Total
Work-years Border
----------------------------------------------------------------------------------------------------------------
Buffalo, NY..................................................... 0.4 .............. 0.4
Detroit, MI..................................................... 1.5 .............. 1.5
El Paso, TX..................................................... 21.6 4.0 25.6
Marfa, TX....................................................... 12.4 .............. 12.4
McAllen, TX..................................................... 4.2 29.0 33.2
Havre, MT....................................................... 3.3 .............. 3.3
Miami, FL....................................................... 3.8 .............. 3.8
New Orleans, LA................................................. 1.0 .............. 1.0
Tucson, AZ...................................................... 6.8 9.0 15.8
Yuma, AZ........................................................ 9.6 .............. 9.6
Houlton, ME..................................................... .8 .............. .8
Swanton, VT..................................................... .............. .............. ..............
Del Rio, TX..................................................... 10.9 .............. 10.9
Laredo, TX...................................................... 7.1 .............. 7.1
El Centro, CA................................................... 6.6 .............. 6.6
San Diego, CA................................................... 4.6 31.0 35.6
Livermore, CA................................................... 20.0 .............. 20.0
Mayaguez, PR.................................................... .3 .............. .3
Spokane, WA..................................................... 7.0 .............. 7.0
Blaine, WA...................................................... 4.2 .............. 4.2
Grand Forks, ND................................................. .9 .............. .9
-----------------------------------------------
Total..................................................... 127.0 73.0 200.0
----------------------------------------------------------------------------------------------------------------
Question. Has the Department backfilled the positions as it
committed to do when the Border Patrol agents were transferred to the
front lines of the border? What is the status of this initiative?
Answer. The INS assigned 93 investigative positions to 30 locations
as backfill for the investigative functions previously performed by
Border Patrol agents in the redeployment plan. Vacancy announcements
for the investigative positions were announced the first quarter of
fiscal year 1997. Selections were made for 70 positions, with the
balance to be selected shortly. Of the 70 selections, 57 (81 percent)
were Border Patrol agents from the interior stations.
Question. What is your current assessment of the law enforcement
staffing situation in New Mexico?
Answer. The INS will continue to support the staffing requirement
and distribution of overall resources to meet the operational needs for
all INS offices including New Mexico. On-board staffing levels within
New Mexico have increased 76.4 percent since fiscal year 1994 (from 212
positions to 374 positions). In fiscal year 1997, the New Mexico
stations received the initial deployment of 52 Border Patrol agents and
will be considered in the final deployment of the pending 286 agents.
According to the 5-year staffing plan, New Mexico will receive
increased resources through fiscal year 2000.
Question. How would the additional Southwest border resources
requested in the President's budget affect New Mexico and your
assessment of the law enforcement situation in New Mexico?
Answer. The President's budget for fiscal year 1998 requested a
total of 550 positions (500 Border Patrol agents and 50 support
positions). The 5-year staffing plan proposes that an additional 50
positions of the requested increase of 500 Border Patrol agents be
directed to New Mexico for fiscal year 1998.
Violent Crime Reduction Trust Fund
$1.4 billion cut in vcrtf after 1999 proposed by the president
Question. The President's Budget proposes additional funding for
the INS, Drug Enforcement Administration, and Federal Bureau of
Investigation (FBI) out of the Violent Crime Reduction Trust Fund
(VCRTF). Would you characterize the Violent Crime Trust Fund spending
as funds to support ongoing programs or one-time investments?
Answer. The fiscal year 1998 budget request supports ongoing
programs within INS. The request includes 1,641 positions, 1,530 full-
time equivalent (FTE) employment and $510.6 million for budget base
spending, which is for ongoing activities previously approved by the
Congress. These include border control, the Institutional Hearing
Program, the detention of criminal and other deportable aliens, and
continuing information resource management activities. The increases
requested, which would be funded by the VCRTF in fiscal year 1998,
include 1,163 positions, 611 FTE and $221.6 million. If approved by the
Congress, the increases would require continuing funding support beyond
fiscal year 1998.
Funding appropriated for the FBI under the VCRTF is used for both
ongoing programs and for one-time investments. For example, in 1997,
the FBI was appropriated $20,240,000 for the National Instant Check
System. That amount was a one-time-only investment for system
development and does not recur in the President's 1998 budget request
for the FBI. Beginning in 1996, the FBI was also appropriated
$5,500,000 for forensic DNA programs. This requirement is recurring and
is included in the President's 1998 budget request. For 1998, the
President's budget proposes a total of $171,121,000 of VCRTF for the
FBI, of which $30,959,000 is for program increases and $140,162,000 is
for ongoing programs.
Funding appropriated for the DEA under the VCRTF can be used for
one-time investments, but primarily is used for ongoing programs. For
example in fiscal year 1996, DEA funded many on-going programs with the
VCRTF funds, including: domestic heroin programs, MET Teams, contract
linguists, ADP programs, and advanced telephony base for equipment
purchases. For fiscal year 1997, DEA is funding its entire State and
Local Task Forces Decision Unit and the funds received for the Source
Country/International initiative with its VCRTF funds.
Question. After 1999, the President proposes overall reductions of
$1.4 billion in the VCRTF. Can you tell the Committee which programs
will be terminated or scaled back after the dip in funding?
Answer. The reduction in the VCRTF is a result of the completion of
the Community Oriented Policing Services program. By 2001, all
authorized funding for this program will have been provided and the
program is expected to have met the goal of providing another 100,000
community policing officers to the states and localities. Other funding
from the VCRTF is expected to continue.
______
Questions Submitted by Senator Kay Bailey Hutchison
Immigration and Naturalization Service
border patrol agent increases
Question. The Illegal Immigration Reform and Immigrant
Responsibility Act of 1996 requires the number of Border Patrol agents
to increase by 1,000 per year through the year 2001. However, the
Administration has requested an addition of only 500 agents in fiscal
year 1998. I have written to the President and Attorney General and you
on this matter. What have you done, or intend to do, to seek an
increase in the number of Border Patrol agents from 500 to 1,000, as
mandated by the 1996 Immigration Act?
Answer. The INS is requesting 500 new Border Patrol Agents for
fiscal year 1998, even though the Illegal Immigration Reform and
Immigrant Responsibility Act of 1996 (IIRIRA) specifies that the Border
Patrol is to increase by 1,000 new agents every year for the next five
years. Over the past four years, between fiscal year 1993 and fiscal
year 1997, the Border Patrol Program's budget has more than doubled. In
addition, the number of Border Patrol agents has increased from 3,965
on-board at the end of fiscal year 1993 to an estimated on-board
strength of 6,859 agents by the end of fiscal year 1997. The addition
of 500 new Border Patrol agent positions in fiscal year 1998 would
bring the total to 7,359. This figure represents an 85 percent increase
over the fiscal year 1993 total and will exceed the ambitious goal of
7,000 that the President had previously announced. The sustained growth
of the Border Patrol into fiscal year 1998, and the number of
additional agents requested in the fiscal year 1998 budget, clearly
demonstrates the President's continuing commitment to a strong
enforcement presence at the border.
These 500 new agents will allow for responsible, manageable growth
of the Border Patrol and further improve our ability to control our
Nation's borders. This level of measured growth will allow us to
maintain integrity in our law enforcement activity. An increase of
agents at a level greater than this would outstrip the supervisory and
support staff available and jeopardize the integrity and efficiency of
INS's law enforcement efforts. While the growth in the Border Patrol is
clearly important, it is also important that the Service's
infrastructure, which supports not only the Border Patrol, but all
other Service programs as well, has a balanced growth with the Border
Patrol. Over the past four years, the growth of the Service's
infrastructure has not kept pace with the growth of the Border Patrol.
The fiscal year 1998 budget, while continuing to add additional Border
Patrol agents to a level that exceeds the President's previous
commitment, places emphasis on the increased resource needs of INS
infrastructure that are vital to maintaining a strong, effective, and
properly equipped Border Patrol.
bars to reentry
Question. Under the 3-year/10-year rule, which took effect on April
1 of this year, those in the U.S. illegally for 6 months or more, will
be barred from re-entry to the U.S. for 3 years. Those here illegally
for over a year will be barred from re-entry for 10 years. Beginning
October 1, 6 months from the effective date, your agency will take on
this additional duty to bar re-entry of those persons, as mandated by
Congress. How do you plan to implement this law barring re-entry for 3
or 10 years? Do you plan to publicize it?
Answer. Interim guidelines have been provided to the field for
implementing the new grounds of inadmissibility found in sections
212(a)(6)(A) and 212(a)(9) of the Immigration and Nationality Act
(``the Act''), as amended by IIRIRA. The effective date for each of
these sections is April 1, 1997. Sections 212(a)(6)(A) and 212(a)(9) do
not apply to applications for admission or adjustment of status
adjudicated by an immigration judge in deportation or exclusion
proceedings commenced prior to April 1, 1997. Except as otherwise
required by law, these grounds of inadmissibility apply at the time of
any other administrative determination regarding admissibility,
including but not limited to the issuance of a visa, inspection of an
alien at a port of entry, disposition of an application for admission
by an inspector or an immigration judge, or adjudication of an
application for adjustment of status. Further guidance will be released
and proposed regulations published in the Federal Register at a later
date.
The following addresses the general implementation of the sections
of law, the manner in which time ``unlawfully present'' in the United
States is measured, and the effect of these grounds of inadmissibility
on applications for adjustment of status.
I. General Implementation Issues
As a preliminary matter it is noted that the section 212(a)(6)(A)
ground of inadmissibility applies to any alien present in the United
States without having been admitted or paroled, but the 212(a)(9)
grounds of inadmissibility only apply to aliens who have previously
physically departed the United States and are now either seeking
admission or have entered or attempted to enter the United States
without being inspected. Therefore, section 212(a)(6)(A) does not apply
to visa applicants outside of the United States, but section
212(a)(9)(B) does apply to visa applicants outside of the United States
who previously did accrue sufficient unlawful presence in the United
States. Likewise, section 212(a)(9) does not apply to aliens seeking
adjustment of status in the United States who have not previously
departed the United States. Aliens will not be able to avoid the
consequences of unlawful presence by claiming that their re-entry after
their previous physical departure was brief, casual and innocent.
Section 212(a)(6)(A) of the Act provides that ``an alien present in
the United States without being admitted or paroled, or who arrives in
the United States at any time or place other than as designated by the
Attorney General, is inadmissible.'' Written into the section is an
exception for battered spouses and children. The battered spouse
exception will be applied to both women and men.
Section 212(a)(9)(A)(I) of the Act provides that aliens who have
been ordered removed from the United States through expedited removal
proceedings or removal proceedings initiated on the alien's arrival in
the United States and who have actually been removed (or departed after
such an order) are inadmissible for 5 years. Section 212(a)(9)(A)(ii)
of the Act provides that aliens who have been otherwise ordered
removed, ordered deported under sections 242 or 217 of the Act or
ordered excluded under section 236 of the Act and who have actually
been removed (or departed after such an order) are inadmissible for 10
years. Aliens who have been removed more than once are inadmissible for
20 years and aliens who have been convicted of aggravated felonies are
permanently inadmissible. The provision holding aliens inadmissible for
10 years after the issuance of an exclusion or deportation order
applies to such orders rendered both before and after April 1, 1997. In
this context, it should be noted that pursuant to section 101(a)(13)(C)
of the Act, permanent residents often are not regarded as seeking
admission upon return to the United States. The statute does include an
exception to the 212(a)(9)(A) ground of inadmissibility for those who
have, prior to their return to the United States, obtained consent from
the Attorney General to reapply for admission. The Service is
considering a regulation or policy that would grant this exception to
aliens excluded or deported prior to April 1, 1997, who had either been
subsequently lawfully admitted to the United States or granted an
immigrant or nonimmigrant visa prior to the effective date of the new,
lengthier prohibitions against readmission. In the interim, applicants
who have already remained outside of the United States for the one or
five years required under pre-IIRIRA law, in the absence of other
adverse discretionary factors, should be granted advance consent to
reapply for admission. Those who have been convicted of an aggravated
felony are eligible to apply to the Attorney General for consent to
reapply for admission but remain subject to all other applicable
grounds of inadmissibility. All requests for such a waiver should be
filed on Form I-212, Application for Permission to Reapply for
Admission into the United States After Deportation or Removal.
Pursuant to section 212(a)(9)(B)(I)(I) of the Act, aliens
``unlawfully present'' in the United States for more than 180 days but
less than one year who subsequently depart from the United States
voluntarily prior to the initiation of removal proceedings under
section 235(b)(1) or section 240 are inadmissible for a period of 3
years. For purposes of this section, ``voluntarily departed'' includes
any departure by an alien from the United States prior to the
initiation of removal proceedings, whether or not pursuant to an order
of voluntary departure issued by the Service. Pursuant to section
212(a)(9)(B)(I)(II) of the Act, those aliens ``unlawfully present'' in
the United States for one year or more, who depart or are removed and
then seek admission are inadmissible for 10 years. The Attorney General
may waive inadmissibility under section 212(a)(9)(B) in the case of an
immigrant who can show that refusal of admission would result in
extreme hardship to the alien's spouse or parent who is a citizen or
lawful permanent resident. The Service will retain authority to grant
the extreme hardship waiver in consular cases (with no administrative
appeal available); however, those seeking admission at a Port-of-Entry
who seek such a waiver will be referred to an immigration judge (with
administrative appeal to the Board of Immigration Appeals, as part of
an appeal of a removal order). Form I-724, Application to Waive
Inadmissibility Grounds and Permission to Reapply is being designed to
accommodate this provision.
Pursuant to section 212(a)(9)(C) of the Act, aliens who were
unlawfully present in the United States for an aggregate period of more
than one year and subsequently departed or who were previously ordered
removed (and actually left the United States) and have subsequently
either entered the United States without inspection or sought to enter
the United States without inspection are permanently inadmissible. The
statute makes an exception for aliens who seek admission more than 10
years after their last departure who have obtained advance consent from
the Attorney General to reapply for admission. This ground of
inadmissibility applies only to aliens who have attempted to re-enter
or actually have re-entered the United States without being inspected
and admitted or paroled.
II. Measuring Time ``Unlawfully Present''
When determining whether sections 212(a)(9)(B) and (C) of the Act
are applicable in a particular case, Service officers will be required
to determine the length of time that an alien spent ``unlawfully
present'' in the United States prior to their initial departure. A
number of factors are relevant to this calculation.
When is an alien unlawfully present? The first question in every
case will be whether an alien has been previously ``unlawfully
present'' in the United States. By statute, ``an alien is deemed to be
unlawfully present in the United States if the alien is present in the
United States after the expiration of the period of stay authorized by
the Attorney General or is present in the United States without being
admitted or paroled.'' See Section 212(a)(9)(B)(ii) of the Act. The
Service interprets time ``unlawfully present'' to include any time
spent in the United States by aliens after they have violated the terms
and conditions of any form of non-immigrant status, because time spent
in violation of status is not authorized.
For purposes of section 212(a)(9)(B), time in ``unlawful presence''
begins to accrue on April 1, 1997. For example, although an alien may
have been in the United States illegally for one year prior to April 1,
1997, as of April 2, 1997, the same alien has accrued only one day of
``unlawful presence'' for purposes of section 212(a)(9)(B). For
purposes of section 212(a)(9)(C), time in ``unlawful presence'' may
accrue prior to April 1, 1997. Thus, the same alien who would only have
one day of unlawful presence for purposes of section 212(a)(9)(B) on
April 2, 1997, would have one year and one day of ``unlawful presence''
for purposes of section 212(a)(9)(C). In addition, when measuring time
spent ``unlawfully present'' in the United States, the time is measured
cumulatively for purposes of section 212(a)(9)(C), but not for purposes
of section 212(a)(9)(B). For example, an alien who was ``unlawfully
present'' in the United States for 5 months, departed the United
States, returned, and was ``unlawfully present'' for 2 more months
would have accrued 7 months of ``unlawful presence'' for purposes of
section 212(a)(9)(C), but not for purposes of section 212(a)(9)(B).
Unlawful presence may be triggered either by overstaying the time
authorized or by entering into an activity that violates the terms or
conditions of status. For example, an alien present on a visitor visa
begins to accrue unlawful presence on the day that he or she enters
into unauthorized employment. Unlawful presence is also triggered by
the commission of a criminal offense that renders an alien inadmissible
or removable.
When does an alien stop being unlawfully present? Once an alien
goes out of status, he or she is ``unlawfully present'' until the
Service restores status or he or she leaves the United States. Service
policy governing restoration of status will be disseminated under
separate cover.
Section 212(a)(9)(B)(iii) enumerates instances in which an alien
does not accrue ``unlawful presence'' for purposes of section
212(a)(9)(B):
1. Time in which an alien is under 18 years of age.
2. Time during which an alien has a bona fide application for
asylum pending (unless the alien was employed without authorization at
any time during the period that the application was pending).
3. Time during which an alien is a beneficiary of family unity
protection.
4. For those admitted or paroled--time during the pendency of a
non-frivolous application for change or extension of status (up to a
maximum of 120 days).
5. Those who qualify as a battered spouse or child as provided in
section 212(a)(9)(B)(iii)(IV) of the Act.
These exceptions are not applicable when considering ``unlawful
presence'' for purposes of section 212(a)(9)(C).
The exception for up to 120 days during the pendency of an
application for change or extension of status only applies when the
application is submitted prior to the expiration of status by a person
who has been lawfully admitted or paroled into the United States, and
includes not only time during the pendency of an application for
``change or extension'' of status but also time during applications for
``adjustment'' of status.
An alien who is ``unlawfully present'' continues to accrue time as
such while in removal proceedings. See 8 CFR section 239.3. Likewise,
the grant of voluntary departure by the Service or an immigration judge
will not stop the running of time ``unlawfully present.'' However, time
in certain forms of Attorney General ``sanctioned'' status will not
count in measuring time unlawfully present. By proposed regulation,
this will include refugees admitted under section 207 of the Act,
aliens granted asylum under section 208 of the Act and aliens granted
cancellation pending adjustment of status. The proposed regulation
addressing these groups will be specific in nature and not leave
``sanctioned'' status open to broader interpretation. Aliens with
pending change or extension of status applications after the 120-day
period and aliens present but not yet removed after a final removal
order will not be considered to be in a period of stay ``authorized by
the Attorney General.''
III. Impact of these Grounds of Inadmissibility on Applications for
Adjustment of Status
Aliens inadmissible pursuant to 212(a)(6)(A) of the Act are
eligible to apply for adjustment of status under section 245(i) of the
Act. However, aliens inadmissible pursuant to section 212(a)(9) of the
Act are ineligible for adjustment of status under section 245 of the
Act, subject to the waiver and exception provisions of those grounds of
inadmissibility.
The INS plans to issue a regulation in June to implement the re-
entry bar provisions. The regulation will be a proposed rule with a
public notice and comment period.
extension of section 245(i)
Question. Under Section 245(i), those here illegally can now adjust
their status without leaving the country. The filing fee paid under
245(i) has provided INS with additional resources. However, Section
245(i) will lapse on October 1, requiring all those not ``in status''
or here illegally to leave the U.S. in order to adjust their status.
What accommodation in your budget have you made for the fact that there
will be no Section 245(i) application fees in fiscal year 1998? Do you
intend to seek an extension of 245(i), which undermines the effect of
the bars to re-entry?
Answer. The INS fiscal year 1998 budget includes a provision to
extend Section 245(i) indefinitely. Therefore, the fiscal year 1998
budget for the Examinations Fee Account assumes that Section 245(i)
will be extended.
______
Question Submitted by Senator Ben Nighthorse Campbell
consolidation of the federal law enforcement training center
Question. Commissioner Meissner, as you know, there is a Memorandum
of Understanding (MOU) in place regarding the future consolidation of
the Federal Law Enforcement Training Center (FLETC). This MOU also
includes the future disposition of FLETC satellite facilities. Could
you please provide the Subcommittee with INS progress towards
fulfillment of its obligations under the MOU?
Answer. The MOU is still being finalized. We are presently
negotiating with FLETC about technical requirements put forth in the
MOU.
We are using Charleston as a satellite facility because FLETC did
not have the capacity to meet our training requirements. When FLETC has
the capacity to meet our training requirements, INS has every intention
of returning to FLETC at Glynco, Georgia.
______
Questions Submitted by Senator Ernest F. Hollings
Immigration and Naturalization Service/Federal Bureau of Investigation
fingerprints/immigration
Question. There has been a great deal of controversy over the
failure of the Immigration and Naturalization Service (INS) and the
Federal Bureau of Investigations (FBI) to conduct fingerprint checks of
immigrants applying for citizenship. Apparently, as many as 100,000
immigrants were naturalized without checks to ensure that they do not
have criminal records.
I remember in 1994 that the INS proposed to stop having the FBI
make fingerprint checks altogether in order to save $3 million. Well
Senator Byrd and I wrote to Janet Reno and put a stop to that.
But now, 4 years later, it appears that the INS began developing a
naturalization project called ``Citizenship USA'' that still had the
same fingerprint problems that Senator Byrd and I highlighted three
years ago.
Commissioner Meissner, did the INS notify the FBI that it was
concerned about the backlog of naturalization applications and that
your agency was planning to shorten its application process and
therefore would be assuming that if the FBI had not contacted INS
within 60 days, that the application was okay?
Answer. After the February 1994, Office of Inspector General report
on weaknesses in the INS fingerprint clearance process, INS began
frequent meetings with the FBI. At these meetings the increase in
naturalization receipts, and the Citizenship USA plan to reach a 6-
month processing goal was discussed. In addition, the growing INS
processing backlog, subsequent to implementation of new quality
assurance fingerprint processing procedures, was addressed with the
FBI, and led to INS/FBI plans to enhance the electronic transfer of
data between the two organizations.
Question. Director Freeh, did the FBI ever inform INS that it would
be unable to meet the 60 day requirement?
Answer. Yes. The ability of the FBI to meet a 60-day requirement
was discussed at operational working levels between individuals of both
agencies. This issue was not, however, discussed between senior levels
of FBI and INS management.
Question. Did you ever tell INS to hold up and not proceed?
Answer. No. INS was often advised by the FBI that it could not
handle the volume of naturalization work on an expedited basis, and
that the FBI could not guarantee any particular response time.
Question. Much is made of this DIAP or Director of Investigative
Agency Policy mechanism that was established to coordinate Justice
agency programs. Does the DIAP deal with technology and criminal
background checks?
Answer. No, to date the DIAP has not addressed the issue of
fingerprint technology and criminal background checks.
fingerprint card backlog
Question. I recently read where the FBI's fingerprint
identification operation is overwhelmed and that there is a backlog of
2.8 million fingerprint cards to be processed. According to one media
report, the FBI has fallen at least three months behind on completing
checks on criminal suspects and background checks on teachers, child
care providers, security guards, private investigators, bank employees,
and others who must have an FBI fingerprint check.
What is the status of the fingerprint card backlog?
Answer. On May 19, 1997, the backlog of fingerprint cards was in
excess of 2,600,000.
Question. How long does it take to process a criminal fingerprint
card? A civil fingerprint card?
Answer. As of May 19, 1997, it took an average of 148 days from the
time a criminal fingerprint card was received by the FBI, until a
response was returned. As of May 19, 1997, it took an average of 36
days from the time a civil fingerprint card was received by the FBI,
until a response was returned.
There are several reasons why it takes more time to process a
criminal fingerprint card than a civil card. Only nine percent of the
civil fingerprint cards received are identified or matched up with
criminal history records. Since the identification rate is low, the
civil cards are processed more quickly because there are fewer steps
involved in the processing of cards when there is no identification.
Conversely, approximately 65 percent of the criminal fingerprint
cards submitted are identified or matched up with existing criminal
history records, which increases the number of steps involved in the
processing of these fingerprint cards.
The Criminal Justice Information Services (CJIS) Division has over
35 million fingerprint cards in its master criminal history file. When
a current fingerprint submission is matched up with a criminal record,
an employee has to physically pull a paper fingerprint card from the
criminal file and compare it with the current fingerprint card
submitted for identification to determine if they are identical. These
existing cards in the master criminal file are then refiled.
After the current fingerprint cards are identified, the current
arrest record is added to the existing criminal history record. If the
current print is identical with a non-automated criminal record, that
record has to be pulled and converted to the automated format.
Question. How did the backlog grow to such high levels and what
actions have the FBI taken to eliminate the backlog?
Answer. The average fingerprint cards received daily by the FBI is
at the highest level since World War II. One of the primary causes of
the increase in fingerprint card submissions is new legislative
requirements at the state and Federal levels for fingerprint checks to
be conducted for licensing and employment purposes. Listed below are
the daily average receipts for all fingerprint cards received by the
FBI during fiscal year 1994 through 1996, and fiscal year 1997 to date:
Average cards received daily
1994..............................................................34,992
1995..............................................................39,334
1996..............................................................45,520
1997..............................................................55,038
In the fourth quarter of fiscal year 1995, the CJIS Division
reduced the backlog of fingerprint cards from 1,200,000 to
approximately 850,000 by using overtime extensively. Due to the
Government-wide shutdown that occurred during the first quarter of
fiscal year 1996, the CJIS Division was unable to work any overtime and
the backlog once again began to increase. Furloughs during the first
quarter of fiscal year 1996 prevented other Federal Government agencies
from processing and submitting their fingerprint cards on a regular
basis. This resulted in the highest daily average receipts of
fingerprint cards in recent history during the second quarter of fiscal
year 1996.
The FBI's CJIS Division uses a fingerprint card processing system,
the Identification Automated System (IDAS), that was built to process
approximately 31,000 fingerprint cards daily, with occasional
``spikes'' in daily receipts up to 37,500 cards. This system was also
designed to have a staffing level of 3,045. Although the IDAS
processing capability has continually improved, the staffing level
assigned to fingerprint card processing has diminished while workloads
have increased remarkably.
Due to the relocation of the CJIS Division to its new fingerprint
identification facility in Clarksburg, West Virginia, the CJIS Division
has encountered a major decrease in its experienced staff (1,675 at the
beginning of 1997 versus 2,310 at the beginning of 1996). Hundreds of
highly experienced fingerprint examiners and others decided not to
relocate to the new facility and either left the FBI or found positions
elsewhere at FBI Headquarters. These employees were replaced with new
personnel who are in training but will require time to develop
necessary expertise.
Additionally, during the first quarter of fiscal year 1997 the FBI
received a Congressional subpoena to recreate years of prior work
produced for the INS special project.
The FBI has taken several actions to eliminate the backlog:
--The FBI is hiring 1,100 new CJIS Division employees in fiscal year
1997 to assist in fingerprint-related matters at the West
Virginia facility. The majority of these employees will be
trained to process fingerprint cards and related criminal
history record data/information.
--As of March 31, 1997, the FBI has hired 490 employees of the 1,100
CJIS employees.
--The CJIS Division's fingerprint processing staff continues to work
extensive overtime of over 20,000 hours a pay period. The
continuation of this overtime utilization is viewed as a short-
term solution.
--The FBI's incremental development of its new fingerprint
identification system, the Integrated Automated Fingerprint
Identification System (IAFIS), will enable it to process
fingerprint cards more quickly beginning with IAFIS ``Build
C,'' a stand alone Image Storage and Retrieval Element, by the
first quarter of fiscal year 1998. The time saved by digitally
storing and retrieving fingerprints for comparison and other
technical advancements in this early delivery by IAFIS will
allow the FBI to continue to address the reduction of the
fingerprint card backlog and eventually eliminate the backlog
entirely.
Question. Does reducing the criminal backlog receive priority?
Answer. No. The entire backlog is of concern to the FBI.
Approximately 50 percent of all receipts are criminal and 50 percent
are civil. They are both entered proportionately into the process.
However, civil prints move through the process much faster, due to the
fact that only 8 to 10 percent are identified with existing criminal
records. Comparatively, 65 percent of criminal prints are identified
with previously existing records. The higher ``hit'' rate for criminal
prints requires lengthening processing time and more personnel
resources to compare the incoming prints to those in the existing
master criminal history file.
Question. When does the FBI anticipate having the backlog
eliminated?
Answer. If receipts remain constant, it is estimated that with the
additional 1,100 employees, the backlog could be eliminated when by
IAFIS reaches Full Operating Capability (FOC) or mid calendar year
1999. Due to the uncontrollable variable of daily receipts, that
estimate could be shortened or lengthened depending upon future volume.
In any event, within 1 year of IAFIS FOC, the FBI anticipates
elimination of the backlog.
To date in fiscal year 1997, fingerprint card receipts are
averaging in excess of 55,000 per day while output is averaging
approximately 52,000 per day and employee productivity per year is
averaging 4,900 prints. These figures are significantly higher than
fiscal year 1996 figures which averaged daily receipts of approximately
45,000 per day and employee productivity per year was at a 4,592 annual
average.
These figures can, and, do fluctuate rapidly with the variances
experienced in receipts and available personnel to address the
workloads. As additional employees are hired, trained and become
proficient in the processing of fingerprint cards, the rate of growth
of the backlog will be stabilized and eventually reduced to manageable
levels. This process will also be enhanced by the addition of new
automated capabilities becoming available during the first quarter of
fiscal year 1998.
mt. pleasant illegal aliens
Question. In your written testimony, Commissioner Meissner, I note
that you are emphasizing interior enforcement. I think this is very
important. Too often we think of illegal immigration as a border issue
that requires resources for San Diego, Arizona and Texas. But, I can
tell you that public support for your program can dissipate quickly if
you don't pay attention to that interior issue.
Let me give you an example. Last summer, local police near my home
in Mt. Pleasant, South Carolina arrested five individuals caught
speeding on the Cooper River Bridge with open alcohol containers in the
car. On further investigation, the police ascertained that these
individuals were illegal aliens. They contacted INS, the nearest office
of which is in Charlotte, North Carolina, and were told to let the
aliens go. They weren't ``criminal'' aliens, and so INS wouldn't get
involved. This unfortunate event eventually got the Department of
Justice (DOJ) and INS a lot of bad press in my backyard.
What can be done about situations like this? Is it true that INS
will only be concerned if aliens are ``criminal'' aliens? Could we
allow the Border Patrol officers in Charleston who are training
recruits to also have an enforcement role?
Answer. During the summer of 1996, the Mt. Pleasant South Carolina,
police contacted the Charlotte, North Carolina, INS office. The
Charlotte office is a sub office of the Atlanta, Georgia, INS District
Office. The Mt. Pleasant Police Department (MPPD) requested that the
INS assume custody of the 5 alleged illegal aliens that they had
arrested for traffic violations. Charlotte is the closest INS
enforcement office to the MPPD, which is 200 miles away. The INS
special agents did not have information indicating whether or not the
MPPD was arresting the subjects or had lodged criminal charges on which
to detain them for the 5 to 7 hours it would have taken the INS agents
to respond. Criminal aliens are a higher priority than aliens not
convicted of crimes. Had we known that the MPPD was charging the
suspects with state violations, the INS Charlotte office would have had
time to respond and to interview the suspected illegal aliens. The INS
does not have the resources to respond to every alleged illegal alien
arrest.
The Border Patrol is hiring and training new agents at an
unprecedented rate. Both detailed and permanently assigned instructors
at the Glynco, Georgia, and Charleston, South Carolina, facilities are
doing an outstanding job of meeting the challenges associated with the
dramatic staffing increase authorized by Congress. These instructors
are already working beyond their normal duty day to meet training
schedules. At this point particularly, I believe it would significantly
impact the training mission to divert these instructors to enforcement
activities.
Drug Enforcement Administration
permanent change of station
Question. Administrator Constantine, your fiscal year 1998 request
asked for an additional $7.8 million to establish a Permanent Change of
Station (PCS) operating account of $31 million. I find this interesting
as over the last several years the Drug Enforcement Administration
(DEA) has been reprogramming funds out of this account for what the
agency has described ``as critical law enforcement needs.
But, according to your budget justification that without this
additional funding DEA will be forced to lengthen the tours of its
special agent work force, which would adversely effect the quality and
competency of DEA special agents, as well as pose additional concerns
for the agency in the area of safety and integrity assurance.
For the last 6 years your agency has been dealing with this
problem. Why with an average of 594 employee moves a year, at a cost of
$21.6 million annually does DEA need an additional increase?
What is the average cost of an agent's move--are my calculations
correct, is it over $60,000 per move? On average how often do your
agents need to be moved?
Answer. During the last 3 years (1995 to 1997), there has been no
reprogramming of funds out of the PCS operating account. To the
contrary, due to funding shortfalls and a significant PCS backlog,
which the agency only began to address in 1995 and 1996, it was
necessary to make one-time reprogramming into the PCS account.
The need for the requested increase is based primarily on the
increase in the number of moves. The agency averaged 594 employee moves
per year between 1990 and 1996. However, the average number of moves in
1995 and 1996 was 800 per year. This is a result of the increase in
permanent positions as well as backfilling managerial positions due to
a large number of retirements. PCS requirements are projected to remain
at this increased level.
Moving costs have also increased during the time period. The
average move now costs between $30,000 and $40,000. Average cost per
move varies from year to year with the number of new agents hired. The
average cost to move a new agent is $10,000 while moving a senior agent
may cost more than $60,000. On the average, agents need to be moved
every 5 to 7 years. The maximum overseas tour for an agent is 6 years.
Question. Director Freeh and Commissioner Meissner, do you move
your agents like the DEA? If so, how often do you move your agents and
what is the cost?
Answer. All FBI agents are subject to transfer at any time to meet
the organizational and program needs of the FBI. FBI agents accept the
possibility of transfer as a condition of their employment. The FBI and
DEA both have mobility agent transfer policies.
In general, FBI agent transfers are made to field offices that are
below their authorized funded staffing level or have a critical
specialty need. The FBI determines whether vacancies in field offices
will be filled through first office, rotational, or Personnel Resource
List (PRL) transfers to maintain an adequate combination of various
investigative experience levels in a particular field office.
First Office Transfers (new agents).--When an agent has
successfully completed new agents' training at the FBI Academy,
Quantico, Virginia, he/she is assigned to one of the Bureau's field
offices based on the current staffing and/or critical specialty needs.
New agents may list their preference for assignment and consideration
is given to their desires; however, assignment is based upon the
staffing needs of the Bureau. An agent can generally expect to remain
in his/her first office of assignment for a minimum of 4 years.
Rotational Transfers.--After completing 4 years in his/her first
office of assignment and until reaching 10 years in his/her office of
assignment, an agent can be considered for a rotational transfer to a
second field office depending on staffing needs. Rotational transfers
are usually based on reverse seniority utilizing the agent's entry-on-
duty date at his/her office of assignment and the staffing level of
his/her office of assignment. The junior-most agent having served four
years in his/her first office of assignment is considered first for
rotational transfer.
Personnel Resource List (PRL) Transfers.--The PRL system was
established to provide a means for agents to document a preferred
office of assignment. The assignment to a preferred office is not a
system of reward nor is it a guarantee. It is, however, a means by
which the personnel resource needs of the Bureau may be addressed
effectively while satisfying the preference of employees. This system
is based generally upon seniority, consistent with the needs of the
Bureau and budgetary considerations. Agents are limited to one PRL
transfer during their career (with limited exceptions such as those
agents who received a PRL transfer from a then-Top 12 offices
[Baltimore, Boston, Chicago, Cleveland, Detroit, Los Angeles, Miami,
Newark, New York, Philadelphia, San Francisco, and Washington, D.C.] to
another Top 12 office prior to June 9, 1987; additionally agents
receiving PRL transfers to Anchorage, Honolulu or San Juan can be
eligible for a second PRL transfer.).
Specialty Transfers.--Specialty needs of the field offices are
generally identified by the Special Agent in Charge for essential
skills such as: Bureau Pilot-In-Command; Technically Trained Agent;
Agent Accountant; and agents with foreign language ability. An agent
who receives a specialty transfer is expected to serve in that capacity
for at least 3 years.
In addition, agents are afforded cost transfers in connection with
hardship requests, undercover assignments, assignment of the Hostage
Rescue Team, and Executive Development and Selection Program (EDSP).
The estimated 1997 cost associated with each transfer is as
follows:
New agents.................................................... $12,798
Specialty/Operational/Rotational.............................. $50,115
PRL........................................................... $50,115
EDSP
$66,224
The following is an estimate of the number of transfers to be
effected for fiscal year 1997 by the FBI:
New agents.................................................... 1,120
Specialty/Operational/Rotational.............................. 214
PRL........................................................... 214
EDSP
279
The INS does not have a formal agent rotation policy. Most new or
enhancement agent hiring is currently done at the entry level where
transfer costs are not an issue. As vacancies for higher graded
positions become available, many are backfilled with local agents.
However, this type of hiring is not limited to local area hiring and
may require transfer funds. The INS transfers its agents to address
operational requirements. The average fiscal year 1996 cost per move
for a Border Patrol agent was approximately $66,400 and for a special
agent the average cost was $75,400.
director for investigative agency policy [diap]
Question. Several years ago, as an alternative to the Vice
President's call for consolidating the FBI, DEA, and Alcohol, Tobacco
and Firearms, the DOJ created the coordinating position of the ``DIAP''
or Director of Investigative Agency Policies.
Could you give us some examples of DIAP accomplishments?
Answer. On November 18, 1993, Attorney General (AG) Reno
established the Office of Investigative Agency Policies (OIAP) to
increase efficiency within the DOJ and to coordinate specified
activities of the Department's criminal investigative components. AG
Reno selected FBI Director Louis J. Freeh as the first Director of
Investigative Agency Policies (DIAP) from among the principals of the
participating OIAP agencies.
Shortly after the appointment of Director Freeh as the DIAP, an
Executive Advisory Board (EAB) was established to assist in the
development and analysis of issues suitable for the OIAP review. The
EAB consists of officials drawn from the ranks of the OIAP member
agencies. These agencies include the United States Marshals Service
(USMS), INS, DEA, FBI, and the Criminal Division. Although they are not
members of the EAB, other DOJ components, including the Bureau of
Prisons (BOP), AG Advisory Committee, and the Office of the Inspector
General, participate in many of the OIAP's efforts. Senior level
employees from the member agencies provide staff support to the DIAP
and the EAB in fulfilling the mission of the OIAP. Although the OIAP is
purely a DOJ organization, it coordinates some of its activities with
the investigative agencies of the Department of the Treasury.
Several OIAP working groups have been established. These working
groups unite experts who address technical matters in their areas of
expertise. The working groups report to and provide advice to the EAB
and DIAP.
Over the past 3 years, the DIAP has proven to be an effective
policy maker and coordinator within the Department as well as with
other Federal agencies. Among the achievements of the DIAP are the
development and implementation of 20 resolutions. For example, some of
these resolutions set forth the following:
--Directed the FBI and DEA to create a common drug intelligence
database.
--Established guidelines to improve coordination of criminal overseas
investigations, with respect to drug trafficking and related
areas, to prevent duplication and maximize investigative
efforts conducted in foreign countries.
--Established the Interagency Budget Advisory Council to develop
yearly budget priorities for OIAP investigative agencies for
incorporation into the Attorney General's budget guidance.
--Established guidelines regarding the use of FBI crisis management
resources in the field during crisis situations to avoid
duplication of efforts among agencies, while promoting safety,
effectiveness, and cooperation.
--Established a uniform policy regarding the use of cooperating
individuals and confidential informants.
--Established guidelines regarding the reporting and review of post-
shooting incidents.
--Established guidelines regarding the use of deadly force in
custodial or escape situations.
--Established guidelines regarding Federal law enforcement agencies'
issuance of warnings to persons, and notification to other law
enforcement agencies, of threats to life or of serious bodily
injury.
Question. When I look around the country things seem pretty
separate. The FBI is building its own new offices to be more secure. In
Columbia, South Carolina, the FBI is moving out of the Federal Building
downtown to a more secure building in the suburbs. But the DEA is
staying in the Federal Building.
The FBI is building a new $130 million FBI laboratory at Quantico,
but the budget before us is requesting $25 million for reconstruction
of its aging labs, and the Treasury appropriations bill has a $55
million request for a separate Bureau of Alcohol, Tobacco and Firearms
(ATF) laboratory.
Can you give any examples where the DIAP has disapproved requests
by law enforcement agencies and has forced consolidation and savings?
Answer. The DIAP created a Field Structure Working Group (FSWG) to
examine the field structure of the DOJ and identify possible areas of
consolidation. Based on its findings, the FSWG determined a collocation
of offices would not be cost effective, efficient, and/or might not
fulfill the security requirements of each agency. Another aspect of co-
location is operative limitations. For example, DEA is a single mission
investigative agency, whereas the FBI is responsible for multiple types
of investigations. As a result of the difference in jurisdiction,
access to space would be cumbersome due to differing security
clearances required by each agency.
Although the OIAP has coordinated some of its activities with other
investigative agencies, such as ATF, the DIAP can only make decisions
regarding the activities of investigative agencies under the DOJ.
Because the ATF is funded within the Department of the Treasury, the
DIAP cannot make decisions regarding its appropriations request.
There are no specific examples that can be cited where the DIAP
disapproved requests by law enforcement agencies. The policy of the
DIAP was not to disapprove requests directly. The DIAP created working
groups, which brought together experts to address technical matters in
their areas of expertise, to provide advice to the DIAP and the
Executive Advisory Board. This was proven to be an effective means to
increase efficiency and coordinate specified activities of DOJ law
enforcement agencies.
The guiding principle for the OIAP has been whether a proposed
course of action would benefit our nation at large, especially the men
and women of law enforcement. At the OIAP, partisan agency interests
have been greatly diminished and interagency cooperation has become the
norm. The OIAP's results have been the product of many persons'
efforts. For example,
--The DIAP's first Resolution directed the FBI and DEA to create a
common drug intelligence database to allow agents from both
agencies to coordinate their investigative activities in a
manner that maximizes the impact on drug targets and enhances
the safety of law enforcement personnel. As a result of this
resolution, millions of FBI drug records were segregated and
entered into the joint FBI and DEA joint drug intelligence
database. The volume of those records' integration is
increasing daily.
--FBI participation was mandated at the El Paso Intelligence Center
(EPIC). The FBI has permanently assigned personnel to EPIC to
retrieve FBI data relative to EPIC's tactical drug enforcement
mission.
--The DEA was reaffirmed as the single point of contact with foreign
law enforcement officials on drug law enforcement operational
and intelligence matters. FBI personnel are assigned to various
offices at DEA Headquarters and certain DEA offices overseas to
prevent duplication of investigative efforts and enhance drug-
related investigations conducted in foreign countries.
--The role of the National Drug Intelligence Center was clarified by
vesting it with primary responsibility for the DOJ strategic
organizational intelligence activities relating to drug
trafficking organizations.
--The use of VISA credit cards in lieu of purchase orders for
transactions under $2,500 was endorsed. The savings are
estimated to be $54 in administrative costs for every purchase
made with the VISA credit card.
--The air transportation systems of the INS and USMS were merged into
one system, the Justice Prisoner and Alien Transportation
System (JPATS). This merger provided the DOJ, for the first
time, a consolidated passenger transportation system. The
objective of the merger was to take advantage of centralized
management, scheduling, maintenance, and associated economies
of scale for both the INS and USMS. While this implementation
strategy focused on aviation system benefits, other related
benefits include better and more economical use of ground
transportation resources and personnel, greater combined
utilization of jail/detention facilities; and reduced security
risks by enabling INS and the USMS to reduce both the use of
labor intensive, commercial flights and higher risk ground
movements. The merger of the JPATS was also implemented with
the assistance of the BOP to ensure that the air route
decisions mesh with BOP's extensive ground transportation
system. Additionally, the FBI also participates with a commuter
type plane and pilots to support the historically under
serviced mid-Atlantic/northeast corridor on a reimbursable
basis. The USMS, INS, BOP, and the FBI, working in a spirit of
true cooperation, have developed a transportation system with
great advantages to the DOJ and as a key element in addressing
the prompt deportation of criminal aliens.
--Began collocation for the servicing of DEA Official Government
Vehicles (OGV's) by the FBI. For several years, the FBI has
serviced OGV's for the USMS and INS. To increase efficiency and
cost effectiveness, the FBI has begun servicing DEA
Headquarters OGV's. This year, the FBI will begin servicing all
DEA Washington, D.C., and Denver, Colorado, field office OGV's.
--Contracts were identified that are utilized by the USMS that the
FBI could use to purchase authorized pepper gas spray systems
and handcuffs, which resulted in estimated savings of $223,900.
fbi laboratory management
Question. Director Freeh, the FBI has requested $32.6 million to
complete funding for the completion of its new $130 million laboratory
located in Quantico, Virginia. We are all aware of the allegations
regarding the current laboratory here downtown. The Washington Post
reports that prosecutors have been notified in over 50 criminal cases
that there may be problems with the quality of the lab's work. It
reported that Oklahoma City suspect ``Tim McVeigh may have gotten his
biggest break when an internal Justice Department investigation of
shoddy practices at the FBI's crime lab indicated that key evidence in
the bombing case could have been tainted.''
Obviously, this could affect many law enforcement agencies and
cases since 10 percent of the forensic examinations are performed for
state and local law enforcement.
What can you tell us about this investigation of the FBI lab and
these allegations?
At our Internet child pornography hearing earlier this week, you
said the lab is still the premier forensic lab in the world. Could you
give us some assurance of why you believe this? I'm sure that I am not
alone when I shudder to think that an accused terrorist might go free
because the evidence is suspect.
Answer. Over the course of 18 months, the Inspector General
conducted the most extensive investigation of the FBI Laboratory ever
performed. That investigation, which focused on three of the
Laboratory's units (Explosives, Materials Analysis and Chemistry-
Toxicology), found serious deficiencies and errors in some of the most
important cases handled by the FBI in recent years, including the World
Trade Center case and the Oklahoma City bombing. Such deficiencies and
errors are inexcusable and will not be permitted to recur. It should be
noted, however, that the Inspector General found no merit to the most
serious allegations made against the Laboratory. The Inspector General
found no evidence fabrication, evidence tampering or perjury. The
Inspector General also found no indication of systemic contamination of
evidence within the Laboratory.
Since the Inspector General's investigation began, the FBI has been
working with prosecutors to ensure that the problems in the Laboratory
did not compromise any case. Because of the ``gag order'' issued by the
judge in the Oklahoma City case, we cannot comment directly on that
matter. However, the FBI has no reason to believe that any pending or
future cases will be compromised by the conduct of any Lab employee. We
do not believe that any prosecutions will be declined or that any
defendant's right to a fair trial will be threatened.
With respect to past cases, the FBI and the DOJ have been reviewing
and will continue to review past cases involving the examiners
criticized by the Inspector General. We believe that an exhaustive
review of those cases is necessary to ensure that no one's right to a
fair trial has been jeopardized.
At the time the Inspector General issued the final report regarding
the Laboratory, on April 15, 1997, the Justice Department had provided
material regarding the Laboratory to prosecutors on in approximately 55
cases. Since that time, the Justice Department has broadly disseminated
the Inspector General's report, in part by publishing that report on
the Internet. The FBI and Justice Department will work together closely
to fulfill our legal obligation to make material related to the
allegations about the Laboratory available to prosecutors for their
determination as to whether information should be furnished to the
defense.
The FBI remains confident in its Laboratory for several reasons.
The FBI has agreed with all of the recommendations made by the
Inspector General to improve the Laboratory's policies and procedures
and is actively implementing the recommended changes. One such
recommendation was that the Laboratory should pursue accreditation as
quickly as possible, which it will do. During the accreditation
process, the Laboratory will be subject to extensive external reviews,
which will identify any additional improvements that might be required.
We believe that these efforts to improve the Laboratory will be
greatly facilitated by the hiring of a new Assistant Director to lead
the Lab. The FBI has initiated a national search for the new Assistant
Director. We are seeking an individual who will have instant
credibility and will be recognized as a leader both by FBI Laboratory
employees and the forensic community generally. We are also seeking an
individual who will bring extensive scientific and management expertise
to the Laboratory.
The FBI remains very proud of its Laboratory and the dedicated men
and women who serve it. A commitment to quality has always been a
central part of their values and mission. The new Assistant Director
for the Laboratory will work closely with the Inspector General and the
Justice Department in solving all of the problems that have been
identified in the FBI Laboratory. We are confident that, with their
assistance, the FBI Laboratory will remain the preeminent forensic
laboratory in the nation, if not the world.
telecommunications carrier compliance
Question. Last year you testified that you were working with the
intelligence community and other Federal law enforcement agencies to
get their financial support for the telecommunications carrier
compliance effort. In the 1997 Appropriations Act, we established a
Fund in the Treasury to accept funding from these agencies and gave
them authority to transfer funding to the Fund. Now, I see in the 1998
budget that you are asking for $100 million for this project.
Have you received firm commitments from other agencies to transfer
funds to help pay for this project? Can you tell us which agencies are
providing funding and how much?
Answer. The Telecommunications Carrier Compliance Fund (TCCF) has
received firm funding commitments from the following entities:
On January 17, 1997, the United States Postal Inspection Service
electronically transferred a contribution of $1,000,000;
In a letter dated February 28, 1997, the Department of the Treasury
advised that it has identified approximately $1,800,000 which could be
transferred from the United States Customs Service (USCS) and the
United States Secret Service; and
In a letter dated March 4, 1997, the DEA advised that it has
identified $15,000,000 in prior year funding that can be transferred to
the Working Capital Fund for subsequent allocation to the TCCF.
Question. Some industry groups have written the Committee that the
FBI is enhancing its wiretap capability in developing its
administrative procedures outside the scope of CALEA. Could you
respond?
Answer. The FBI has not developed administrative procedures that
are outside the scope of CALEA. To the contrary, as part of the
consultative process mandated by CALEA, the FBI has made every attempt
to work cooperatively with the telecommunications industry to ensure
the industry-wide implementation of the assistance capability
requirements of CALEA.
In response to specific requests from the industry, the FBI, in
collaboration with other Federal, state, and local law enforcement
agencies, created a technical recommendation for the delivery of
intercepted communications from a carrier's network to a law
enforcement agency's monitoring facility. This document, entitled the
Electronic Surveillance Interface (ESI), was submitted to the industry
standards setting body as a law enforcement contribution and
recommendation to the process. The ESI was intended to aid carriers in
understanding how law enforcement conducts electronic surveillance,
what information it needs, and what information it historically has
received in order to properly do its job. The FBI has prepared and
submitted other technical contributions to respond to industry requests
for more detail on law enforcement's needs and to advance the standards
process. These contributions were aimed at ensuring the integrity of
evidence gathered through the use of electronic surveillance and at
identifying technical options for the efficient delivery of intercepted
communications and call identifying information.
Additionally, in accordance with the Section 104 provisions of
CALEA, the FBI has published Capacity Notices for comment. These
notices represent fulfillment of the statutory mandate to provide
notice for potential future interception activity that may occur. The
Second Notice of Capacity was published on January 14, 1997. Comments
were accepted through March 15, 1997. The comments have been reviewed
and analyzed. A Final Notice of Capacity will be issued in June 1997
that will fulfill the obligations of Section 104.
Finally, in accordance with CALEA Section 109(e), on March 20,
1997, the FBI published the Final Cost Recovery Rules for
telecommunications carriers, now codified as 28 CFR Sec. 100.21.
Question. Some elements of the telecommunications industry are
saying that Congress should slip the date that defines ``the embedded
base'' so that more telecommunications switches qualify under CALEA.
Have you taken a position on this issue?
Answer. Law enforcement does not believe that the January 1, 1995,
date should be changed as CALEA provides sufficient mechanisms for
carriers to reasonably achieve compliance without being unduly
burdened.
Since the $500 million authorized for reimbursements by CALEA was
intended to apply to pre-January 1, 1995 equipment, facilities and
services, carriers who offer post-January 1, 1995 services may recover
costs under two CALEA provisions:
--A carrier may petition the Federal Communications Commission (FCC)
to determine whether compliance with the Section 103 assistance
capability requirements is reasonably achievable with respect
to equipment, facilities, or services deployed after January 1,
1995.
--A carrier may also petition the FCC to recover its costs expended
for making modifications to equipment, facilities, and services
to achieve compliance with the Section 103 assistance
capability requirements.
In addition to the aforementioned provisions, a carrier may
petition the FCC to receive an extension of time within which to comply
with CALEA.
The equitable provisions in CALEA to seek cost recovery, extensions
of time, etc., have not yet been utilized by carriers to reduce any
effort that might be burdensome. Law enforcement believes these
processes are more than adequate to address those circumstances in
which compliance cannot be reasonably achieved. Such processes should
be employed, as envisioned by CALEA, rather than seeking to change the
statutory demarcation date for reimbursements globally.
investigating misconduct of fbi employees
Question. Director Freeh, the FBI has experienced a number of
instances recently, such as the inquiry into the shooting incident at
Ruby Ridge, the handling of Richard Jewell as a suspect in the Olympic
Park bombing in Atlanta, and the examination of evidence by the FBI
Laboratory, that has caused many to wonder if the FBI is capable of
policing itself. The FBI is the only agency within the DOJ--and may be
the only Federal law enforcement agency in the Federal Government that
has its own Office of Professional Responsibility and performs its own
inquiries into allegations involving the conduct of its personnel.
Recently, you made the FBI's Office of Professional Responsibility
a separate office within the FBI, with direct responsibility to the
Deputy Director and yourself. You also provided more staffing to the
Office.
Why does the FBI require an inspection office that is separate from
the Inspector General?
Answer. The FBI, like DEA and major police departments around the
United States, finds that its law enforcement integrity is absolutely
dependent on the agency being responsible and accountable to
investigate itself, with appropriate independent oversight. Further,
attorney misconduct within the DOJ is investigated by the Department's
Office of Professional Responsibility (OPR), not by the Inspector
General (IG).
The power and authority to identify, correct and punish misconduct
is an essential part of establishing and maintaining discipline within
an agency. Agency enforcement of internal discipline has inherent
advantages in that knowledgeable, effective internal investigations
require the expertise and initiative of agents and managers who are
familiar with the FBI's structure, procedures and standards of conduct
and are motivated to identify and root out misconduct. Removing that
authority from agency management would, by definition, make that agency
ethically irresponsible, as it could not enforce its own standards of
conduct.
Agency self-policing should not be unchecked. Ample independent
oversight is provided pursuant to Attorney General Reno's order of
November 8, 1994. FBI employees may report allegations of improper
behavior outside of the agency, and the Deputy Attorney General may
assign the matter for investigation to an another DOJ entity, as was
done with Ruby Ridge, the Richard Jewell matter, and the FBI
Laboratory. Pursuant to that order, FBI OPR reports its internal
investigations to DOJ's OPR and to the IG. The IG may seek assignment
of any matter by the Deputy Attorney General. Moreover, Director Freeh
has not been reluctant to recuse himself in cases where his
impartiality might be questioned, as when allegations, now determined
by the IG to have been baseless, were made against him in connection
with the FBI Laboratory investigation.
Question. Why did the Inspector General of Justice end up
investigating the FBI Laboratory instead of the Office of Professional
Responsibility? Do you think the investigation would have been handled
differently?
Answer. Among the complaints about the FBI Laboratory made by Dr.
Whitehurst were allegations of prosecutorial misconduct by Director
Freeh and General Counsel Howard Shapiro during the VANPAC case, which
involved the investigative prosecution of the murder of United States
Federal Appeals Court Judge Robert Vance in Birmingham, Alabama, in
December 1989. Director Freeh and General Counsel Shapiro were the
Government's lead prosecutors for that case. In view of these
allegations, Director Freeh recused himself and the FBI from the
investigation of Dr. Whitehurst's allegations and referred the matter
to the DOJ. If the FBI's OPR had continued to participate with the IG
in the investigation there is no reason to believe that the results
would have been any different.
Immigration and Naturalization Service
245(i)
Question. Commissioner Meissner, your testimony indicates that the
section 245(i) surcharge fee, which this subcommittee created in 1994,
will expire this year if it is not extended--how much money would INS
lose if this subcommittee does not extend the fee? What would be the
impact on INS?
Answer. If Section 245(i) is repealed, the INS estimates that it
will lose approximately $129.7 million in receipts in fiscal year 1998.
Section 286 of the Illegal Immigration Reform and Immigrant
Responsibility Act of 1996 authorized a new detention account titled
the Immigration Detention Account. Receipts from this account are to be
derived from the penalty portion of receipts collected under the
provisions of section 245(i). The $129.7 million estimated to be lost
by the repeal of 245(i) is the same amount expected to be deposited
into this Account in fiscal year 1998.
If these receipts are lost, the INS will not be able to maintain
the new Detention Fund Account at a level that would fund the expenses
for which it was established. Those expenses include those incurred for
the detention of aliens under Sections 236(c), mandatory detention of
criminals and terrorist aliens, and 241(a), mandatory detention of
aliens with final orders of deportation).
charleston border patrol
Question. Commissioner Meissner, it seems to me that the Border
Patrol School at the former Charleston Navy Base has been a success. We
are training over 1,400 new agents this year. The community loves the
Border Patrol being there and from what I have heard, the Border Patrol
loves being in Charleston. The agents tell me that it has been a total
success and that we are adding getting the agents trained so that they
can be deployed from Texas to California. This has been done with a
minimal investment--less than we added for just firing range
construction at the FBI Academy at Quantico.
The Border Patrol is in Charleston because the Federal Law
Enforcement Training Center [FLETC] in Glynco, Georgia, was unable to
provide the training needed to produce an additional 1,000 agents per
year. I've heard that FLETC now is testifying that Charleston should be
shut-down by 1999. I think they are jealous that it is so successful
and cheap compared with their center.
When I look at your Border Patrol training loads and the current
attrition rate, it seems to me that INS is going to need this facility
for the foreseeable future.
Don't you agree? Are you conveying that viewpoint to FLETC?
Answer. The INS needs a place to train Border Patrol agents both
now and in the foreseeable future. With the growth that INS has
experienced in recent years, the Service will need to train Border
Patrol agents in response to attrition as well as any new agents added
in the appropriations process in the future. If the Federal Law
Enforcement Training Center at Glynco, Georgia, cannot accommodate our
training requirements, INS will continue to rely on the Charleston
Border Patrol training facility to meet its needs.
naturalization process
Question. What is INS doing to ensure a naturalization process
which can once again serve as a source of strength for our country--one
which can be carried out efficiently and with integrity?
Answer. The present goal of the INS is to increase efficiency,
improve reliability of existing systems, and switch manual processes to
electronic systems. Reduction in backlogs in fiscal year 1996 was
addressed by increased resources at district offices and use of service
centers. In November 1996, the INS began the enormous task of improving
the quality and consistency of the naturalization process. Steps to
strengthening control of the naturalization process include:
standardization of the work process; fingerprint integrity checks;
enhanced supervisory review of naturalization adjudications; and
implementation of a standardized quality assurance review program. By
these measures, the INS intends to maintain the goal of timely
processing of naturalization applications without compromising the
integrity of the naturalization process.
Question. What does INS consider to be a reasonable period of time
in which to naturalize without compromising the integrity of that
process, and when does INS expect to reach that goal throughout the
country?
Answer. Given the re-engineering that is currently taking place
within the naturalization program, it is difficult to set a firm
processing goal until the results of the re-engineering efforts are
known.
Question. What does INS need to carry out this important duty, and
to get it done right?
Answer. INS continues to work in conjunction with the FBI to
improve the fingerprint clearance process. INS is preparing a two-part
reprogramming proposal as a part of its overall efforts to improve the
naturalization process. The first reprogramming proposal, which will be
forwarded for your consideration in the coming weeks, requests approval
to fund mandatory expenses, i.e., FBI fingerprint charges, overtime and
records support, contract costs, and costs of conducting ceremonies.
This funding will allow INS to address immediate needs in order to keep
the program on course. In June, INS will forward a reprogramming
proposal that will focus on new initiatives, currently being explored,
to improve the overall effectiveness of the naturalization program and
improve customer service. Mr. Robert Bratt has been named Executive
Director of Naturalization Operations and is leading the INS effort to
improve overall efficiency of the program. Mr. Bratt is working to
ensure the integrity of the naturalization process and to lay the
groundwork for a complete re-engineering of the naturalization process
at INS.
mexico/colombia
Question. Administrator Constantine, you have testified before the
Foreign Relations Committee that Mexico is dominated by organized crime
and that law enforcement officials are on the payroll of the drug
cartels. I respect you for going on record that you could not certify
that Mexico was cooperating with us in the war on drugs.
Now with respect to Colombia, my understanding is that DEA has
developed a close working relationship with the Colombian National
Police, its commander General Serrano, and the chief prosecutor Alfonso
Valdievieso. You have testified that the Colombians have made great
strides to support our anti-narcotic programs.
Now, United States policy doesn't seem to make sense to me.
President Clinton certified that Mexico is cooperating but he continued
to decertify Colombia. Does that make sense to you? I mean doesn't that
undercut the progress that you have made in Colombia and send the wrong
signal to the Mexican officials?
You and the FBI have extensive efforts underway to build evidence
and get indictments against Mexican drug barons and cartels. How many
outstanding indictments do we have now? What has been the response of
the Mexican government?
Answer. Once again, DEA will defer to others within the
Administration regarding the certification decisions.
Currently, the United States has indicted many of the major Mexican
drug traffickers in the U.S., in the hope that they will someday be
extradited to this country. Further, we have identified a list of
priority extradition cases upon which we have requested that the
Mexican law enforcement authorities act most vigorously and
expeditiously.
On a law enforcement operational level, DEA is working with the
Mexican authorities to develop a credible, corruption-free law
enforcement system in their country (as described above). The
Government of Mexico must combat corruption at both senior as well as
operational levels of government. Corruption jeopardizes the integrity
of the entire Mexican counternarcotics program, and recent and ongoing
anti-corruption programs will be the most important aspect of future
efforts. While there has been some progress in removing corrupt
personnel from law enforcement and military agencies, greater steps
must be taken to ensure that Mexico has a credible law enforcement
regime.
DEA has dedicated significant resources to assist in the Mexican
efforts in the following ways: (1) the selection of new candidates to
Mexican counterdrug enforcement agents; (2) the ``vetting'' process of
new Mexican agent recruits; (3) training programs for Mexican
counterdrug agents; (4) the Border Task Forces in Juarez, Tijuana, and
Monterrey; (5) the Organized Crime Unit; and (6) the creation and
establishment of Mexico's new Special Prosecutor's Office for Crimes
Against Health (FEADS).
The problems of establishing a corruption-free law enforcement
infrastructure are large, but not insurmountable. However, to develop a
credible and trustworthy law enforcement capability, the Government of
Mexico must ensure the integrity of the units that have the
responsibility of tracking down and arresting the drug syndicate
leaders, ensuring these individuals are either prosecuted in Mexico and
receive meaningful sentences commensurate with their crimes, or
alternatively, that they are extradited or expelled to the United
States and brought to justice. The best approach is, in simple words:
to work with people we feel we can trust, based on the best information
we have at the time; and to design safeguards in our operations should
they later be compromised.
Question. Operationally, is there anyone that you can trust on the
Mexican side?
Answer. United States law enforcement efforts, despite hopeful
beginnings over the last several years, have been frustrated by the
absence of secure and effective Mexican counterpart agencies with whom
to work cooperatively. The recent arrest of the head of the Mexican
INCD (the principal Mexican federal drug law enforcement agency) on
charges of assisting cartel leaders further underscores the obstacles
presented when drug-related corruption is pervasive. The disbanding of
the INCD was recently announced by Mexico. An Organized Crime Unit was
recently formed within the Mexican Attorney General's Office. This unit
is staffed by fully vetted agents. The formation of this new vetted
unit, coupled with broad changes to Mexican law to allow more
investigative tools for the agents assigned to it, will likely improve
Mexico's ability to prosecute traffickers. However, for effective
efforts against traffickers to exist there must be evidence that long-
lasting criminal justice institutions within Mexico have been formed.
Answer. With regard to the issue of the trustworthiness of Mexican
officials, on occasion, there have been a few Mexican officials with
whom DEA can work. However, they are few and far between. The
Government of Mexico has been wrestling with widespread incidences of
corruption among law enforcement officers for decades. DEA Agents have
been forced to operate in a manner that requires a continual weighing
of the pros and cons of passing information to Mexican counterparts.
Much of the information is sensitive and cannot be passed unless there
are persuasive reasons to believe in the integrity of the involved
Mexican unit. The situation is exacerbated by the reality that,
although we work with certain counterparts who have demonstrated a high
degree of integrity, we have no control over the chain of command and
eventual dissemination of our information.
No better example of this dilemma can be demonstrated than that of
former INCD Commissioner, General Gutierrez-Rebollo having had line
authority over the Sensitive Investigative Unit (SIU). The SIU was
vetted in order to serve as an investigative arm to provide Mexican
follow up to significant United States counternarcotics investigations.
Since the SIU ultimately reported to Gutierrez-Rebollo, their vetting
was seriously imperiled if not rendered useless.
The problems of establishing a corruption-free law enforcement
infrastructure are not insurmountable. To become credible in the law
enforcement arena, the Government of Mexico must ensure the integrity
of the units that have the responsibility of arresting the syndicate
leaders, thereby ensuring these individuals are either prosecuted in
Mexico and receive meaningful sentences commensurate with their crimes,
or agree to extradite them to the United States where they will receive
punishment similar to that of Juan Garcia-Abrego.
Since March of this year, DEA has made considerable efforts to
further develop working relationships with its Mexican counterparts.
DEA assisted the GOM in the restructuring of Mexico's primary drug law
enforcement agency. This new agency, the Special Prosecutor's Office
for Crimes against Health, was established on April 30, 1997 and
replaced the corruption ridden National Institute to Combat Drugs
(INCD). DEA is committed to assist the GOM in the vetting and training
of the members of this new agency. DEA has already successfully
``vetted'' approximately 50 new recruits, 40 of whom are scheduled to
attend DEA's second four week specialized narcotics training course for
vetted units commencing July 14, 1997 in Leesburg, Virginia.
fenfluramine descheduling
Question. Administrator Constantine, I have been contacted by
several members regarding a diet drug called fenfluramine. Apparently,
the DEA was asked to deschedule this drug in 1991. The Food and Drug
Administration gave its approval in September 1995 and the Department
of Health and Human Services formally recommended descheduling to the
DEA in June 1996. Both agencies found that there are no scientific
evidence of abuse potential, patterns of abuse or diversion. However,
DEA has not approved descheduling.
Why? What are DEA's reasons for not allowing descheduling of
fenfluramine?
If there are no further reasons to hold up on approval, when do you
anticipate letting the drug be approved?
Answer. The Controlled Substances Act (CSA) requires that the DEA
consider all relevant data to determine whether there is substantial
evidence of abuse potential so as to warrant control or decontrol of a
substance. After a thorough review of all available data, including the
recommendation of the Department of Health and Human Services and
abuse, trafficking and diversion data, the Deputy Administrator of the
DEA has determined that at this time there is insufficient data to
establish that fenfluramine has a potential for abuse, which warrants
control under the CSA. Accordingly, the Deputy Administrator signed a
Federal Register notice proposing to decontrol fenfluramine. This
proposal was published during the week of May 5, 1997. Interested
parties will be provided a 60-day opportunity for comments and requests
for a hearing.
______
Questions Submitted by Senator Frank R. Lautenberg
Immigration and Naturalization Service
detention representation project
Question. I am proud to acknowledge that the INS District in New
Jersey has worked with a coalition of local voluntary organizations to
create a program through which asylum-seekers detained at the Elizabeth
Detention Facility can obtain legal counsel. This initiative is known
as the ``Detention Representation Project,'' and has helped ensure that
individuals with asylum claims are not returned to their persecutors.
At the same time, the project has been useful to the INS, in that
detainees without a basis for relief from removal are so advised by
legal counsel by voluntary agencies, and are therefore less likely to
crowd the overburdened immigration docket with meritless claims.
Through the project, legal representation is provided to indigent
detainees without any cost to the government.
With the implementation of the ``summary removal'' provisions of
the new immigration law beginning on April 1 of this year, the
Detention Representation Project has taken on even greater importance.
Without the legal representation, which the project provides, many fear
that asylum-seekers would in advertently be delivered back into the
hands of their persecutors by our government.
Since January of this year, the agencies which founded the
Detention Representation Project have been trying to pursue the project
with the INS District in New York. These agencies had hoped to launch
the project in New York before the opening of the new Wackenhut
Detention Facility in Queens, and certainly before the onset of Summary
Removal this past April 1. New York INS had been unresponsive to the
many overtures of the voluntary agencies until after Wackenhut had
opened and summary removal has been implemented.
I am concerned that this problem may be representative of a larger
phenomenon; namely, that the immigration laws of this country, and the
due process protections afforded to those fleeing from persecution,
vary from INS district to INS district.
Please tell me what prevented the New York District from
cooperating with the voluntary agencies, as has been done in the New
Jersey District, prior to the opening of Wackenhut and the
implementation of summary removal. Was INS Headquarters aware of this
initiative, and if not, why not? If INS was aware of this initiative,
why was INS New York allowed to drag its feet in implementing the
project in a timely fashion? What, if anything, is INS Headquarters
doing to encourage such private-public partnerships at the local level,
in order to ensure that summary removal proceedings do not summarily
deprive asylum-seekers of due process?
Answer. I have been advised that representatives of our District
Office in New York City and the Catholic Legal Immigration Network
(which includes other volunteer agencies), have communicated with one
another and have also participated in a meeting (on April 22) during
which related issues were discussed. It does not appear to us that
there actually is a misunderstanding between those offices, or a lack
of cooperation.
At the meeting on April 22, a schedule for pro bono legal
representation was presented for the next three months, with the first
representation taking place on April 29, by Ms. Mary McClenahan, an
attorney for the project. The INS headquarters was not notified of any
difficulty in establishing a meeting.
The INS District Director, New York City, has advised INS
Headquarters that the coordinated time frame for the opening of the
facility was not immediately known to the District, but that as soon as
the date was known, contact with the agencies was made. Although
schedule coordination between the two parties proved difficult, a time
frame was reached and a subsequent meeting took place to the
satisfaction of the volunteer agencies.
Private-public relationships are important to this Service. We
recently took action to establish Community Liaison positions in
various cities throughout the country. As resources are available, the
INS will continue to recruit and fill these valued positions. It should
also be noted that various other kinds of INS personnel participate in
liaison activities with charitable and relief organizations. In cases
where asylum seekers are detained, careful scrutiny of each case takes
place.
We believe that what occurred at Wackenhut facility was an anomaly.
The Service strives to set up advance meetings with volunteer groups
prior to the operation of new facilities for the express purpose of
forging bonds with volunteer agencies and concerned community groups.
drug trafficking by gangs
Question. As you know, since the late 1980's drug trafficking gangs
have transformed many of our cities and rural areas into combat zones.
A few years ago you indicated that the Drug Enforcement Administration
(DEA) was prepared to launch a new enforcement initiative, which you
called Mobile Enforcement Teams. This initiative was designed to assist
local law enforcement agencies to deal with the escalating problem of
drug-related violence.
Answer. In 1995, DEA established the Mobile Enforcement Team (MET)
program to combat the growth of violent drug trafficking organizations
and prevent these organizations from taking over the streets of our
communities. The growth of drug-related violence is straining the
resources of our local police agencies. Intelligence reports, public
opinion polls, and statistical trends have all verified the strong
connection between narcotics trafficking and violent crime. The DEA MET
initiative is designed to assist state and local police departments
combat violent crime and drug trafficking at the local level.
At the request of a police chief, sheriff, or district attorney, a
MET (composed of eight to twelve DEA Special Agents) will work in
concert with local police to extricate violent drug offenders from a
targeted community. The MET's primary mission is to assist the
requesting local agency with the dismantling of drug organizations by
securing the conviction and incarceration of those individuals dealing
drugs and spurring violence in the affected community.
DEA has developed a deployment review system designed to assist in
the evaluation of the MET program's overall effectiveness. All MET's
are required to submit two reviews for each deployment. The first
review occurs immediately following the deployment, and the second
review is conducted 6 months after the deployment is completed.
Programmatic performance measurements include: impact of the reduction
in drug sales and/or reduced visibility of drug sales; the stability of
the target area, including any noticeable reduction in the violent
crime activity; the community reaction and involvement; summary of
media coverage; and an overall assessment prepared by the requesting
agency including crime rates (e.g., drug related assaults, homicides,
drive-by shootings, robberies, etc.). Thus far, these program
deployment reviews have generally shown the MET program to have a
positive impact on targeted communities, often revealing both
significant decreases in area crime and narcotics trafficking.
The following are a few examples of successful MET program
deployments:
Spartanburg, South Carolina.--The City of Spartanburg was
experiencing a significant escalation of gang and drug-related
violence, and the city's frequency of major crime was five times higher
than the average for other cities with similar size populations. The
MET and the Spartanburg Police Department identified the David Young
crack cocaine organization as having the most significant influence on
the violent crime and drug situation in the Spartanburg area. This
September 1996 MET deployment ultimately resulted in a Federal
indictment charging David and Darrell Young, and 50 members of the
Young Trafficking Organization, with conspiracy for distributing 1,000
kilograms of cocaine. A current and former police officer were also
arrested and charged in the investigation. Seizures included nine
weapons, $320,000, nine residences, one business, and eight vehicles.
Lynn, Massachusetts.--Lynn law enforcement officials requested
assistance from the DEA MET program in helping them address the
escalation in cocaine and methamphetamine trafficking in their city and
the drug related violence that it produced. The MET targeted the local
chapter of the Hells Angels Motorcycle Club, which controlled the
neighborhood where their clubhouse was located, leaving residents in
silent fear. The investigation involved a wiretap on the phone of
Chapter President, Greg Domey, and undercover purchases from members
and associates of the club. In November 1996, the deployment culminated
with the arrest of Domey and 16 of his associates for drug trafficking
and related acts of violence. Domey and one other member of the club
were charged with operating a continuing criminal enterprise, which
carries minimum/mandatory Federal sentences.
Rampart Area--Los Angeles, California.--Los Angeles Police Chief
Willie Williams requested the help of the DEA MET program to assist his
officers in regaining control of the Rampart District of Los Angeles,
which was described as a ``battle front'' controlled by numerous street
gangs. In April 1996, the MET joined forces with several other agencies
and initiated enforcement targeting several violent street gangs. The
deployment resulted in the incarceration of over 400 gang members, the
seizure of numerous weapons and drugs, and an overwhelming response
from the local residents. Neighbors in this area joined together to
collect money from residents, and subsequently erected a street
billboard thanking DEA and the other agencies for making their streets
safe.
Paterson, New Jersey.--Chief of Police Vincent Amoresano of
Paterson, New Jersey requested the help of the DEA MET program to
assist in combating the area's violent gangs/organizations engaged in
drug trafficking and street violence. The city is rife with illegal
firearms, which are closely connected to illicit drug operations.
According to city police, intimidation shootings--shooting to wound to
scare away competition--are more and more common. Passaic County and
Paterson authorities identified Yeidy Gonzalez-Inoa as the head of a
violent Dominican organization trafficking in cocaine, crack cocaine,
and weapons, in Paterson. This March 1996 deployment ultimately
resulted in the arrest of Gonzalez and 37 others (4 charged with
retaliatory homicide for the murder of a confidential source during the
deployment; 33 charged with narcotics and weapon violations). In
addition, this highly successful deployment resulted in the seizure of
4\1/2\ pounds of crack cocaine; 1 ounce of heroin; 1\1/3\ pounds of
marijuana; 7 weapons; and $4,300.
Statistical accomplishments of the MET program through February
1997 are as follows:
Total MET deployments............................................. 98
Initiated..................................................... 98
Completed..................................................... 70
Total arrests..................................................... 3,411
Drug.......................................................... 3,117
Non-drug...................................................... 294
Seizures:
Cocaine (pounds).............................................. 780
Methamphetamine (pounds)...................................... 106
Heroin (pounds)............................................... 17
Marijuana (pounds)............................................ 353
Weapons....................................................... 647
U.S. currency (millions)...................................... $4.2
Vehicles...................................................... 110
Residences.................................................... 11
______
Questions Submitted by Senator Barbara A. Mikulski
major drug investigations
Question. The Immigration and Naturalization Service conducts
criminal investigations including investigations into drug dealing by
criminal gangs.
It is my understanding that the INS has suspended major drug
investigations. In some cases, agents have been withdrawn in the middle
of major drug investigations due to a change in INS policy.
Why have you stopped participating in major drug investigations and
what are you doing to insure that existing investigations are not
jeopardized?
Answer. The INS has not stopped participating in major drug
investigations. The INS is not the primary agency responsible for
investigating illicit drug trafficking organizations. The INS has 110
Organized Crime Drug Enforcement Task Force (OCDETF) special agents.
These special agents are the only INS employees solely dedicated to the
investigation of illicit drug trafficking organizations. Also, INS
currently has 119 special agents assigned to Violent Gang Task Forces
(VGTF). These VGTF's are proactive, interagency, multi-jurisdictional
efforts involving other Federal law enforcement agencies as well as
state and local entities. Many VGTF investigations have a nexus to drug
trafficking organizations. The INS also participates in numerous local
community task forces. It is the responsibility of local field mangers
to determine whether INS' participation in a particular task force is
warranted. It is also incumbent upon local managers to assess the
merits of ongoing investigations to determine whether INS' continued
participation on specific task forces is justified. As a rule, INS
special agents are not pulled off ongoing task force investigations
where it would jeopardize the success of a case. If this has occurred,
the specific case would have to be identified in order to provide an
accurate response.
Question. What is the reason for this policy change?
Answer. There have been no recent national policy changes.
Question. Do you have any plans to put agents back on major
criminal drug investigations?
Answer. Currently, the INS has 110 special agents assigned to
OCDETF's. These 110 positions represent 12 more positions than shown on
the OCDETF reimbursable account. In fiscal year 1996, INS obligated
$10.3 million in the OCDETF program. Only $10.1 million was reimbursed
by the Office of National Drug Control Policy. The remaining
obligations were absorbed by INS funds. The local INS field offices
have reported that their OCDETF special agents are involved in OCDETF
work and investigations 100 percent of the time. We are fully committed
to the success of the OCDETF program.
subcommittee recess
Senator Hollings. Let the record show that we have just
certified that the Government of Mexico is not corrupt.
Senator Gregg. Yes, I know.
Senator Hollings. You cannot go out on the range, you might
get shot, so you might not walk over here because you might
become a witness or get shot. But Mexico ought to be certified.
They are doing a wonderful job.
Senator Gregg. Thank you.
[Whereupon, at 10:51 a.m., Thursday, April 10, the
subcommittee was recessed, to reconvene subject to the call of
the Chair.]
DEPARTMENTS OF COMMERCE, JUSTICE, AND STATE, THE JUDICIARY, AND RELATED
AGENCIES APPROPRIATIONS FOR FISCAL YEAR 1998
----------
WEDNESDAY, APRIL 16, 1997
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 10 a.m., in room S-146, the
Capitol, Hon. Judd Gregg (chairman) presiding.
Present: Senators Gregg, Campbell, Domenici, and Hollings.
Also present: Senator Burns.
FEDERAL COMMUNICATIONS COMMISSION
STATEMENT OF HON. REED E. HUNDT, CHAIRMAN
ACCOMPANIED BY ANDREW S. FISHEL, MANAGING DIRECTOR
opening remarks
Senator Gregg. We will begin the hearing here on the
Federal Communications Commission [FCC] appropriation.
Senator Hollings, how are you today?
Senator Hollings. Good morning, Judd. You all right?
Senator Gregg. I am great, great.
Senator Hollings. Good.
Senator Gregg. We have somebody with some knowledge base on
this subject here. We can actually begin. I have no opening
statement. Did you have an opening statement?
Senator Hollings. No; thank you.
Senator Gregg. We would be happy to hear from you, Mr.
Hundt.
opening statement of mr. hundt
Mr. Hundt. Thank you very much.
Let me introduce Andy Fishel, our Managing Director, who is
sitting to my right.
Thank you very much for having this hearing. As I am sure
you know, at this particular time in history, the Federal
Communications Commission is wrestling with some of the most
difficult problems that the agency has ever had to address, and
they certainly are time-consuming, and voluminous problems.
In the last year, pursuant to the Telecom Act, and the
normal crush of business, we have initiated 265 separate
rulemakings, and have reviewed one-quarter of 1 million pages
of comments filed by 72,000 parties. At the same time, we have
completed 14 auctions; we began our 15th yesterday. Our daily
workload over the course of the last year has led to us
granting 425,000 separate applications, resolving more than
80,000 separate complaints. And our overtime electricity bill
has tripled in the past year. And the work is just beginning.
We anticipate filings under section 271 of the new law for
Bell companies to get into long distance. Ameritech's filings,
this year, so far, in Michigan alone, have been supplemented by
17,000 pages of documents.
We have also been dealing with some very daunting economic
and intellectual problems, not just voluminous but just plain
hard. Let me give you two examples and then bring my statement
to a close, so that we can proceed as you would wish.
An example. Congress asked us to take implicit universal
subsidies and make them explicit, and establish a universal
service system that expressly contemplates that there could be
multiple universal service providers that receive that subsidy.
Consequently, we have been working very hard in recent
months to figure out how to implement this mandate in a way
that preserves and addresses universal service for small
telephone companies, and particularly for small telephone
companies in rural America. In many parts of America,
particularly those that are rural, it is not the six large Bell
companies and GTE that are the service providers, but it is, in
total, 1,400 small telephone companies and rural cooperatives.
We understand, clearly, that Congress has asked us in no
way to have these companies be victims, or sufferers from the
policy of competition. Instead, we need to reconcile the policy
of competition with the country's historic commitment to
preserving, maintaining, and supporting universal service in
this country. The first step, pursuant to the congressional
mandate, was to work with the joint board of State and Federal
commissioners to write a report. This was done in November.
Here is where I think we are now. I speak not for the whole
Commission, which will vote on this matter on May 6, but just
to give you some insight, Mr. Chairman, on this particular
matter, as an example of the kind of work that we've been
pleased to do, but have been somewhat burdened by.
Rural telephone companies, the backbone of universal
service to rural America should, I think, continue to receive
all the universal service assistance that they are receiving
today, and that they would be receiving if we did not need to
reform the methods. The methods today, known by acronyms like
LTS and DEM weighting, and high cost fund, do need to be
reformed pursuant to the mandate of Congress. They need to be
made explicit. But the reform should not be one, in my view,
that shortchanges these telephone companies in any way.
The joint board thought that it might be a good idea to
freeze high cost support based on 1995 investment. My own
personal conclusion is that in this respect, we should not
follow the joint board's recommendation and we should continue
to distribute high cost support according to existing formulas,
which will allow support to rise in 1998 and 1999, based on
investments made in 1996 and 1997. For the year 2000, it is my
view that we should adopt a proposal made by smaller telephone
company associations to adjust the level of support by
inflation.
Another instance of some of the work we have been doing--
the joint board report was read, by some, to suggest that we
should eliminate all support for second residential lines and
multiline businesses. Members of this committee, including the
distinguished ranking Democratic member, have suggested to us
that this is not an aspect of the joint board report that we
should adopt, and we agree--at least I agree with that view.
Rural telephone companies, in my view, should continue to
receive support for all lines through at least January 1, 2001.
And a last example of a problem that we are struggling
with, and I think we are coming up with the right and happy
solution--how do we fulfill Congress' mandate to connect every
classroom and library and rural health care clinic in the
country to our Nation's telephone networks, without, in any
way, causing any threat, direct or indirect, to the price of
basic residential dialtone service?
I believe that the recommended decision is circulating now,
or virtually now--I have not checked my clock--but essentially
today, among the commissioners of the FCC, will accomplish this
goal, it will not be necessary in any way, to directly or
indirectly threaten, prejudice, or increase basic residential
dialtone in order to accomplish the goals of connecting rural
health care clinics providing service to low-income people, or
connecting classrooms and libraries.
prepared statement
As to the specific techniques that we suggest instead, they
bear substantial resemblance to today's techniques where
purchasers of interstate tariffs, particularly businesses, do,
in fact, carry the bulk of the load of maintaining the
communications networks of America. I could describe it in more
detail, if you wish, and possibly you would like me to bring
this to a conclusion now.
Thank you for your indulgence.
[The statement follows:]
Prepared statement of Reed E. Hundt
introduction
Mr. Chairman and Members of the Subcommittee, thank you for this
opportunity to testify on the Federal Communications Commission's
fiscal year 1998 Budget Estimates. The Telecommunications Act of 1996
updates the FCC's charter first granted in the Communications Act of
1934. Congress sought to establish a pro-competitive, deregulatory
national policy framework for communications. This framework reflects a
bipartisan consensus that introducing competition and deregulation in
America's telecommunications marketplace offers numerous potential
benefits for consumers, business users, communications companies, and
the economy as a whole.
If our competition policy is a success, then the market, not
government, will declare industries or firms winners or losers. And, as
The New York Times editorial page observed last month, if competition
succeeds, customers used to squabbling with their local
telecommunications service provider over installation, service repairs,
or rates can do more than fight. They can switch. Accordingly,
implementation of the Telecommunications Act remains the FCC's day-to-
day agenda.
We also remain committed to the goal of public benefits from
communications. Market forces alone will not always adequately meet all
of society's public interest goals, such as addressing public safety
needs. Consumer education and outreach is also an integral part of our
mandate.
Finally, we are working to make the FCC's operations as smart,
simple, and streamlined as possible. The payoff is that our
productivity is up. Even as we project the return of FCC staffing to
pre-Telecommunications Act levels, our workload continues to grow.
telecommunications act implementation
We have been able to meet or beat every deadline the
Telecommunications Act sets for us, while continuing to carry out all
of our other responsibilities. So far, we have completed 44
implementation-related rulemakings and adopted 146 individual items. We
have also held 18 public forums on issues related to Telecommunications
Act implementation, including interconnection, access charge reform and
universal service, national wireless facilities siting policies, and
market entry barriers for small businesses. We are in the process of
completing 23 proceedings, and the Telecommunications Act requires us
to initiate at least 12 additional proceedings.
As we continue to implement the Act, we are discovering a number of
things we did not realize previously. One is that the process of
introducing the competition envisioned by the Act is increasing our
workload in ways that are difficult to predict and to plan. We have
been inundated with filings in the various proceedings before us. For
example, we have reviewed 75,000 pages of comments and other filings by
parties in the universal service proceeding alone. On access reform we
received a four-and-a-half foot stack of comments that does not include
over 300,000 e-mail comments concerning charges that Internet Service
Providers and similar companies pay to local telephone companies. In
both proceedings, we have spent hundreds of person hours in meetings
with interested parties. We have also spent almost $450,000 in overtime
electric bills during the past year, more than triple what we spent the
year before, just to keep our buildings open to support the longer
staff hours.
With respect to Bell Operating Company (BOC) entry into the long
distance market, we now know that the 49 anticipated filings by BOC's
under Sec. 271 of the Act may not be as neat as the process suggests.
Earlier this year, for example, Ameritech filed twice before
withdrawing its application, which resulted in over 17,000 pages of
filings. Last Friday, SBC Communications filed the third in-region long
distance entry petition, which consists of 5,000 pages of filings. In
fact, for fiscal year 1997 we project filings received in all docketed
proceedings will increase 88 percent over fiscal year 1996.
Additionally, while Telecommunications Act implementation has required
us to increase Full Time Equivalents (FTE's) devoted to policy and
rulemaking activities by 50 percent since fiscal year 1995, filings
received for review in docketed proceedings have increased by 227
percent during the same period. We are required to, and do, give
consideration to every one of the filings and comments received by the
agency.
The Telecommunications Act impacts our workload in other ways as
well. Veronis, Suhler & Associates reported two weeks ago that mass
media mergers and acquisitions totaled $113 billion in 1996. How many
new broadcast license transfers will be filed with the Commission as
the industry continues to benefit from the new structural freedom the
Act affords? How many complaints will be filed concerning over-the-air-
reception devices? How many preemption cases will the FCC be called
upon to address pursuant to Sec. 253 of the Act? Five of the ten
largest U.S. business mergers in 1996 were between telecommunications
companies, and each one required FCC review. With the digitization of
communications, the entire computer industry has become part of the
communications sector of our economy, and has a number of issues before
the FCC. Moreover, each action we take has advocates and opponents.
Many decisions will be challenged in court. The subsequent workload
from implementing the Telecommunications Act's changes is very large.
Being prepared to handle this growing workload, like implementation of
the Act itself, requires that we have sufficient resources.
overview of fiscal year 1998 budget request
The FCC proposes an fiscal year 1998 budget of $217,000,000 with
2,155 FTE's. This represents an increase of $30 million over an
adjusted fiscal year 1997 appropriation level, as described below. The
proposed increase is for one purpose only: to reimburse the General
Services Administration (GSA) for one-time, non-recurring costs to
relocate FCC headquarters to a consolidated working space at the
Portals project in Southwest Washington. The reimbursable costs are
attributable to expenses for information systems at the Portals, as
well as design requirements and systems furniture that have to be paid
for in fiscal year 1997 in order for the items to be available by the
time the move begins early in fiscal year 1998. It is anticipated that
$10 million in additional funding will be required in fiscal year 1999
to repay GSA for the remaining costs associated with the relocation. We
are advised the roof will be in place at the Portals building later
this Spring. The building itself incorporates design elements necessary
to accommodate the specific requirements of the FCC. The schedule calls
for the FCC to move in six equal phases beginning approximately
December 1997 and ending June 1998.
With the exception of the increased funding for headquarters
relocation, the FCC's fiscal year 1998 appropriations request is $187
million. Please note that this is $2.1 million less than our total
fiscal year 1997 appropriation of $189,079,000. It is also $2.1 million
less than the base appropriation included in the President's budget.
This reduction reflects a change in the estimated cost of salary
increases.
We are requesting no additional funding to cover $7.3 million in
anticipated uncontrollable costs, primarily to cover the cost of fiscal
year 1997 and fiscal year 1998 locality and pay raises. Also included
are inflationary costs for various non-compensation accounts including
rent, mail, and service contracts. We have assumed that these costs
will be funded from the savings generated by the reduction of 100 FTE's
through 1998. These staff reductions will be accomplished through
attrition and a decrease in the number of employees initially hired on
term appointments, as those appointments expire in fiscal year 1998.
Our proposal to operate at a current service baseline for fiscal year
1998 of $187 million is less than last year's appropriation. The amount
to be collected from regulatory fees would increase from $152,523,000
in fiscal year 1997 to $162,523,000 in fiscal year 1998.
As you know, in fiscal year 1996 Congress appropriated $10 million
to the FCC for Telecommunications Act implementation. The FCC obligated
$7.2 million of this amount prior to September 30, 1996. The balance of
$2.8 million has been carried forward into fiscal year 1997 to complete
Telecommunications Act initiatives begun in fiscal year 1996. Almost
all of the $2.8 million is either obligated or committed in the
agency's accounting system for the completion of implementation-related
initiatives, such as the continuation of required paralegal and data
support services, and economic analysis of telecommunications issues.
The FCC has also carried forward into fiscal year 1997 $2.4 million of
spectrum auction receipts that are obligated for necessary auctions-
related expenses in the current fiscal year. Finally, we carried
forward into fiscal year 1997 $3 million in regulatory fees collected
in excess of the appropriation requirements for fiscal year 1995 ($2.9
million) and fiscal year 1996 ($100,000). Our plan is to redirect these
funds to programmatic activities, such as electronic licensing, which
is a significant part of our ongoing efforts to streamline the
Commission's processes.
public safety spectrum
In addition to promoting competition, the second fundamental task
of the FCC is to secure the public interest in communications. One of
the public's most urgent needs is for more public safety spectrum. The
Commission took a giant step toward addressing this need two weeks ago
when it adopted the Digital Television (DTV) Table of Allotments, which
recovers immediately 60 MHz of spectrum previously used for TV channels
60-69. I hope that 24 MHz of this newly recovered spectrum (out of a
total of 138 MHz to be recovered over the next ten years) can be
reallocated quickly to help address the serious spectrum needs of
public safety agencies. As I noted when we adopted the DTV Table, the
benefits of this reallocation can be measured, literally, in lives
saved. Affording the public safety community new spectrum with
nationwide capacity will also facilitate development of network
interoperability and will create new efficiencies in equipment
manufacturing that can be passed on to public safety users.
Additional spectrum, however, is only one step in improving public
safety wireless communications. The Public Safety Wireless Advisory
Committee (PSWAC) identified other areas in which improvements are
needed. For example, the public safety community has long been beset by
the problems of operating in many different frequency bands--meaning
that police, fire, and emergency agencies in one town often cannot talk
to each other because they operate on different frequencies. Past FCC
policies contributed to the problems we see today. The Commission
allocated spectrum on a piecemeal basis--leading to the fragmentation
that characterizes public safety communications. A significant portion
of our ongoing public safety proceeding will be devoted to addressing
interoperability problems.
We are also working on ways to improve the features and delivery of
emergency communications, for example, examining the various ways that
we can increase the accuracy and reliability of wireless 911 and
enhanced 911 services. To alleviate congestion on 911 circuits, the FCC
earlier this year announced the availability of a new 311 code as a
means of quick access to non-emergency police and other government
services. We also made available 711 for quick access to
Telecommunications Relay Services, a service that allows for persons
with hearing or speech disabilities to use the telephone.
consumer education and outreach
Consumer education and outreach is an integral part of our mandate,
and we continue to receive an increasing number of consumer inquiries,
many of them forwarded to us by you on behalf of your constituents. In
1996, our Office of Legislative and Intergovernmental Affairs handled
more than 7,000 Congressional inquiries, an increase of 25 percent over
1995. During the first ten days of this month alone, we received 524
Congressional letters, an increase of 160 percent over the same period
last year.
Last year, our Office of Public Affairs answered more than 105,000
inquiries from consumers and the media and issued over 6,000 documents.
During February and March, the FCC's home page received an average of
135,643 hits per day, up from an average of 37,647 hits per day during
the same period in 1996. In fiscal year 1996, the FCC responded to over
65,000 requests for reference materials as compared to 62,600 in fiscal
year 1995. To move the agency further onto the Internet, two weeks ago
we issued a Notice of Proposed Rulemaking to allow electronic comments
to be filed in FCC rulemaking proceedings, using the World Wide Web and
electronic mail. Electronic filing of comments in FCC rulemaking
proceedings will make it easier for the estimated 40 million people in
the United States who have access to the Internet to file comments and
to access comments filed by others in an efficient manner.
Thanks to Congress' wisdom in providing us with resources for
upgraded computers and modern information technology, we are able to
keep pace with unprecedented public interest in matters before the FCC.
Consistent with our increased productivity and following the closure of
18 FCC field offices in fiscal year 1996, our fiscal year 1998 budget
estimates project 14 percent fewer FTE's for public information
services than were devoted to the same activity in fiscal year 1995.
Industry and the public also continue to file complaints with us,
giving rise to increased levels of enforcement activity. Our Common
Carrier Bureau, for example, processed 28,381 written consumer
complaints and inquiries in fiscal year 1996, 63 percent more than in
fiscal year 1995. The majority of these complaints were received
directly from consumers, accompanied by bills and other supporting
documentation. A majority of them concerned ``slamming'' (i.e.,
unauthorized switching of long distance carriers) and operator service
providers. While the types of complaints change over time, the total
number of complaints received by the Bureau continues to rise.
Similarly, our Wireless Telecommunications Bureau handled 1,239
enforcement matters in fiscal year 1996, 71 percent more than in fiscal
year 1995. At the same time, the number of FTE's devoted to enforcement
activity agency-wide is down 19 percent since fiscal year 1995.
improving fcc operations
Deregulation means that we need to be sure that both incumbents and
newcomers are able to innovate without being discouraged by our rules
or processes. Later this year, we hope to commence a Notice of Inquiry
into the impact of our rules on innovation and investment in
telecommunications networks, including incentives to deploy advanced
technologies for data networks such as the Internet.
We also continue to ask whether the FCC is doing things it should
not be doing. It was this question that led us to cut the number of FCC
field offices from 34 to 16 (including the first reduction-in-force in
FCC history). To better serve the needs of the public, we created a
new, centralized call center at 1-888-CALL-FCC to provide toll free
service for information or assistance from anywhere in the United
States.
In 1995, we made 37 streamlining recommendations to Congress
concerning functions we no longer believed it was necessary for us to
perform, 21 of which were enacted as part of the Telecommunications
Act. Just one such change, removing an individual licensing requirement
for domestically-operated recreational ships and aircraft, eliminated
the need to track about 710,000 radio licenses.
It was also this question about what we should not be doing that
led us to issue a Notice of Inquiry immediately after the
Telecommunications Act became law asking how we could improve our
processes. In gathering suggestions responding to the NOI, we worked
with the Federal Communications Bar Association. The NOI served as an
umbrella proceeding under which the public could comment on FCC-wide
and Bureau-specific streamlining efforts. In reply to the NOI, the FCC
received numerous proposals ranging from major policy initiatives to
suggestions for minor adjustments in the way we do business. Many
proposals have been adopted. Last month, for example, we simplified and
clarified our rules governing ex parte presentations in proceedings
before the Commission. The amended rules will make compliance easier,
while enhancing their effectiveness.
We also last month adopted a Notice of Proposed Rulemaking
proposing to simplify the existing equipment authorization process, to
deregulate equipment authorization requirements for certain types of
equipment, and to provide for electronic filing of applications for
equipment authorization. Simplifying and streamlining the equipment
authorization process will benefit both large and small manufacturers,
encourage the development of innovative products for consumers, and
enable new products to be introduced into the market more rapidly. The
proposals, if adopted, would reduce the number of equipment
applications required to be filed with the Commission annually from
about 3,500 to approximately 1,800, significantly reducing paperwork
burdens on manufacturers.
Two weeks ago, we eliminated the limit on directional gain antennas
for spread spectrum transmitters operating in the 2,450 MHz and the
5,800 MHz bands and made a number of related rules changes intended to
promote the use and development of spread spectrum systems. The new
rules will expand the ability of equipment manufacturers to develop
radio links without the delays and costs associated with formal
frequency coordination and licensing. The new rules will also
facilitate the growth of the spread spectrum industry by enabling and
encouraging practical applications for spread spectrum transmission
system products, which may include intelligent transportation system
communications links; high speed Internet connections for schools,
hospitals, and government offices; energy utility applications; PCS and
cellular backbone connections; and T-1 common carrier links in rural
areas.
Additional FCC streamlining actions already completed include
reducing reporting requirements by more than 50 percent for the
National Exchange Carriers Association, among others; eliminating our
Review Board; reducing international tariff notice periods to one day
from two weeks; reducing the size of the Office of Managing Director as
a percentage of the agency from 16 percent to 9 percent; and providing
status information on audio service applications on the FCC's web site
(www.fcc.gov), thereby affording immediate and direct access to that
information to licensees and applicants.
electronic licensing
Just as computers have improved our ability to respond to public
requests for information, we also want to use information technology to
promote electronic licensing. Electronic licensing reduces processing
time by at least 25 percent, and in many instances reduces processing
time from 30 days to overnight. The FCC's Wireless Telecommunications
Bureau has been a leader in using electronic licensing to speed its
work.
The Wireless Bureau has developed the capability to receive over 60
percent of its more than 500,000 annual applications electronically. To
date, more than 150,000 license applications have been filed
electronically. Additionally, the Wireless Bureau has developed
software that will analyze and automatically determine licensing
accuracy of thousands of applications annually. This electronic
licensing combined with electronic filing has reduced processing time
for some customers, such as Amateur Radio operators, from more than 75
days to overnight.
Other FCC Bureaus are moving to electronic filing as well. The
International Bureau has instituted electronic filing for earth station
applications. The Mass Media Bureau has begun a project to provide for
the electronic filing of broadcast applications. The filing software
will scan for incomplete or inaccurate applications, and provide
automatic computer analysis of much of the information currently
processed by hand, such as interference analysis. As I described above,
electronic filing of applications for equipment authorization should
reduce by more than half the current application processing time of
approximately 40 days.
We also hope to begin electronic payment of filing fees by credit
card, so as to create an added incentive for applicants to use the
electronic method of filing. We are also working on implementing a
universal form on the Internet for all electronic filing and renewals.
Thanks to efficiencies created by electronic licensing as well as
streamlining proposals such as delicensing, we project that FTE's
devoted to authorization of service will decrease in fiscal year 1998
by 11 percent over fiscal year 1996 levels.
shifting management responsibility for fcc auction debt
In the area of what the FCC should not be doing, it is also time to
assess whether it is consistent with our statutory mandate under the
1993 Budget Act to act as both the promoter of wireless competition and
as banker to the wireless industry. Pursuant to the direction of
Congress, as expressed in the 1993 Budget Act, the FCC adopted rules
allowing small businesses to pay for their new spectrum licenses in
installments over the term of their licenses. While these policies have
helped hundreds of small businesses obtain spectrum licenses in our
auctions, these new businesses now owe the Federal government
substantial sums for their licenses.
It is becoming increasingly apparent that there is tension created
by the FCC's present dual role as regulator of, and creditor to, the
wireless industry. The Commission will continue to face requests from
some small business licensees for temporary relief from their
installment payment obligations, or for renegotiation of the terms of
their loans. Commercial lending institutions routinely engage in these
practices, but the FCC does not have the necessary expertise or
experience to perform these functions. In addition, such a function may
also conflict with our statutory duty to expeditiously issue licenses
for new communications services.
The responsibility for all of these creditor functions should be
transferred to some other government entity with appropriate expertise,
such as the Treasury Department, while the Commission would retain its
ultimate authority over the licenses themselves. Treasury could work
out any relief that should be granted to an auction debtor, and make
appropriate recommendations to the Commission with respect to whether
licenses should be retained, revoked, or transferred. The Treasury
Department's assumption of these creditor responsibilities would be
consistent with the fact that the auction funds are deposited in the
U.S. Treasury, and the Department would be in the best position to make
decisions on payment terms.
conclusion
While competition and deregulation remain the FCC's mantra, the
agency will continue to need the resources to do the job Congress, the
telecommunications industry, and the American people are calling upon
us to do. The New York Times editorial page last week characterized the
Commission's deregulatory efforts to date as ``sure-footed.'' Adherence
to our twin goals of private competition in communications and public
benefits from communications should continue to promote significant
investment in all telecommunications industries, and hasten the day
when business and residential users will be afforded a marketplace
choice in telecommunications services. It also means that all Americans
can look forward to the benefits of modern communications.
This concludes my statement. Thank you again for this opportunity
to meet with you. I would be pleased to answer your questions.
funding for Universal service
Senator Gregg. Thank you.
I would turn to the ranking member whose expertise in this
area far exceeds mine.
Senator Hollings. I defer on the expertise part, but I
think the chairman has answered the questions that many of us
had with respect to the Commerce Committee. Namely, the joint
board recommendation about connecting up, now, all the schools
and libraries. You say that that is not going to threaten any
basic rural phone service.
Well, it is a $3 billion amount. You only get, what is it,
$1.6 billion, now, or what is the universal service fund? So I
mean, you are going to double it. You are not going to do it
all at once. You know, like that ad, ``I can't believe I ate
the whole thing''? In other words, you cannot distribute the $3
billion in 1 year to every library and every school--I doubt--
or can you? That is the question.
Mr. Hundt. Well, I do not know how many will come to take
the money. That certainly is true. But the joint board
suggested that we make available for connecting classrooms and
libraries, not more but not less than $2.25 billion on a per-
year basis. And under the proposal that is circulating now,
Senator, that recommendation would be followed. As to how much
would actually be requested and how many schools or libraries
would meet the requirements, that I cannot predict.
Senator Hollings. Well, I hope your Commission will show
care in distributing it. I mean, obviously, everybody is going
to apply.
Mr. Hundt. I am not sure that everyone----
Senator Hollings. Congressmen and Senators apply for their
libraries.
Mr. Hundt. Well, I am not sure that everyone will be able
to meet the requirements immediately, but I do not doubt that
in the fullness of time everybody will----
Senator Hollings. Well, in the fullness of time, but I was
trying to think of an orderly phase-in. With respect to the
secondary line and the multiline users, that joint board
recommendation to up the rates there in order to try to enhance
the universal service fund, I understand you to say you are not
going to follow that recommendation. I hope we do not.
Mr. Hundt. I think that that recommendation--there was a
good thought behind it, but I think that as we studied it more,
and as we took more in the record, we realized that there are
instances in which a second-line service that did not get
support in some of the States, the United States, would really
be priced prohibitively high, and that would hurt business
development, even Internet access in these States. So we are
changing our techniques here, but your concerns, in particular,
Senator Hollings, I hope and sincerely believe are met in a way
that you would be pleased with, by the proposal that is
circulating.
For example, we have a totally new method, but, you know,
just to illustrate the point, a company called Consolidated, in
North Dakota, right now is receiving total support of $1.211
million. A totally new method. Their support under the new
method would be $1.211 million.
Subscriber line charges
Senator Hollings. I see. Well, again, about trying to
enhance that universal service, and the problem of access
reform, as I remember before the Commerce Committee, you said
the Commission would be taking no action to increase local
phone bills, and there has been some misgiving about any flat
or user fee increases in the subscriber line charges, and all.
That is not contemplated at this time, is it?
Mr. Hundt. No, sir; at least not by me. And again, I am
sure you all know that I am speaking for myself here, since the
Commission will vote on this May 6.
Senator Hollings. Right.
Mr. Hundt. But I personally think that it is inconsistent
with the congressional intent. You want us, as I understand
it--and you have said this more than a few times on the
record--you, Senator, and many other Senators. You want to make
sure the basic dialtone service, which is the access product,
the gateway product in buying anything else, is affordable. We
know it is affordable now, because it is at about 95 percent
penetration. We do not want that to go up in price. So if you
have a universal service program that makes that go up in the
name of universal service, you have kind of done the wrong
thing in saying you have done the right thing.
We are trying to keep basic, affordable dialtone at the
levels that exist today. That is why raising the subscriber
line charge, in my view, cannot be consistent with the
directions that you gave us.
Cable rates
Senator Hollings. Now the real concern among consumer
groups, and this Senator, is with respect to the increase in
cable rates. Now we know that we had tried, and we did keep
control against any increases in the 1996 act until 1999.
However, under the 1992 act allowing increases for inflation,
it seems to many to have been abused in the sense that there
have been three to four times the inflation rate.
What is your response to that?
Mr. Hundt. Well, we have looked into this in some detail.
As far as we can tell, Senator, the main two things driving
increases in cable rates as of this moment, are, No. 1, the
programming costs, the costs that are paid by the cable
companies. Those are going up.
And the cable company does not have much choice when its
program supplier says, ``I am raising my prices.'' The cable
company, we can understand--the cable company has to raise that
price in the same way that, when Starbucks had a higher price
for coffee beans, they ended up passing that on to a higher
price for a cup of coffee.
And No. 2 is that some cable companies are spending a lot
of money to upgrade their systems in a way that will make them
be more competitive and more efficiently able to provide
telephony service, which, of course, Congress opened the door
for in the 1996 act. Those upgrades are being passed on. That
is, however, not true for most companies. The first point
applies to virtually every cable company.
Senator Hollings. Well, look at that carefully because
there is some evidence to the effect that more than the program
increase costs that is--and actually triple the rate of
inflation cost, and I know the study is being made.
FCC relocation cost
Do you have $30 million in here, I think, to move to your
new headquarters?
Mr. Hundt. I think it might be $40 million, actually.
Senator Hollings. Forty.
Mr. Hundt. Forty million dollars over 2 years, and $30
million in the year in question.
Personnel reduction
Senator Hollings. Yes; I understand. And actually, you have
cut back the personnel some 100?
Mr. Hundt. Yes; we re going to be working with fewer people
in order to accommodate the increases that otherwise always
happen. The CPI increases the salary, and the other increases
that you cannot do anything about. So to have a flat level in
the appropriation, we have contemplated a smaller number of
people.
Senator Hollings. Thank you, Mr. Chairman.
Senator Gregg. Thank you, Senator.
Senator Campbell.
Senator Campbell. Thanks, Mr. Chairman.
I just had one little question. I do not know how Starbucks
got in this conversation, but I fly United all the time. This
is just related. I think they have done more damage to United
Airlines flight service--Starbucks--than I think if the wheels
fell off that airplane. [Laughter.]
Radio channel licenses
I wonder, I will just one little--it is kind of a parochial
question, but I live in an area where there are nine separate
law enforcement agencies, and I am not sure I understand this
correctly, but to use different radio channels, they have to
obtain permits to use different radio channels. Is that
correct?
Mr. Hundt. Yes.
Senator Campbell. Through the FCC?
Mr. Hundt. Yes; I mean, all of the licenses to use those
radio channels come from us.
Senator Campbell. With nine agencies--and where we live,
there seems to be an awful lot of frequency congestion because
they do not have enough channels. Is there anything that
prevents local government from expanding them? Does local
government have to get the permits from you, or State
government also have to get----
Mr. Hundt. Yes; this comes out of the FCC, because we have
a national licensing scheme for radio use.
Senator Campbell. Is that a difficult thing to do in
situations----
Mr. Hundt. It is very difficult to do, but I have some good
news, which you might want to let me share with you on this
particular topic.
Senator Campbell. Please.
Mr. Hundt. As I am sure you know, not very long ago, we
issued the digital television licenses, and that is a pretty
big deal for broadcasters, and I think we have done a good
thing for the country. But a small part of our decision is a
very big deal for the public safety community. Because in the
course of that decision, we found some spectrum in what we call
the 60's, the channels on the TV set that are in the 60's, that
are not used in most places in the United States; 63, 64. There
is no TV station that operates in those kinds of channels,
almost everywhere in the United States.
So because we have now carved that out as not being part of
the digital TV transition, we can commence a rulemaking process
at the FCC in the next few months, that would allocate a chunk
of that spectrum for coordinated, comprehensive use by the
public safety community all across the country.
Senator Campbell. I see.
Mr. Hundt. Just yesterday, and this does not happen every
day, the public safety community came in and thanked all the
commissioners of the FCC. And like I said, that does not happen
every day. They should not thank us. They should thank our
engineers who worked for, really, 2\1/2\ years, and built a
fantastic computer model that solved this problem for the whole
country.
And I think when we get that model out and we get this
rulemaking out in the next couple of months, you will be
really, really proud of these engineers.
Senator Campbell. Do you think that will make it easier to
get an expanded number of channels?
Mr. Hundt. It is really going to make a big difference.
Senator Campbell. That is great. That is the only question
I had, Mr. Chairman.
Spectrum cost for public safety entities
Senator Hollings. What is the cost to the public safety
entities, now, in order to take on that spectrum?
Mr. Hundt. Well, you know, that is a good question. The
primary costs that they face, right now--and I do not know how
to quantify it--but when a police department and a fire
department in a single town both have to go and get radio
licenses and radio equipment that they want to use, they find
that it is hard to find enough spectrum to use, enough
capacity, and they end up not coordinating. They end up getting
different licenses, and they end up not being able to talk to
each other. So the prices go through the roof, not to mention
the fact that they cannot do as good a job as they would like
to do.
So that we had this instance at the World Trade Center
bombing, where we found that one law enforcement agency on one
floor could not communicate to another one one floor away. We
are talking about lives being lost, you know, not just extra
expense.
So if we carved out a 63, or a 64, one of those TV channels
that is not used, it is the same frequency all across the
country, and we could at last get the long-desired coordination
possibility.
So I have never quantified the savings here, and we should
do that, Senator, but it is big. It is big.
technology to use Spectrum
Senator Gregg. Do we not also have an issue on the capacity
of these law enforcement agencies to have the technology to
undertake the use of this spectrum?
Mr. Hundt. Yes.
Senator Gregg. Now the FBI thinks, estimating, it will cost
$1 billion for them just to get up to speed on the spectrum
cost.
Spectrum auctions
Mr. Hundt. Yes; in this connection, another thing that we
have underway right now is an effort with the public safety
community in which we might take some of these 60's that I was
mentioning, and auction them, and then divert some of the money
to help let the public safety community have a way to pay for
using the other 60's, and in that way try to kill two birds
with one stone.
Senator Gregg. Would you have to limit that just to 60's? I
mean, as you auction off other spectrums, should not some of it
be set aside to pick up the cost that these----
Mr. Hundt. You could target any of the spectrum auctions
for this purpose.
Senator Gregg. You would not have any problem with that?
Mr. Hundt. I certainly would not. It just happens to be a
neat solution, that we could take this batch of the 60's, as we
are calling them, and then have an auction for some and raise
the cash, and then for the others, you know, dedicate them
directly to the public safety community, and then, really, one
solution to address this issue that has plagued the country for
an awful long time without a good solution.
Senator Gregg. I think we should do that, follow along with
those courses.
Senator Burns has joined us. We are honored, of course.
conversion to Digital television
Senator Burns. Well, I do not have any questions. A
followup to the channels. Those channels were initially
assigned to the television industry, were they not?
Mr. Hundt. That is right.
Senator Burns. How does that fit, when you convert some of
those channels, how does that fit with your conversion to
digital?
Mr. Hundt. Well, two things. First of all, where the 60's
are currently being used for analog TV, we would still have
that happen. For example, Congressman Markey always delights to
remind me that one of the 60's is used in Boston for the Boston
Red Sox being broadcast. We would not be taking that channel
away.
Senator Burns. I am not a Red Sox fan.
Senator Hollings. We do not mind.
Mr. Hundt. You all do not mind about that? [Laughter.]
Well, in any event----
Senator Gregg. Hold it. Hold it. Hold it. [Laughter.]
Mr. Hundt. Well, you know, as you please, really. I would
take your direction on this.
But in any event, we would grandfather the existing analog
licensees of the 60's. It is just that there are not very many
in the aggregate across the country. The key thing that our
engineers figured out was a way to give out the digital
television licenses without using any of the 60's, and that is
a brilliant engineering solution that is all expressed in the
computer model.
Senator Burns. Where will they go now?
Mr. Hundt. Different answers for different stations, but
basically between 2 and--I can't remember, right now.
Senator Burns. It will be under 50, you mean?
Mr. Hundt. Yes, sir; for example, in Washington, 8 would be
used, because no one uses 8 in Washington. Or 14 would be used,
because no one uses 14 today. I am not competent to explain the
intricacies, but because, as you well know, the allocation
system involves a interaction among 2,000 separate licenses. It
is very complicated to make them all fit, and the model,
computer model that our engineers have developed does this job
and is in the process of being publicly disclosed to the
industry, even now.
Senator Gregg. Well, I think this is a very important
issue. This committee has been aggressively pressing the
Justice Department, and I think we have even written you a few
letters on this issue of taking the spectrum for the law
enforcement community and for the Defense Department as we go
through the auction process. So, hopefully, this will alleviate
some of the concern that we have had.
I also think we need to pursue how we pay for a $1 billion
price tag that the FBI faces, and to say nothing of what local
law enforcement faces in technology upgrading. The ideas you
have on that are very helpful, and we appreciate them.
Portals lease
On the issue of your move to Portals, I understand that
this arises out of your desire to go there, but also because
the General Services Administration [GSA] lost a lawsuit over
the leasing of this facility, and the new lease price seems to
be rather high. I think it is $35 a foot. I am just wondering
why you should have to pay this and why GSA should not pay the
difference?
Mr. Hundt. GSA, as a matter of law, was the agent of the
FCC for purposes of the lease negotiation. That was not
something that we have any role in, and as our agency, they
bound us to the lease which they did sign.
Senator Gregg. So why shouldn't we let them pay for it? It
comes out of another committee. It is out of another account.
Mr. Hundt. I really have no comment for you. We do not have
an appropriated sum to pay for our move at this time, and we
have told GSA that we do not have the money to pay for the
move, and GSA will have to find that money. I am in a very
receptive mode as to any suggestions that you might have.
Senator Gregg. Have you ever tried tents?
Mr. Hundt. Yes; but it is so hard to work those computers
in there; you know. [Laughter.]
Senator Gregg. You run them off the lightning.
Alcohol advertisements
Can you assess the alcohol advertising policy.
Mr. Hundt. Yes; the networks have publicly said that for
their owned and operated stations, and for the advertising the
networks are responsible for, they are making the individual
decisions not to welcome hard liquor advertising.
However, the affiliates, you know, the bulk of the stations
in this country, they have their own time as everybody knows,
and some of them--no one knows exactly how many--are carrying
hard liquor ads. We do not actually have the facts here. You
know, one thing that I think we ought to do is have a notice of
inquiry so that we learn the facts. Some people say that there
are 100 plus stations carrying these ads. Others say that there
are 50 some stations.
I would like to be able to give you the facts on this
situation and that is why I think we should vote a notice of
inquiry and develop a factual record, and be able to report to
you and to the country on this topic. I want to say that I am
certainly not faulting the networks. I mean to be complimenting
them. But I just cannot tell you what the pattern is across the
country, and the percentage amount of advertising time is
primarily local. So that is a big concern.
Direct appropriations increase
Senator Gregg. Now the dollar increase that you have here
in direct appropriation goes up rather dramatically on a
percentage basis, dollarwise. It is not dramatic, I suppose, by
our numbers, but still, percentagewise an increase. The vast
majority of that is a function of your higher rent costs?
Mr. Hundt. The primary, indeed, the overwhelming reason for
the fact that you are remarking is the move to Portals.
Senator Gregg. Senator Domenici.
Senator Domenici. I have a series of questions regarding
digital TV, and I think I am just going to submit them to you.
I would really appreciate it, if the chairman would concur in
this, and the ranking member, if you would answer them for the
committee, quickly.
I would ask exceptionally quickly. We are reviewing the
numbers in the Budget Committee, and we would like to get your
version of various spectrum ideas that are being discussed.
Could you do that for us?
Mr. Hundt. Sure. Would next week be all right?
Senator Domenici. Noon. Start on them today. [Laughter.]
It would be very helpful if you could have the response by
tomorrow night.
Mr. Hundt. OK. We will give it a crack. Oh, you have got it
right here.
Senator Domenici. I am going to leave the questions with
you.
Mr. Hundt. OK.
Senator Domenici. I was going to ask them while we are
here, but I do not want to keep all these people. I arrived too
late to delay people.
Mr. Hundt. All right. We will get you something, for sure,
by tomorrow night, and if one of them seems to take a little
longer, I will tell you by tomorrow night.
Senator Domenici. All right.
Mr. Hundt. Is that all right?
Senator Domenici. It should come to the committee, even
though--I mean, this should not be with me.
Senator Gregg. No; communicate directly to the chairman of
the Budget Committee.
Senator Domenici. Thank you.
Appropriation request
Senator Burns. Mr. Chairman, what is the increase in the
request?
Senator Gregg. Well, it is about 55 percent on a percentage
basis of the direct appropriations as opposed to, I think, $36
to $55 million. Last year, we went up about $10 million on the
direct appropriation, so it is going up, rather dramatically.
But I am not really sure it is all the FCC's problem. A lot of
it is the cost of this new building.
Additional committee questions
Does anybody else have any questions?
Senator Burns. No; I would like to get a copy when you
furnish it----
Senator Gregg. Yes; obviously copy us with the answers, but
do please go directly to the chairman of the Budget Committee.
Senator Hollings. I would not be too bullish on this
spectrum. It is a disease. Everybody's got a program and they
are going to sell spectrum, sell spectrum, sell spectrum, and
it is not going to happen, ultimately, as you and I both know.
Senator Gregg. And it is important that we protect the
spectrum for the law enforcement community and the Defense
Department.
[The following questions were not asked at the hearing, but
were submitted to the Commission for response subsequent to the
hearing:]
Questions Submitted by Senator Pete V. Domenici
access charges
Question. Chairman Hundt, many rural telephone companies and
cooperatives are quite concerned about the FCC's forward looking costs
in interconnection and proxy models under Joint Board's recommendation.
The rural providers believe that such cost models are inadequate and do
not provide sufficient flexibility and predictability. I am concerned
about the interaction of the FCC's interconnection and access charge
reform proceedings with universal service. If the Commission does not
provide an adequate cost formula for rural and high cost areas, it
could have a profound effect on phone rates and infrastructure
development and investment.
Does the FCC have any plans to significantly modify current Access
Charge fees?
Answer. According to the FCC's plan, all rural telephone companies
would receive universal service support according to the same formulas
used today. The plan adopted by the Commission on May 7th reforms the
access charge system for the largest local telephone companies that are
subject to the FCC's price cap regulation. These companies include the
Bell Operating Companies, GTE and other large independents. For
companies other than price cap carriers, which includes the vast
majority of local telephone companies that provide service in rural
areas, we will, with minor exceptions, maintain the current access
charge regime. Later this year, we will consider what changes are
warranted for these companies in a separate rulemaking proceeding,
where we can give proper attention to the special circumstances these
companies face. In its May 7th decision, the Commission balanced
various goals, which included keeping low flat rates for residential
consumers to promote universal service, lowering per-minute charges for
long distance service to stimulate demand and promote efficient use of
the network, and ensuring that local telephone companies have
incentives to continue to invest in the local network. For the largest
local telephone companies, the Commission will reduce the per-minute
charges collected and will allow them to recover more of their revenues
through flat charges collected from long distance companies. This will
make the recovery of access charges more economically efficient and
reflective of the way costs are incurred. These changes should help
permit all carriers, both incumbent local telephone companies and new
entrants, to compete fairly for the local exchange business, without
either having an advantage for a particular type of customer.
Question. Does the FCC currently have any plans to eliminate the
cap on End User Charges or Subscriber Line Charges placed on second
telephone lines for either residences or businesses in rural areas?
Answer. In its recent Order, the Commission did not change the
Subscriber Line Charge (SLC) for small rural carriers. For large price
cap companies, the Order maintains current SLC caps for primary
residential and single-line businesses and gradually reduces the
subsidy for second line residential and multi-line businesses. This is
consistent with the unanimous recommendation of the Federal-State Joint
Board. The Universal Service Joint Board concluded that the current
$3.50 cap on the Subscriber Line Charge (SLC) for primary residential
and single-line business lines should not be increased. The Joint
Board, however, did not recommend that the SLC cap should be maintained
for multi-line business or residential connections beyond the primary
connection. The Commission's plan, consistent with the Joint Board's
view, does not increase SLC charges on primary residential or single-
line businesses.
In its rulemaking, the Commission ensured that the prescribed
changes in access charges would have minimal impact on residential or
business consumers, and especially those in rural areas. We believe
that the resulting plan will lead to lower long distance charges on
these customers' bills. The May 5th pledge by AT&T to pass-through
access charge reductions to consumers underscores the validity of this
approach. In addition, a recent SBA study shows that small businesses
in rural areas are bigger users of long distance than urban small
businesses. Therefore, we predict these businesses will be recipients
of even larger decreases in their long distance bills.
Question. Is the FCC currently working to develop a more accurate
proxy model for local telephone companies which will ensure adequate
and accurate cost recovery? Please explain your answer.
Answer. The Joint Board recommended that the Commission use a
forward-looking cost model to calculate the forward-looking costs of
providing the supported services but it did not recommend a specific
model.
On March 26, 1997, the state members of the Joint Board submitted a
report to the Commission regarding the cost models. In the report, the
state members stated that they have serious concerns about the adequacy
and accuracy of the cost models at this point. Nonetheless, the state
members recommended that the Commission select one model as soon as
possible to focus the efforts of the Commission and industry. The state
members, however, did not make a recommendation on which model the
Commission should select.
We remain committed to using a forward-looking cost methodology to
determine universal service support. However, we are also concerned
about which model provides the most workable, reliable mechanism that
could be used to calculate universal service support for large, non-
rural carriers. As recommended by the Joint Board, we will take
specific steps to adopt a forward-looking economic cost methodology for
determining support in high cost areas. First, by the end of June 1997,
the Commission will issue a further Notice of Proposed Rulemaking
seeking additional information to help the Commission select a model.
By August 15, 1997, the states will notify the Commission of their
intent to either develop their own forward-looking economic cost study
or use the one developed by the Commission. By February 6, 1998, states
must file their forward-looking economic cost studies with the
Commission. The Commission will place the state-filed forward-looking
economic cost studies on public notice and review them to ensure
consistency with federal guidelines. The mechanism for determining high
cost universal service support, based on forward-looking economic cost,
will become effective on January 1, 1999.
Question. Understanding the dilemma the FCC is currently facing
regarding proxy models which do not work, is the FCC confident that an
accurate proxy model can be developed for rural high cost local
telephone carriers and cooperatives?
Answer. The Commission intends to provide support for universal
service in rural areas consistent with section 254(b)(3), which states:
Access in rural and high cost areas.--Consumers in all
regions of the Nation, including low-income consumers and those
in rural, insular, and high cost areas, should have access to
telecommunications and information services, including
interexchange services and advanced telecommunications and
information services, that are reasonably comparable to those
services provided in urban areas and that are available at
rates that are reasonably comparable to rates charged for
similar services in urban areas.
The Commission recognized that it will be more difficult to develop
a forward-looking economic cost model methodology for rural carriers
than for non-rural carriers and more time would be necessary to develop
a model that accounts for the unique needs of rural carriers. This
concern led the Joint Board to recommend that the Commission, working
with state commissions, review any proxy model used by the Commission
to ensure that it takes into consideration the unique circumstances of
rural carriers. On May 26, 1997, the state members of the Joint Board
submitted a report to the Commission regarding the cost models. The
report found that the cost models were not sufficiently developed to be
used for rural carriers.
Consistent with the recommendation of the Joint Board, the
Commission has determined that rural carriers should move to a forward-
looking economic cost methodology, but should not do so immediately. We
will require rural carriers to calculate support based on forward-
looking economic costs once a method suitable for application to rural
carriers is developed and validated. The Commission will issue a
Further Notice of Proposed Rulemaking to address issues unique to rural
areas by October 1998. The Commission also supports the establishment
of a rural task force, consistent with commenters and the State
Members' Report, to study the development and impact of a forward-
looking cost methodology for rural carriers.
Until a forward-looking cost methodology is selected for rural
carriers, they will receive universal service support for all lines,
using the same formulas in effect today, with slight modifications,
until December 31, 1999. On January 1, 2000, this support will be
adjusted for inflation.
Question. Chairman Hundt, one concern we are hearing with regard to
the Interconnection order is how that order may have adverse
implications on the Universal Service fund.
Is it true that a competing telephone company can purchase
unbundled network elements and then rebundle those elements to avoid
paying access charges? And if it is true, would you please explain why
this is permitted.
Answer. First, in the Local Competition Order, the Commission held
that a competing telephone company that purchased unbundled network
elements should not also be required to pay intrastate and interstate
access charges to the incumbent local telephone company to use those
elements to provide long-distance service. Parts of that order have
been stayed by the United States Court of Appeals for the Eighth
Circuit on jurisdictional grounds.
We examined this issue in our current interstate access reform
proceeding based on our jurisdiction over interstate access charges.
Specifically, we examined whether any new entrant paying cost-based
rates to the incumbent local telephone company would have already
compensated that company for the ability to deploy unbundled network
elements to provide originating and terminating access. We considered
whether adding access charges to the price of unbundled elements, would
impair, if not foreclose, new entrants' ability to offer competitive
access services through the use of unbundled network.
In our Access Reform Order released on May 9, 1997, we stated that
we will exclude unbundled network elements from Part 69 access charges.
This conclusion applies to all incumbent LEC's. As we noted in the
Local Competition Order, payment of cost-based rates represents full
compensation to the incumbent LEC for use of the network elements that
carriers purchase. We further noted that sections 251(c)(3) and
252(d)(1), the statutory provisions establishing the unbundling
obligation and the determination of network element charges, do not
compel telecommunications carriers using unbundled network elements to
pay access charges. Moreover, these provisions do not restrict the
ability of carriers to use network elements to provide originating and
terminating access. Allowing incumbent LEC's to recover access charges
in addition to the reasonable cost of such facilities would constitute
double recovery because the ability to provide access services is
already included in the cost of the access facilities themselves.
Excluding access charges from unbundled elements ensures that unbundled
elements can be used to provide services at competitive levels,
promoting the underlying purpose of the 1996 Act.
universal service
Question. Does the FCC plan on discontinuing Universal Support
services to multi-line small businesses in rural, high-cost regions?
And if so, when would this plan take effect?
Answer. Under our plan, ``rural'' phone companies (phone companies
serving study areas with less than 100,000 lines) will continue to
receive support for all lines--including business lines--using the same
formulas used today. We will maintain the existing mechanism for ``non-
rural'' carriers (phone companies serving study areas with more than or
equal to 100,000 lines) for an additional year while we resolve issues
concerning a forward-looking economic cost methodology. The existing
support system will continue to be applied to large non-rural carriers
and to fund all lines. This system will be funded on a new basis--with
funds collected based on interstate revenues of all telecommunications
providers. By August 1998, we will adopt a forward-looking cost
methodology on which support for all non-rural carriers will be based,
with implementation beginning January 1, 1999.
Question. Does the FCC propose to limit Universal Service support
to second telephone lines in homes of rural, high-cost regions? And if
so, when are these plans to be implemented?
Answer. As noted above, under the Commission's plan, rural phone
companies will continue to receive universal service support for all
lines--including second residential lines--using the same formulas in
use today. We will review these decisions during the course of
implementing a forward-looking cost methodology for determining high
cost support for rural carriers.
Question. Does the FCC have plans to place a cap on the Universal
Service fund? And if so, would you explain your reasoning for this
decision.
Answer. The Joint Board did not recommend a specific cap for the
universal service fund. However, the Board recommended that support for
schools and libraries be capped at $2.25 billion per year. The
Commission adopted the annual cap for the school and library fund in
its recent Order. However, in assessing the certainty for universal
service to respond over time to meet the changing needs of consumers
and the marketplace, the Commission did not institute a cap on the
overall universal service fund as part of its May 7th decision.
Question. Does the FCC still contend that only Interstate revenues
should be used to fund the Universal Service Fund? And if so, could you
please explain why you are not considering Intrastate revenues?
Answer. The Federal-State Joint Board on Universal Service
recommended that support for schools, libraries, and rural health care
providers be based on interstate and intrastate telecommunications
revenues. The Joint Board did not issue a recommendation regarding the
assessment base for contributions for the high cost and low income
programs.
The Commission adopted the Joint Board's recommendation regarding
the assessment base for schools, libraries, and rural health care
providers and will base contributions to federal support for schools,
libraries, and rural health care providers on interstate and intrastate
end-user telecommunications revenues. Carriers will be permitted to
recover their contributions to the universal service fund through the
interstate jurisdiction. It should be noted that commenters in this
proceeding contend that any requirement by the Commission to recover
universal service funding from intrastate revenues would infringe upon
states' jurisdiction over local rate-setting, as provided in Section
2(B) of the Telecommunications Act. Because the Joint Board did not
issue a recommendation regarding the assessment base for support for
the high cost and low income programs and because states had not
reached a consensus on this issue, the Commission adopted an approach
that maintains historical jurisdictional lines and will base
contributions to federal support for high cost areas on interstate end-
user telecommunications revenues. Contributions for the new federal
universal service support mechanisms will be collected beginning
January 1, 1998.
digital television
Question. Chairman Hundt, the FCC has recently cleared the way for
broadcasters to begin the transition to digital television. While I
support the eventual transition to this new and improved medium, I
still have grave concerns with the transition schedule for smaller
rural states like New Mexico. I continue to hear from numerous New
Mexicans who are worried that they will soon be faced with purchasing a
new, much more expensive television set in the near future. Mr.
Chairman, I believe the FCC should make better efforts to inform the
public of the actual digital transition schedule. You may not realize
it here in Washington, D.C., but $1,000 is still a lot of money in New
Mexico--especially for a television set.
Will you please outline before this committee what New Mexico
citizens and broadcasters can expect with regard to the digital ruling
by the FCC?
Answer. The citizens of New Mexico are served by television
broadcasters in three markets: Albuquerque-Santa Fe (market number 48),
El Paso (99) and Amarillo (126). Under the rules adopted April 3, 1997,
commercial broadcasters in those markets (in fact in all markets above
the 30th largest) would have until May 1, 2002 to build digital
broadcast facilities. Non-commercial broadcasters would have until May
1, 2003.
For New Mexico's television viewers, the situation is as follows.
For those viewers who rely upon cable or satellite as their primary
source of video programming, they will, for all practical purposes, see
no difference other than what their service provider chooses to offer
with respect to advanced technologies. For the approximately 35 percent
of the population that relies upon the over the air service, they can
choose to buy a new digital television when they are ready, based on
their own needs. By the time broadcasters in New Mexico are required to
be providing digital signals, the consumer electronics manufacturers
expect to have reached the necessary volumes of production (in excess
of 1,000,000 per year) which drive prices down rapidly. Furthermore,
computer manufacturers have proposed that they will provide tens of
millions of DTV-ready PC's by that time, with little more than $100
additional costs to consumers, helping to increase consumer acceptance
of DTV.
Still, it is clear there may be some consumers who will not, even
by 2006, buy new digital televisions. It is our expectation, based on
the comments received in response to our Notices, that there will be
low cost set-top convertor devices, similar in size, cost and
complexity to a cable convertor box today which will allow viewers to
benefit from the digital signal without needing to buy an entirely new
set.
Question. When do you anticipate rural states like New Mexico will
see the full transition to digital television?
Answer. As discussed above, it is our expectation that a target of
2006 for the cessation of analog service is reasonable. As many
commenters in our proceedings have made clear, as digital technology
has developed, we have had reason to expect that DTV may be adopted
more quickly than originally anticipated. Competitors in the video
programming market, such as DBS, cable and wireless cable, have
aggressively pursued the potential of digital technology. This
competitive pressure has lent urgency to the need for broadcasters to
convert rapidly. Furthermore, technological advances will continue to
lower costs to broadcasters; for example, new technology may allow some
broadcasters to use existing towers for digital transmission, thus
easing the expense of converting to digital equipment. Similarly, on
the consumer side, ongoing development to meet consumer demand will
bring down costs of converter boxes necessary to fully transition from
analog to digital technology.
Question. New Mexico, due to its large land area and rural
population, must utilize several translators to provide television
throughout the state. What impacts, if any, will be felt by translators
during this transition to digital television?
Answer. In our Sixth Further Notice of Proposed Rule Making
(Notice) in the digital television proceeding, we observed that various
spectrum studies have indicated that in order to provide DTV channels
for all eligible full service broadcasters it will be necessary to
displace low power TV (LPTV) and TV translator stations to some degree.
The task of analyzing the impact of DTV on LPTV and TV translator
stations is extremely complex and station specific. Because of this, we
can only approximate the number of LPTV and TV translator stations that
will be affected or have to cease operation to accommodate new full
service DTV stations. In the Notice, we estimated that about 55 to 65
percent of all existing LPTV stations and about 80 to 90 percent of all
TV translators would be able to continue to operate. We also noted that
about 17 percent of all LPTV and TV translator stations operate on
channels 60-69 and could be affected by our proposals to recover those
channels. We have conducted a similar analysis of the final DTV Table
of Allotments that was adopted in our recently adopted Sixth Report and
Order in the DTV proceeding. The estimates provided by this new
analysis confirm our initial studies of LPTV and TV translator impact.
There are currently about 360 LPTV and TV translator stations in the
state of New Mexico. We estimate that about 330 of these stations, or
92 percent, will not be affected by new DTV operations. However, there
are about 70 low power stations on channels 60-69 in New Mexico. These
stations may be affected by our plans to recover this spectrum for
public safety and other uses.
LPTV and TV translator stations can be affected in different ways
by the DTV implementation process. Initially, we note that an LPTV or
TV translator station will be affected only if it causes interference
to a new DTV station or if it receives interference from such a
station. Other LPTV and TV translator stations will not be affected. As
secondary operations, LPTV and TV translator stations that cause
interference to DTV stations will be required to take steps to
eliminate that interference. In some cases, LPTV and TV translators
will be able to resolve the interference by changing their operation
through methods such as using a directional antenna or reducing their
power. In a few cases, the only solution will be to cease operating. If
the LPTV or TV translator receives interference, the licensee may
decide to simply accept the interference and continue to operate. This
could occur, for example, if only a portion of the LPTV or translator
station's service is affected.
We have also amended our rules to mitigate any impact on low power
operations. In this regard, we have amended the low power rules to
eliminate a number of existing restrictions on their operations and to
provide more opportunities for low power stations to find replacement
channels where necessary. We have also allowed low power operators to
take into account terrain and other factors in avoiding interference to
full service TV and other primary operations.
Question. Understanding the significant costs involved in modifying
a television station to transmit digital signals, how many, if any,
independent and public television stations does the FCC anticipate will
be unable to make the transition due to financial reasons?
Answer. Our requirements to fulfill their obligation to receive
``credit'' for building a digital facility are designed to provide
broad flexibility to licensees. There is no requirement to produce
programming on site, and licensees need only serve their community of
license. While we would hope that broadcasters would choose, on their
own, to develop advanced capabilities and serve large areas, our
regulation should allow even an independent licensee to meet its
obligations. Many broadcasters have been investing in digital equipment
for some years already, due to the inherently more efficient and
reliable features afforded by digital technology. It was widely
reported at the recent NAB convention in Las Vegas that equipment
manufacturers expect costs of digital equipment to keep going down. It
is our expectation that a well planned capital budgeting process over
the five years New Mexico broadcasters have to introduce digital
services would not unduly burden even these small market broadcasters.
Furthermore, with respect to public television stations, we extend
an additional year and will grant special treatment to afford them
every opportunity to participate in this transition, and will deal with
them in a lenient manner in considering requests for extensions.
Question. Will any currently operating translators or television
stations in New Mexico be forced to relinquish any spectrum for the
transition to digital television?
Answer. As indicated above, there may be some impact on translators
in New Mexico. With regard to recovery of channels 60-69, this will
only occur if this spectrum is used for new services. In largely rural
areas, such as those served by translators in New Mexico, the volume of
communications traffic is generally lower and spectrum is less
congested. We therefore would expect that in those areas the need for
new services will be lower and fewer translators will be affected than
the worst case estimate provided above.
spectrum-transition to digital tv
Question. With respect to the rules for Digital Television (DTV)
service adopted by the Commission on April 3, 1997, what is the
sequence of events for the transition to DTV that you expect to occur
over the next ten years? Do you anticipate court challenges against the
DTV Table of Allotments? Will broadcasters have to apply for the second
channel? When does the FCC expect to approve the applications and what
transactions will occur that will constitute the ``loaning'' of the
second channel? How would any Congressional action related to the
transition affect the process if such action were to occur before the
second channel is actually awarded to the broadcasters?
Answer. On April 3, 1997, the Commission adopted two Reports and
Orders in the DTV proceeding: the Sixth Report and Order sets forth a
DTV Table of Allotments listing the channels that will be awarded; the
other, the Fifth Report and Order, sets forth the rules applicable to
eligible licensees. The Commission expects to release both Orders next
week. Like all other Commission decisions in rulemaking proceedings,
the two DTV Orders are subject to administrative and judicial review,
upon the filing of a timely petition for reconsideration by an
interested person. Unless the Commission or a federal court issues a
stay, however, the rules issued remain effective during any period of
reconsideration or on appeal.
The process of obtaining the DTV licenses will be as follows. In
the Fifth Report and Order, the Commission will issue a list of
licensees and permittees eligible for a DTV channel, pursuant to the
Telecommunications Act of 1996. We will also provide a cancellation
procedure, so that the Commission can reclaim quickly the DTV channels
of those licensees and permittees not interested in converting to DTV.
The Commission expects those licensees and permittees that will convert
to DTV to file an application for a construction permit to build the
DTV facility. We have provided a streamlined process for them to do so.
Under this certification procedure, if an applicant can answer ``yes''
to a list of questions designed to elicit required technical
information about the proposed DTV facility, the application can be
granted within a matter of days. Other applicants will be required to
provide additional technical information. Upon grant of a construction
permit, the applicant can commence construction of the DTV facility on
its 6 MHz channel. Finally, once the DTV facility has been built and is
ready to go on the air, we will authorize the permittee to begin
operation upon notification to the FCC, provided that an application
for a license is filed within 10 days. The process is designed to be
simple and quick, while ensuring that the FCC has the information it
needs to carry out its interference protection and other
responsibilities.
The Commission's rules are also intended to provide for an
expeditious buildout of DTV. Those rules require affiliates of the top
four networks in the top 10 markets to be on the air with a digital
signal by May 1, 1999. Affiliates of the top four networks in markets
11-30 must be on the air by November 1, 1999. The top ten markets
include 30 percent of television households, while the top 30 markets
include 53 percent of television households. A number of broadcasters
in the top ten markets have committed to begin digital operations
within 18 months. All other broadcast stations are required to be on
the air with a digital signal within five years. Because an important
goal in our DTV proceeding is the return of the analog spectrum at the
end of the DTV transition period, the Commission has set a target date
of 2006 as a reasonable end-date for analog television service. The
Commission will review that date in periodic reviews, which will be
conducted every two years to allow evaluation of the progress of DTV
and changes in Commission rules, if necessary.
In the months leading up to DTV, many broadcasters across the
country, in anticipation of our DTV Orders, began taking measures to
prepare for DTV transmissions, including investing in new hardware. The
Commission expects, and intends to ensure, that unless otherwise stayed
the transition to DTV will continue at a brisk pace.
Question. Based on the Commission's experience with spectrum
auctions to date, does it make sense, as a matter of spectrum policy,
for the Federal Government to hold an auction five years before the
date that it may be able to deliver spectrum licenses to those who bid
on it? Wouldn't an auction raise more money (present value discounting
aside) if it were an auction of spectrum that the federal government
had certainty of delivering?
Answer. The DTV Table of Allotments set forth in the Sixth Report
and Order recovers 138 MHz of spectrum--60 MHz immediately and 78 MHz
in ten years. Early recovery is made possible by an allotment plan that
minimizes the number of digital channels above channel 59. Some of the
spectrum that the FCC will recovery immediately--24 MHz--can be quickly
reallocated to help address the serious needs of public safety users.
The remaining 36 MHz from channels 60-69 can be reallocated
expeditiously and assigned using competitive bidding. The remaining 78
MHz, which will become available at the end of the transition ten years
from now, can be assigned using competitive bidding for any use that
the public desires.
Based on the Commission's experience with 14 spectrum auctions to
date, we have found that prospective bidders for new communications
licenses generally need at least one year's notice of an upcoming
auction. We believe, for example, that one reason the Commission's
ongoing auction for Wireless Communications Services appears to be
falling short of the Congressional Budget Office's revenue estimates is
that prospective bidders had only five-and-one-half months' notice
between the date the auction was enacted into law as part of the
Omnibus Consolidated Appropriations Act of 1997 (Public Law 104-208)
and the April 15, 1997 statutory deadline for commencing the auction.
Bidders need a reasonable time to develop their business plans for new
competitive communications services and to access capital.
In the case of recovered broadcast spectrum, there may be
advantages to an early auction. Recovering analog broadcast spectrum
expeditiously requires that broadcasters be on notice of a date certain
for the return of those channels and a corresponding commitment by
Congress and the FCC to enforce the timetable for recovery. Auctioning
recovered broadcast spectrum even five years in advance of the
anticipated recovery would strengthen this commitment by creating a
class of private parties with an economic interest in assuring that the
recovery occurs.
Question. What gives the Commission confidence that it will be able
to retrieve the analog spectrum from broadcasters to deliver it to the
winning bidders, especially given that broadcasters say the transition
to DTV may take longer than the year 2006 and that they may not be in a
position to return the spectrum that early?
Answer. As explained in the answer to Question 1, the Commission
adopted rules designed to provide for an expeditious buildout of DTV.
As I stated when the FCC adopted the DTV rules on April 3, however, I
am concerned by the Commission's decision not to adopt a phased-in
build out rule for markets 30-211. The failure to do so means that over
90 percent of television stations have no requirement to build out
before five years. This puts our spectrum recovery goals unnecessarily
at risk. While I believe there is a good chance that market forces
generated by a rapid buildout in the top 30 markets will cause the
remaining markets to build out relatively quickly, I would have
preferred not to leave this to chance. I hope the Commission will
revisit this decision as early as next year. Moreover, to the extent
Congress shares this concern about the prospects for a DTV buildout
that recovers all 78 MHz of spectrum by 2006, it may want to pass
legislation codifying the 2006 deadline for the DTV transition. A
statutory deadline would strengthen significantly the Commission's
efforts to ensure a timely buildout.
Question. If the Administration's spectrum proposal were to be
adopted, how would the FCC levy and collect any shortfall in
anticipated receipts from an auction of returned broadcast spectrum?
That is to say, by what mechanism would the FCC ensure the integrity of
the process of holding broadcasters accountable for this obligation to
cover any shortfall?
Answer. The best way to avoid a shortfall in receipts anticipated
from auctioning the 78 MHz of broadcast spectrum recovered by the
Commission's Sixth Report and Order is to recover that spectrum as
rapidly as possible. This is why I hope the Commission will revisit its
decision not to adopt a phased-in buildout rate for DTV licensees in
markets 30-211. The Commission has not yet considered a mechanism by
which it would hold broadcasters responsible for any shortfall in
spectrum auction receipts. Should such a mechanism become necessary,
there are many ways of addressing this issue, and the Commission would
welcome the opportunity and the flexibility to explore these options
fully and to find a solution that maximizes public and private benefit.
______
Questions Submitted by Senator Ernest F. Hollings
cable rate increases
Question. The 1992 Cable Act authorized the FCC to regulate rates
for cable service not subject to effective competition. Since that
time, the FCC has adopted its ``going forward'' rules and allowed
annual adjustments of rates. The 1996 Act preserved FCC authority to
regulate rates through March 31, 1999 yet press reports indicate that
rates continue to rise 3 times inflation. Do you have the authority to
curtail these rate increases?
Could you provide for the Committee options available to the FCC
under its current statutory authority that would curtail these rate
increases through March 31, 1999?
Answer. The 1992 Cable Act directs the Commission to ensure,
through regulation, that cable rates are not unreasonable by simulating
the effects of competition until actual competition emerges in the
marketplace. In 1993, the Commission found that, on average, the rates
charged by cable systems that did not face effective competition were
approximately 10 percent higher than the rates charged by comparable
systems that were subject to effective competition. This ``competitive
differential'' meant that cable systems that were not subject to
effective competition were generally required either to set cable rates
to their September 30, 1992 levels and then apply a 10 percent
reduction or to submit a cost-of-service showing to justify higher
rates. In 1994, the Commission revised the competitive differential
from 10 percent to 17 percent. This revision generally reduced cable
rates by an additional 7 percent.
The data collected for our 1996 Price Survey indicate that the goal
of the 1992 Cable Act is being met. The differential between average
rates charged by competitive and noncompetitive cable operators
narrowed significantly after the introduction of rate regulation. On
August 31, 1993, the average cable rate for services and equipment
charged by the competitive group was $20.51 per month, and the average
charged by the noncompetitive group was $22.23 per month, for a
differential of 8.4 percent. After the imposition of rate regulation,
the differential narrowed significantly, to 2.7 percent in July 1994
and to 2.3 percent by January 1995.
Reviewing the entire period of rate regulation (from April 1993 to
the end of 1996), finds that the Cable CPI increased at a slower rate
than general inflation. The Cable CPI increased by 8.4 percent, or at a
2.3 percent compound annual (``CA'') rate, versus a 10.2 percent
increase for the general CPI, or a 2.7 percent CA rate, over the entire
forty-five month period. The Commission's rules allow cable operators
to adjust their rates to account for inflation and to pass through to
subscribers certain external costs. These costs are: (1) state and
local taxes applicable to the provision of cable service; (2) franchise
fees; (3) costs of complying with franchise requirements; (4)
retransmission consent fees and copyright fees; (5) other programming
costs; and (6) Commission regulatory fees imposed pursuant to 47 U.S.C.
Sec. 159. The Commission also allows operators to recover the costs of
substantial upgrades to their networks.
Recent rate increases appear to be due to general inflation,
increases in external costs and expenses associated with network
upgrades. The Commission has allowed inflation adjustments of 2.15
percent, 2.96 percent and 2.14 percent for the periods ending June 30
of 1994, 1995 and 1996, respectively. Over the past five years,
programming license fees for the national networks have risen at a CA
rate of 8.4 percent versus a 2.8 percent rate for the general CPI, or
nearly three times the general rate of inflation.
The Commission could modify its rules to reduce or eliminate the
pass-through of some or all of the costs that operators are permitted
to pass through under the Commission's current rules. The elements at
stake in such a decision include the diversity and quality of cable
programming, the financial stability of the cable operator, the
revenues which flow from the cable operator to the state and local
governments, and the quality of the nation's infrastructure.
The Commission adopted new ``going forward'' rules in 1994 as a
means of encouraging cable operators to provide new programming. Prior
to the adoption of these ``going forward'' rules, cable operators were
allowed a rate increase (as determined by the Commission) to reflect
the costs of adding new channels and to obtain a 7.5 percent mark-up on
new programming costs. The Commission concluded that this did not
provide most cable operators with sufficient incentive to provide
subscribers with additional channels from either unused or new
capacity.
Operators electing to use the 1994 ``going forward'' rules may take
a per-channel mark-up of up to 20 cents for each channel added to a
cable programming service tier. This 20 cents represents the
Commission's best estimate of the average amount by which operators in
a competitive environment would adjust rates for a new channel,
exclusive of programming costs. Operators are allowed to recover for
the addition of channels at any time during a three-year period
beginning on January 1, 1995. The per-channel adjustment to the monthly
rate cannot exceed $1.20 per subscriber over the first two years (the
``Operator's Cap'') or $1.40 over the full three-year period. During
the third year, operators can only take the final 20 cent adjustment
for channels added in that year. For channels added pursuant to these
``going forward'' rules, operators may not take the 7.5 percent mark-up
on programming costs allowed under the initial rate rules.
The Operator's Cap is based on the Commission's observations of
cable industry behavior prior to the 1992 Cable Act, adjusted for the
lack of effective competition, so as to replicate a competitive market.
The Operator's Cap provides an incentive to operators to provide new
services while protecting consumers by keeping overall regulated rates
reasonable. Operators may use a portion of the Operator's Cap to pay
license fees. Operators were also allowed to add a maximum of 30 cents
per subscriber for programming costs associated with adding new
channels (the ``License Fee Reserve'') during 1995 and 1996. The
License Fee Reserve was necessary because, without one, operators would
have an incentive to add no-cost or low-cost channels instead of
channels that may have been more in demand by subscribers. In 1997,
license fees are no longer subject to special rules, but are treated as
external costs. The 1994 ``going forward'' rules expire on January 1,
1998, unless renewed by the Commission. If allowed to expire, cable
operators will no longer be able to adjust their rates pursuant to
these rules.
In 1995, the Commission granted operators the option of adjusting
rates annually, rather than quarterly. The parties involved in this
proceeding, including local franchising authorities, generally agreed
that cable operators should be encouraged to reduce the number of rate
filings. The adoption of the optional annual rate adjustment limits
subscriber frustration and confusion because subscribers do not have to
contend with numerous rate adjustments during a given year. Regulatory
authorities also benefit because the number of rate adjustments
requiring review is minimized.
The most effective deterrent to rate increases is the availability
of competitive choices. In the absence of a competitive environment,
the Commission's policies have sought to balance the goal of providing
subscribers choices in cable programming at reasonable rates while
affording cable operators an incentive for expanding and improving
service. In the Commission's review of the ``going forward'' rules, we
will undertake to examine with more focus the source of recent rate
increases and what direction rate regulation should take.
universal service
Question. In testimony before the Commerce Committee you stated
that you would take no action to increase local phone bills. Do you
intend to impose on consumers any flat end user fees or increases in
the Subscriber Line Charges as part of either the Universal Service or
Access Reform?
Answer. The Universal Service Joint Board concluded that the
current $3.50 cap on the Subscriber Line Charge (SLC) for primary
residential and single-line business lines should not be increased. The
Joint Board, however, did not recommend that the SLC cap should be
maintained for multi-line business or residential connections beyond
the primary connection. In our Access Reform Notice of Proposed
Rulemaking, the Commission asked for comment on whether to raise the
cap on the SLC for second and additional residential lines and for
multi-line business lines for the largest telephone companies. Raising
the current SLC cap on non-primary residential lines and multiline
business lines should lead to lower long distance usage charges for
consumers because these costs are currently recovered from usage
charges assessed by local telephone companies to long distance
carriers.
Question. Several of the Universal Service proposals under
consideration would require an increase in the Subscriber Line Charges
for second residential lines and multi-line businesses in rural areas.
Do you support increasing these rates for rural areas?
Answer. As noted in the answer to the previous question, the
Universal Service Joint Board did not recommend that the SLC cap should
be maintained for multi-line business or residential connections beyond
the primary connection. In our Access Reform Notice of Proposed
Rulemaking, the Commission asked for comment on whether to raise the
cap on the SLC for second and additional residential lines and for
multi-line business lines for the largest telephone companies. Raising
the current SLC cap on non-primary residential lines and multiline
business lines should lead to lower long distance usage charges for
consumers because these costs are currently recovered from usage
charges assessed by local telephone companies to long distance
carriers. Many rural areas are served by small telephone companies,
which are not the subject of the current access charge reform
proceeding. Instead, the Commission intends to adopt a separate Notice
of Proposed Rulemaking later this year that will address how the
existing access charge rules should be reformed for small telephone
companies.
Question. Chairman Hundt, you have recently been quoted in the
press as saying that basic residential telephone rates in this country
are currently being subsidized by long distance and other revenues to
the tune of about $20 billion. If universal service obligations amount
to $4 to $6 billion, how will the FCC recommend that the remainder of
that amount be treated? Will individual states have to create their own
universal service fund to make up losses in subsidies from interstate
long distance services? Will local residential phone rates have to
increase?
Answer. The majority of subsidies currently available to local
telephone companies are regulated by states and not by the Federal
Government. Subsidies include mechanisms to shift costs from rural to
urban areas, from residential to business customers, and from local to
long distance service. The result of state requirements that local
telephone rates be averaged across the state is that high density
(urban) areas, where costs are typically lower, subsidize low density
(rural) areas. State pricing rules have also created a business-to-
residential subsidy by mandating that businesses pay more per line than
residential customers. In addition, states have historically priced
vertical services (such as caller i.d.) above cost in order to
subsidize basic dialtone. On the Federal side, access charges have been
set in order to recover certain loop costs not recovered through local
rates, which results in long distance users subsidizing local users.
In section 254(f), the 1996 Act contemplates that state legislators
and regulators will establish state universal service support
mechanisms. Also, section 254(b)(5) states that there should be
``specific, predictable and sufficient Federal and State mechanisms to
preserve and advance universal service.'' The statute further provides
that universal service support mechanisms should be revised in the
context of a Federal-State Joint Board proceeding. Thus, states and the
Commission are responsible for preserving universal service and must
coordinate federal and state universal service programs.
The Act also requires that universal service support be
``sufficient'' to achieve the Act's goals. We will work with the states
to maintain sufficient support for universal service, and intend to
take into account any reductions in implicit support that result as we
work with the states to move from the current support system to a
system of explicit support. Under section 2(b) of the Communications
Act, the states have sole jurisdiction over intrastate rates, and must
approve any local rate increases. In implementing the 1996 Act, the
Commission is dedicated to fulfilling the mandate of Section 254,
ensuring that all consumers, including low-income consumers and those
in rural, insular, and high cost areas, have access to
telecommunications and information services at rates that are
reasonably comparable to rates for similar services in urban areas. The
Commission believes that its implementation of the 1996 Act will allow
states to maintain rates at their current levels.
Question. Chairman Hundt, you have indicated an interest in
``preserving comity'' with the states, and therefore you would consider
not exercising the FCC's authority to assess intrastate revenues for
the Universal Service Fund at this time. What would be the implication
of this decision on high cost states like South Carolina?
Answer. The Commission's goal in establishing a new mechanism for
universal service support is to maintain telephone subscribership
through better targeting of the support. Our actions this May will not
reduce support for high cost rural telephone service. South Carolina
would continue to receive at least the level of high cost loop support
it currently receives.
Question. Effectively, the Joint Board Recommended Decision bases
the amount of universal service support each rural telephone company
receives during the transition period on the universal service support
that company will receive in 1997. Most Average Schedule companies do
not receive universal service support, but when they convert to cost
status, many begin to receive it.
A company making a conversion in the middle of 1997 will only
receive a partial year of support. Shouldn't their support during the
transition period be calculated as if they had converted to cost status
on January 1, 1997 in order to receive an entire year of universal
service support?
Answer. Average schedule companies are exempt from the Commission's
requirement of maintaining and filing annual cost studies to receive
universal service support because the National Exchange Carrier
Association, the administrator of the current universal service support
mechanisms, calculates their operating expenses based on a formula that
averages the costs of companies of similar sizes. Moreover, the
Commission's rules do not specify particular accounting procedures for
average schedule companies that convert to cost. Some average schedule
companies, however, choose to conduct cost studies voluntarily.
NECA, through its internal procedures, prescribes the requirements
that a company must follow to receive universal service support when it
converts from average schedule to cost status. When an average schedule
company converts to cost status, NECA gives the company the option
either to continue to receive universal service support on an average
schedule basis for the remainder of the year or to file a cost study
for the previous year's cost data and begin receiving cost-based
universal service payments as of the date of conversion to cost.
Companies electing the second option, however, only receive universal
service support payments for the period during the year they are
receiving cost-based settlements. For example, if they convert to cost
on April 1, they will receive eight-twelfths of the annual support
amount. They will receive the full annual amount in the subsequent
year.
If the Commission adopts the Joint Board's recommendation to
calculate support for rural carriers during the transition based on the
previous year's levels, we shall consider the impact this rule would
have on rural carriers, including average schedule companies. We would
consider proposals to permit average schedule companies that convert to
cost to file an annualized cost study that projects the costs of the
entire year based on the months for which a cost study is maintained.
Question. Chairman Hundt what is your position as to which entity
should administer the interstate universal service fund?
Answer. The Joint Board recommended that the Commission create a
Federal Advisory Committee to recommend a neutral, third-party
administrator of the federal support mechanisms. The Joint Board stated
that the third-party administrator must: (1) be neutral and impartial;
(2) not advocate specific positions to the Commission in proceedings
not related to the administration of the universal service support
mechanisms; (3) not be aligned or associated with any particular
industry segment; and (4) not have a direct financial interest in the
support mechanisms established by the Commission. The Joint Board also
recommended that the National Exchange Carrier Association (NECA) be
appointed the temporary administrator of the support mechanisms,
provided NECA was made more representative of non-LEC interests.
A majority of commenters support the Joint Board's recommendation
that a neutral, third-party should administer the federal support
mechanisms.
In January, the Commission initiated a proceeding examining changes
to NECA's board of directors to include representation of non-LEC
interests. The Commission initiated this proceeding in order to respond
to the Joint Board's recommendation that NECA be appointed the
temporary administrator of the support mechanisms only if its board
membership were changed.
I support the Joint Board's recommendation.
Question. Chairman Hundt as competition for prime locations in the
payphone market increases, do you not believe that the pressure of
higher commissions, which will be demanded by location owners, will
have the effect of driving up current monopoly payphone rates?
Answer. Competition for prime locations has existed in the payphone
marketplace for over a decade, since independent payphone providers
were first allowed to compete with the LEC's in the provision of
payphone service. In enacting Section 276, Congress sought to take this
competition a step further by putting all payphone service providers
(``PSP's'') on the same competitive footing to encourage the
proliferation of payphones available for use by the public. More
specifically, Congress sought to ``promote competition among payphone
service providers and promote the widespread deployment of payphone
services to the benefit of the general public * * *.'' To achieve these
dual objectives, the Commission was entrusted with the responsibility
to take certain actions to effectuate congressional goals in the
payphone area, including the removal of subsidy schemes, providing for
nondiscriminatory access to bottleneck facilities, ensuring fair
compensation for all calls from payphones, and allowing all competitors
equal opportunity to compete for essential aspects of the pay phone
business.
The Commission, in turn, set forth a plan in the Payphone
Reclassification Proceeding, to be achieved over time, that removes the
various barriers to vigorous and unfettered competition, including
barriers that are regulatory, structural, economic, and technological.
This will allow new competitors to enter into the payphone marketplace
with ease and, correspondingly, allow others to exit. As a result,
while competition for prime payphone locations may increase, the
Commission's deregulatory framework ensures that there will be more
competitors who seek to provide more payphones at more locations. Thus,
the Commission has fostered greater competition among market
participants and simultaneously promoted the widespread deployment of
payphones.
Question. The FCC has ordered that local call rates paid to
payphone providers be priced through market rates by October 6, 1997.
How do you believe end-user choice is going to be achieved as premises
owners sign exclusive contracts which allow for only one payphone
provider per location?
Answer. Prior to the Commission's adoption of the orders in the
Payphone Reclassification Proceeding, PSP's frequently signed contracts
with location owners for the exclusive right to provide payphones to
callers at those particular locations. Nothing in Section 276 or the
Commission's proceeding changed this practice, other than the statutory
provision, Section 276(b)(1)(D), which allows Bell Operating Companies
(``BOC's'') to negotiate with the location owner about the operator
service provider that is presubscribed to its payphones, a role that
previously had been barred by a judicial decision. What Section 276
changed, however, was the level of competition for the right to provide
payphones at all locations. Under the statute and the Commission's
rules, a location owner now has the ability to select the best package
of payphone services for the benefit of both itself and the payphone
callers who visit its location.
As the Commission noted in the Payphone Reclassification
Proceeding, five states have already deregulated local coin rates,
which has led to statewide market-based rates ranging from $.25 to $.35
per call. In addition, whenever payphone end-users are not willing to
pay the rates that are charged at a particular location's payphones,
they ``are free to seek alternative payphones in nearby locations or *
* * make calls from portable phones.'' Callers also have the option of
waiting until they return to their homes or offices before making a
call.
Under the Commission's deregulatory, market-based approach,
competing PSP's have the ability to negotiate the placement of
payphones at neighboring locations in an effort to capture business
from the locations that charge rates the market will not support. In
the limited circumstances in which an alternative location is not
available to make a payphone call, the Commission provided that the
states ``are empowered to act by, for example, mandating that
additional PSP's be allowed to provide payphones, or requiring that the
PSP secure its contract through a competitive bidding process that
ensures the lowest possible rate for callers. If a market failure
persists after such action, the state should recommend the matter to
the Commission for possible investigation.''
In addition, Section 276(b)(2) of the Act directed the Commission
to determine whether there is a need to maintain payphones to serve
public health, safety, and welfare goals, and, if so, to ensure that
such payphones are supported fairly and equitably. To this end, the
Commission established guidelines by which the states may ensure the
maintenance of payphones serving public interests in health, safety and
welfare, in locations where they would not otherwise be available as a
result of the operation of the market. Consistent with our primary
reliance on the competitive marketplace, however, these guidelines
require that the states administer and fund such public interest
payphone programs in a manner which is competitively neutral, and which
fairly and equitably compensates entities providing public interest
payphones.
Question. The Federal-State Joint Board on universal service has
advised the FCC to require schools and libraries to seek competitive
bids for all services eligible for discounts under Section 254(h). Do
you feel that schools should be required to accept the absolute rock-
bottom bid, or should they have some flexibility to take quality into
account and therefore be permitted to accept the bid offering the best
value?
Answer. The Joint Board refrained from recommending that the FCC
require schools and libraries to select the lowest bids offered to
them. Instead, the Joint Board recommended that the FCC provide schools
and libraries with ``the maximum flexibility to purchase whatever
package of telecommunications services they believe will meet their
telecommunications service needs most effectively and efficiently.''
When the Joint Board explicitly addressed this issue in the context of
access to the Internet, the Joint Board only recommended that the FCC
require schools and libraries to select the most ``cost-effective''
provider of Internet access, not the lowest cost provider. Both the
Joint Board and FCC also recognize that state and local procurement
rules already generally require schools and libraries to satisfy a
``best value'' or similar standard and this is the standard with which
both are most comfortable.
______
Questions Submitted by Senator Daniel K. Inouye
Question. Just one year ago, the FCC ruled that no DBS licensee
with channels at a full-CONUS location could acquire channels at the
110 degree DBS orbital location without divesting its existing interest
in full-CONUS channels. In its Order, the FCC stated: ``We believe that
we have the obligation to prevent the undue accumulation of full-CONUS
DBS spectrum by any one firm and to encourage additional DBS entry by
other firms as long as markets for the delivery of video programming
remain highly concentrated.'' Clearly the markets for the delivery of
video programming remain as highly concentrated today as they were one
year ago. How can such a situation not be considered anticompetitive
vis-a-vis other DBS providers? Should there be a different analysis on
the effects of such concentration for a vertically-integrated entity?
Answer. In the satellite industry, and in particular the portion of
the industry devoted to direct-to-home delivery of video programming,
the Commission's recent experience is that rapid change is the norm,
rather than the exception. For that reason, when we adopted the
limitation on acquisition of channels at the 110 degree west orbital
location, we indicated that it was intended as a one-time measure, and
that it was premised on the circumstances facing us at that time.
Revision of Rules and Policies for the Direct Broadcast Satellite
Service, 11 FCC Rcd 9712 (1995)(``DBS Auction Order''). In particular,
we mentioned the possibility that additional spectrum could become
available for providing service to the United States, and that this
could significantly affect any future analysis.
In the event the Commission is asked to evaluate a transaction that
would have violated this one-time limitation, we will examine the same
types of concerns that gave rise to the limit. As required by the
Communications Act, that review would be undertaken based on the
complete record and all relevant facts.
The Commission is aware that certain aspects of vertical
arrangements can raise competitive concerns. See, e.g., Third Annual
Assessment of the Status of Competition in the Market for the Delivery
of Video Programming, January 2, 1997. We would analyze any application
relating to a proposed merger or similar transaction, including those
involving vertical integration, to determine whether it presents
competitive concerns.
Question. Should the proposed merger of News Corporation and
Echostar proceed, News Corporation would control a television network,
28 stations, 24 radio stations, a major movie studio, a major book
publisher, the New York Post, TV Guide, 9 regional cable sports
networks, a number of cable television channels, including fX and the
Fox News Channel, and a national DBS operation that would control a
majority of the prime DBS slots in the United States. Do you have any
concerns about the serious media concentrations issues raised by this
merger?
Answer. Echostar and the News Corporation have not filed any
applications with the FCC seeking approval of their announced merger,
and recent press reports indicate that it is unclear whether the two
companies intend to proceed with the deal. It is not clear exactly what
questions any such applications, if filed, would raise regarding media
ownership. In the event such applications are filed, the Commission
will, pursuant to the Communications Act, put the applications out for
public notice and comment and then carefully review them and make a
determination on whether or not to grant them based on thorough
consideration of the complete record. The Commission would examine all
relevant facts and issues, including any which relate to concentration
and competition.
Question. Federal law prohibits an entity from owning a cable TV
system and a TV station in the same market. Yet, if the deal is
permitted to go forward, News Corporation would control TV stations
reaching 40 percent of all U.S. homes (News Corp. 1996 Annual Report)
and a nationwide multichannel video programming distributor. Would you
support similar cross-ownership limitations on a DBS provider
retransmitting local signals?
Answer. The Commission has historically declined to impose cross-
ownership limits with respect to DBS and other satellite services. As a
result, the industry today includes investors from a wide range of
industrial sectors, including cable, broadcast, common carrier, and
satellite manufacturing sectors. Meaningful economic competition is the
norm, rather than the exception, in the industry as currently
structured.
It has been the Commission's experience that cross-ownership rules
may prove either an aid or a hindrance to competition, depending on the
particular competitive circumstances in the industry at any particular
time. We view a number of provisions in the 1996 Telecommunications Act
as recognizing this need for periodic service by service, case by case
analysis. For example, recognizing that rapid changes in industry may
affect the usefulness of ownership regulations, Congress has directed a
biennial review of ownership limitations. In general, any ownership
regulation should be evaluated to determine whether it would advance
competition by addressing a specific threat to meaningful economic
competition, or whether it will limit meaningful economic competition
by limiting marketplace participants artificially, thereby foreclosing
public interest benefits that additional participants may foster.
Question. The FCC has an existing rule (100.11) that prohibits a
foreign company from owning more than a 25 percent stake in a DBS
license. In fact, all of our trading partners treat DBS as
broadcasting. Why shouldn't that rule bar News Corporation, an
Australian company, from acquiring a 40 percent interest in DBS
licensee Echostar?
Answer. As a preliminary matter, Echostar and Newscorp have not
filed any applications with the FCC seeking approval of their announced
merger. It is not clear what, if any, questions any such applications,
if filed, would raise regarding alien ownership restrictions.
The FCC's International Bureau has ruled that Section 100.11 of the
Commission's Rules was not intended to prevent foreign ownership of a
DBS licensee that provides service on a subscription basis. MCI
Telecommunications Corporation, DA 96-1793 (released December 6, 1996).
Applications for review of that ruling are now pending before the full
Commission.
The Commission has regulated subscription DBS as a non-broadcast
subscription service not subject to statutory provisions that apply
specifically to broadcasters. Although many other nations regulate DBS
as a broadcast service, not all countries do so. Moreover, most
countries, recognizing that satellite services may warrant unique
regulatory treatment, have not treated those services identically to
terrestrial broadcast services. Furthermore, in both the United States
and abroad, regulatory classifications have on occasion been flexibly
applied to address unique characteristics of particular types of
services, or to achieve certain public policy goals. For example, some
European direct-to-home satellite services are provided via ``Fixed
Satellite Service,'' or FSS, frequencies, not broadcast satellite sound
(``BSS'') frequencies. In the same vein, for purposes of mandating
public interest obligations, the Congress treated direct-to-home
services provided by FSS and BSS identically.
Question. Would you support applying the existing program access
rules to vertically integrated DBS providers to ensure against any
potential anticompetitive behavior?
Answer. Current statutory and FCC regulatory provisions concerning
program access were intended primarily to address concerns about the
effects on competition of vertical integration by the cable industry.
This concern arises out of cable systems' position as the dominant
providers of multichannel video programming in most markets. To the
extent it is proposed that similar limits be applied to vertical
integration not involving the cable industry, we would wish to analyze
whether the imposition of such limits would help or hinder competition.
For example, such limits could impose a cost on an emerging competitor
to cable, which could frustrate the underlying purpose of the statutory
provisions.
Question. Would you support a prohibition on ASkyB from signing
exclusive carriage agreements with the local Fox TV stations to ensure
competitors, such as cable, have access to popular sports and
entertainment packages offered by Fox?
In the 1992 Cable Act, Congress took steps to ensure competition
and consumer choice in the video marketplace by enacting the program
access rules. What happens if some satellite delivered programming
currently subject to those rules is moved off satellite? For example,
if cable owned a regional sports network and moved it from satellite to
terrestrial delivery? Should the program access provision be revised to
address this issue?
Answer. Both of these questions pertain to satellite exclusivity
and are answered in the following response.
As an initial matter, it should be noted that the program access
statute does not preclude exclusive contracts in all instances. In the
1992 Cable Act, Congress prohibited exclusive contracts between
vertically integrated programming vendors and cable operators in areas
unserved by cable and prohibited such exclusive contracts within areas
served by cable, absent a specific public interest showing, for a
period of ten years.\1\ Congress recognized, however, that in areas
served by cable, some exclusive contracts between vertically integrated
vendors and cable operators may provide countervailing benefits to the
development of competition among distributors.\2\ Congress provided
that where an exclusive contract is demonstrated to be in the public
interest, it should be allowed. The Commission's position depends,
therefore, on whether the exclusive contract would be in the public
interest, including whether it would have a procompetitive or
anticompetitive effect on competition among video distributors. The
Telecommunications Act of 1996 expanded the application of the program
access provisions to common carriers \3\ and open video system
operators.\4\
---------------------------------------------------------------------------
\1\ See 47 U.S.C. Sec. Sec. 548(c)(2), (4), and (5); 47 C.F.R.
Sec. 76.1002(c)(2), (4), and (5).
\2\ See 47 U.S.C. Sec. 548(c)(2), (4); 47 C.F.R.
Sec. 76.1002(c)(2), (4).
\3\ 47 U.S.C. Sec. 548(j).
\4\ 47 U.S.C. Sec. 573(c)(1)(A).
---------------------------------------------------------------------------
Section 628 of the Communications Act prohibits unfair or
discriminatory practices in the sale of satellite cable programming to
multichannel video programming distributors.\5\ Section 705 defines
``satellite cable programming'' as ``video programming which is
transmitted via satellite and which is primarily intended for the
direct receipt by cable operators for their retransmission to cable
subscribers.'' \6\ We have interpreted the statutory program access
provisions to apply only to satellite-delivered programming, although,
in the open video system context, we have stated that ``we do not
foreclose a challenge under Section 628(b) to conduct that involves
moving satellite delivered programming to terrestrial distribution in
order to evade application of the program access rules and having to
deal with competing [multichannel video programming distributors].''
\7\ We have not yet been presented with a situation where a cable
operator otherwise subject to Section 628 has moved previously
satellite-delivered programming off of the satellite to terrestrial
delivery for the purpose of evading the ambit of the program access
provisions. In the Annual Assessment of the Status of Competition in
the Market for the Delivery of Video Programming (``Third Annual
Report''),\8\ several commenters urged the Commission to expand the
application of the program access rules to include all programming--
regardless of the method of distribution. In its Third Annual Report,
the Commission stated that although we have seen no evidence that such
conduct has actually occurred, if it were to occur, we would have to
consider an appropriate response to ensure continued access to
programming. The Commission intends to continue to monitor patterns and
practices in the industry, but is not prepared currently to make a
recommendation regarding revision of the statute.
---------------------------------------------------------------------------
\5\ 47 U.S.C. Sec. 548(b); 47 C.F.R. Sec. 76.1001.
\6\ 47 U.S.C. Sec. 605(d)(1); see also 47 C.F.R. Sec. 76.1000(h).
\7\ In re Implementation of Section 302 of the Telecommunications
Act of 1996--Open Video Systems, Second Report and Order, 11 FCC Rcd
18223, para. 103, n.451 (1996).
\8\ FCC 96-496,--FCC Rcd--, adopted December 26, 1996; summarized,
62 Fed. Reg. 5627 (Feb. 6, 1997).
---------------------------------------------------------------------------
Question. The Commission recently decided the allocation and
assignment process for digital television. What impact will the
Commission's decision have on Low Power TV stations located in channels
60-69? Will any of these stations lose their channel assignments?
Answer. In the Sixth Report and Order in the DTV proceeding, we
stated that the principal impact on low power operations, LPTV and TV
translators, will be from the accommodation of all full service
broadcasters with a second channel for DTV. We further stated that the
potential benefits of recovering channels 60-69 for other uses, such as
to meet the urgent needs of public safety, outweigh any additional
impact this plan may have on low power operations. Nevertheless, we
recognized the benefits that low power operations provide to the public
and adopted a number of measures in the Sixth Report and Order to
mitigate the impact of DTV allotments and our spectrum recovery efforts
on these low power operations. These measures included allowing
displaced low power licensees to apply for replacement channels without
being subject to competing applications, and changing several technical
rules to provide low power stations with additional operating
flexibility and increase the use of existing TV channels by low power
operations. We also indicated that LPTV operations can remain on
channels 60-69 provided that they do not cause interference to primary
operations. We estimated that these changes will preserve many existing
low power operations and will open many new channels for those low
power stations that may be displaced on their existing channels. We
also indicated that we would address the issue of compensation for low
power stations in our forthcoming Notice of Proposed Rule Making on
reallocation of channels 60-69. Finally, we stated that we intend to
consider in another future rule making whether to create a new class of
low power television broadcast stations that would modify the secondary
status of these stations and provide them some level of protection.
In summary, the Commission's DTV allocation and assignment decision
will have an impact on LPTV stations located in channels 60-69. As
secondary operations, a number of low power stations may lose their
channel assignments and may have to switch channels or cease operating
if they cause interference to a primary user of the spectrum. However,
as indicated above, we are taking a number of significant steps to
minimize the impact to these stations.
While we do not have figures for how many stations are actually in
operation, there are 1,244 low power stations currently licensed by the
Commission on channels 60-69. Our data base identifies 474 as LPTV
stations and 770 as TV translator stations.
Question. Section 254(g) of the Telecommunications Act requires
that interexchange services be priced using a rate integrated pricing
structure. Has the Commission ruled in any case that any carrier, class
of carrier, service, or type of service is not subject to the
requirement that a rate integrated pricing structure be used?
Answer. Section 254(g) applies to ``providers of interexchange
telecommunications services'' with respect to the geographic rate
averaging requirements of that section, and to ``provider[s] of
interstate interexchange services'' with respect to rate integration
requirements. As determined by the Commission in the Rate Averaging and
Rate Integration Order (paras. 9, 52), Section 254(g) applies to all
providers of interexchange telecommunications services and to all
interexchange telecommunications services. In the pending
reconsideration proceeding of the Rate Averaging and Rate Integration
Order, the Commission has been asked to consider the extent to which
Section 254(g) does not apply, or the extent to which the Commission
should forbear from applying, that section to some wireless services,
such as mobile satellite service. At this time, the Commission has not
determined that any carrier, class of carrier, service, or type of
service is not subject to the rate integration requirements of Section
254(g).
Question. Section 254(g) was intended to codify and clarify the
Commission's ``rate integration'' policy which requires that the rate
structure employed in the contiguous United States also be employed in
setting rates for Hawaii and Alaska. Can such a carrier select a
different rate structure for service to Hawaii or Alaska than other
points in the Mainland?
Answer. Section 254(g) of the Communications Act codified the
Commission's preexisting rate integration policy. As stated by the
Commission in the Rate Averaging and Rate Integration Order (para. 67)
released last summer implementing Section 254(g), carriers must use the
same ratemaking methodology and rate structure in offering service to
subscribers in states and territories outside the continental United
States as employed by the carrier in offering services to subscribers
in the continental United States.
Question. The Commission's October 1996 Detariffing Order required
interexchange carriers to stop filing rate information (i.e., tariffs)
at the Commission. Without such information, it becomes very difficult
to enforce Section 254(g). How does the Commission intend to ensure
that consumers have adequate rate and service information in order to
properly enforce Section 254(g)'s geographic averaging and rate
integration policies? Specifically, shouldn't carriers be required to
provide the same amount of rate and service information that was
provided in tariffs?
Answer. In the October 1996 Detariffing Order, the Commission
adopted mechanisms to ensure effective enforcement of Section 254(g)'s
geographic rate averaging and rate integration requirements in the
absence of tariffs. The Commission required nondominant interexchange
carriers to file an annual certification stating that the carrier is in
compliance with the requirements of Section 254(g). The Commission
further required nondominant interexchange carriers to maintain
supporting documentation on the rates, terms, and conditions of their
interstate, domestic, interexchange services that they could submit to
the Commission upon request. Finally, the Commission required these
carriers to make publicly available rate and service information.
Several parties have filed petitions asking the Commission to
reconsider or clarify various aspects of these enforcement mechanisms.
The Commission is currently considering these petitions and examining
the mechanisms that are necessary to enforce geographic rate averaging
and rate integration in a detariffed environment. The Commission will
continue to ensure that effective enforcement mechanisms are in place
to achieve fully the goals of Section 254(g).
______
Questions Submitted by Senator Frank R. Lautenberg
mandated psa time to encourage response to the census
Question. Particularly in light of the recent grant of digital
television spectrum to broadcasters, will the FCC consider imposing a
requirement that broadcasters provide PSA time to encourage citizens to
return their census forms in 2000?
Answer. The Commission will soon issue a notice on the public
interest. The Commission will consider a variety of proposals on ways
that broadcasters might satisfy their public interest obligations, and
provision of public service announcements will be included in that
discussion.
universal service
Question. On most any basis (including the existing mechanisms),
New Jersey will be a net payor of funds to support universal service.
The export of monies from New Jersey for federal programs is a serious
concern of mine. New Jersey gets back only $0.68 of every dollar it
sends to the federal government, 49th out of the 50 states. A small
fund targeted to high cost areas with a real need will mitigate the
adverse impact on New Jersey.
Is it the FCC's intention to maintain an amount for supporting high
cost areas comparable to today's mechanisms, which provide
approximately $1.5 billion in support. If not, will the FCC's decision
on high cost areas increase the amount of support, and, if so, will New
Jersey be required to pay more than it does today. How much more? And
finally, would that increase disproportionately affect donor states
like New Jersey?
Answer. In analyzing the amount of universal support a carrier
would receive for high-cost areas such as New Jersey, the Joint Board
recommended that the Commission use a forward-looking cost model to
calculate the forward-looking costs of providing these supported
services. While it did not recommend a specific model, the Joint Board
did state that the Commission and the state commissions should work
together to choose a model by the statutory deadline. The Joint Board
recommended that, beginning on January 1, 1998, universal service
support for large, non-rural carriers should be based on the cost of
service as determined by a proxy model.
On March 26, 1997, the state members of the Joint Board submitted a
report to the Commission regarding the cost models. In the report, the
state members stated that they have serious concerns about the adequacy
and accuracy of the cost models at this point. Nonetheless, the state
members recommended that the Commission select one model as soon as
possible to focus the efforts of the Commission and industry. The state
members, however, did not make a recommendation on which model the
Commission should select.
We remain committed to using a forward-looking cost methodology to
determine universal service support. However, we are also concerned
about which model provides the most workable, reliable mechanism that
could be used to calculate universal service support for large, non-
rural carriers. As recommended by the Joint Board, we will take
specific steps to adopt a forward-looking economic cost methodology for
determining support in high cost areas. First, by the end of June 1997,
the Commission will issue a further Notice of Proposed Rulemaking
seeking additional information to help the Commission select a forward-
looking universal service support mechanism for non-rural carriers. By
August 15, 1997, the states will notify the Commission of their intent
to either develop their own forward-looking economic cost study or use
the one developed by the Commission. By February 6, 1998, states must
file their forward-looking economic cost studies with the Commission.
The Commission will place the state-filed forward-looking economic cost
studies on public notice and review them to ensure consistency with the
federal plan. The mechanism for determining high cost universal service
support, based on forward-looking economic cost, will become effective
on January 1, 1999.
______
Questions Submitted by Senator Conrad Burns
Question. What are your staffing needs over the next five years?
Over time, as competition replaces regulation, I would think that
staffing needs at the FCC would decrease dramatically. Would you agree?
Answer. The Commission's fiscal year 1998 Budget Estimates propose
a ceiling of 2,155 FTE's, 100 fewer FTE's than in fiscal year 1997. In
fiscal year 1999 the Commission will propose a ceiling of 2,105 FTE's,
50 fewer than in fiscal year 1998. These staff reductions will be
accomplished by attrition and a decrease in the number of employees
initially hired on term appointments, as those appointments expire.
Because of the ongoing nature of implementing the Telecommunications
Act and the need for enforcement of our new rules, we cannot predict at
this time what the Commission's staffing needs will be in the year
2002. However, our activities are focused on ensuring that a thriving,
competitive telecommunications market place is created and sustained.
Question. Tell me how many senior executive positions that the FCC
had when Chairman Hundt took office? How many does it have now? What
are these people doing? Based on what they're doing now, how many of
them do you estimate you will need five years from now?
Answer. When Chairman Hundt took office in November 1993, the
Commission had 46 authorized Senior Executive Service (SES) positions.
Currently, the Office of Personnel Management (OPM) has authorized 50
SES positions to the agency, plus 1 temporary SES slot. Most of the
Commission's senior management and policy-making positions, including
the General Counsel and Common Carrier Bureau Chief, are SES, as are
many of the Commission's Division Chiefs, such as the Chief of the
Litigation Division. The Commission does not determine its SES
allocation. Instead, OPM makes a biennial allocation to us as well as
to other agencies. We have already indicated to OPM that we will accept
continuation of our current allocation of 50 SES positions for fiscal
years 1998 and 1999. At this point in time, it is difficult to predict
what our needs will be in the year 2002 and beyond.
Question. As I understand it, there's not only an Office of Public
Affairs, but there are also press contacts in each bureau and office.
Similarly, although you have a large Managing Director's office, each
bureau and office has its own administrative staff with typically 7 to
8 people. And finally, the FCC has hired a lot of economists and each
bureau has economists; the Office of Plans and Policy has economists
and you've created a whole Competition Division with economists. Why
are all these folks necessary? How many will be needed in five years
and why?
Answer.
Office of Public Affairs
The Office of Public Affairs (OPA) currently has a staff of 61. In
addition, there are two Bureau media liaisons employed by the Common
Carrier (1) and Cable Services Bureaus (1). The Wireless Bureau also
has a media liaison, who is on detail from OPA and included within the
61. For purpose of comparison, in December 1995, OPA had 65 staff
members in addition to 3 Bureau media liaisons.
During the last year, OPA has experienced a significant increase in
its workload. This is illustrated by the increased number of inquiries
from the media and the general public. OPA has received and responded
to more than 500,000 public inquiries; answered more than 25,000
inquiries from the media; issued 595 press releases; distributed more
than 400,000 forms to the public; and responded to 65,000 requests for
reference materials. OPA staff created the FCC's Internet Home Page and
are responsible for updating and maintaining the system. There have
been 21,000,000 visits to the Home Page.
OPA traditionally was responsible for news media coordination
functions and had 15 employees, while a larger consumer information,
public outreach, reference, FCC library, and audio/visual staff of 50
employees within the Office of Managing Director handled those
functions. In November 1994, in conjunction with a comprehensive
organizational reform of the FCC, the consumer, reference, public
outreach and audio/visual sections, and the 50 employees who made up
these functions, were merged with the 15 prior OPA employees to create
one consolidated office.
The three Bureau media liaisons are necessary in light of the
increasing number of inquiries as well as the technical nature of the
questions. For example, the Cable Services Bureau contact is able to
focus solely on cable issues and provide better service to the
community as a whole. The Bureau liaisons typically perform a wide
variety of tasks, which include providing information for the Bureau's
Internet home page and organizing open forums and other industry
discussion events. In the past, these functions were typically handled
by someone with the title ``Special Assistant to the Bureau Chief.''
Assigning an individual with experience in working with the news media
and the public to these posts has enabled the FCC to better work with
the media and the public through such events as open forums and
industry round tables.
In five years, the size of OPA will depend to a large extent on the
ability of the agency to better utilize technology. For example, at
present the FCC is developing a system that will permit electronic
filing of comments. Increased electronic access to comments could
simplify the workload now carried by OPA's Reference Operations
Division. The overall size of the news media staff and necessity for
Bureau liaisons will depend on the functions of each area and issues
before the agency. For example, the Cable Services Bureau may no longer
need a dedicated liaison within a relatively short period of time,
whereas spectrum auctions may necessitate the continued presence of a
liaison for the Wireless Bureau.
Office of Managing Director
As of March 1997, the Commission's Bureaus and Offices had the
following administrative staffing levels: Cable Services Bureau (7
FTE's), Compliance and Information (9 FTE's), Common Carrier Bureau (10
FTE's), Mass Media Bureau (6 FTE's), Wireless Telecommunications Bureau
(8 FTE's), and Office of Engineering and Technology (3 FTE's).
Administrative staff employed by the Commission's Bureaus and Offices
are principally responsible for assisting Bureau and Office Chiefs, as
well as the Managing Director, with Bureau-specific budgeting,
planning, staffing, and management activities. While it is not possible
to estimate the Commission's administrative staffing level in 2002, the
size of the Office of Managing Director as a percentage of the agency
has been reduced from 16 percent to 9 percent during the past two
fiscal years, consistent with Commission-wide streamlining efforts. We
intend to continue efforts to streamline the Commission's operations in
coming fiscal years and anticipate additional productivity gains.
Economists
Economists currently employed in the Commission's Office of Plans
and Policy (OPP), Competition Division, and other Bureaus and Offices,
are critical to the Commission's efforts to implement the
Telecommunications Act in the most pro-competitive manner possible.
Successful implementation of the Act demands economic analysis of a
multitude of issues. For example, in the recent universal service and
access reform proceedings, economists performed a number of critical
tasks, including providing economic analysis of the benefits to
consumers that would result from various options before the Commission;
evaluating the proxy models presented to the Commission; and analyzing
the disparate economic effects that various changes to our price cap
regime would have on various carriers. Commission economists helped to
review 160,000 pages of comments by parties in the interconnection,
access reform and universal service proceedings alone. Significantly,
while Telecommunications Act implementation has required us to increase
FTE's devoted to policy and rulemaking activities by 50 percent since
fiscal year 1995, filings received for review in docketed proceedings
have increased by 227 percent during the same period. For the
foreseeable future, economists will remain central to the Commission's
efforts to carry out a deregulatory national policy of competition in
all communications markets.
Question. As I understand it, the General Counsel's office has
grown by over one-third from 70 to over 100 since you assumed office.
What are all the extra folks doing?
Answer. The Office of General Counsel (OGC) serves as the chief
legal advisor to the Commission and its various Bureaus and Offices. It
also represents the Commission in litigation in federal courts. The
percentage of cases won by the FCC before the U.S. Court of Appeals has
increased dramatically. Three and a half years ago the FCC was winning
just under 60 percent of these cases. Today we are winning over 80
percent. This record of success results in cost savings for industry
which faces added certainty in interpreting Commission rules.
OGC has three divisions--the Administrative Law Division, the
Litigation Division and the Competition Division.
The Administrative Law Division provides the Commissioners and the
agency's Bureaus and Offices with legal advice on a broad range of
communications and general administrative law issues. The Division also
provides the public with legal information on such matters. The
Division reviews all draft Commission decisions for legal sufficiency,
with a particular emphasis on administrative law and statutory
interpretation issues. Division staff provide legal advice to the
Commission concerning a wide array of statutes, regulations, and
procedures, including, for example, the Communications Act of 1934, as
amended by the Telecommunications Act of 1996, the Administrative
Procedure Act, the Freedom of Information Act, the Privacy Act, the
Regulatory Flexibility Act, the Paperwork Reduction Act of 1995, the
Government in the Sunshine Act, the Contract with America Advancement
Act of 1996, the Federal Advisory Committee Act, negotiated rulemaking
and alternative dispute resolution, the Commission's procedural rules,
procurement issues and the agency's ex parte and ethics rules. The
Division also drafts all Commission decisions involving matters on
review from Administrative Law Judges, Freedom of Information Act
applications for review, and regulatory and filing fee applications for
review.
The Litigation Division represents the Commission in federal courts
of appeals when parties challenge Commission actions, and, in
conjunction with the United States Department of Justice and United
States Attorneys offices, represents the Commission in litigation in
Federal district courts. In addition, Litigation Division attorneys
work with the Solicitor General of the United States in representing
the Commission in actions in the United States Supreme Court.
The attorneys and economists of the Competition Division work to
ensure a sustained focus on, and a rigorous and consistent analysis of,
competitive issues throughout the Commission. Competition Division
staff team with Bureau staff in the production of draft Commission
decisions and reports to Congress that assess the competitive status of
various telecommunications markets. The Division reviews draft
Commission decisions for consistent competitive analysis, particularly
in light of the Telecommunications Act of 1996. The Division is also
responsible for implementing provisions in the 1996 Telecommunications
Act regarding utility holding company entry into telecommunications
markets.
The recent increase in OGC's staff is largely attributable to two
developments--the increased workload resulting from enactment of the
1996 Telecommunications Act and transfer of the Competition Division to
OGC from the Cable Services Bureau.
The 1996 Telecommunications Act required the agency to conduct
dozens of rulemaking proceedings, many of which are still pending. It
has also served as a spur to additional rulemaking proceedings
consistent with the deregulatory and pro-competitive purposes of the
Act. The 1996 Act also provided for a wide variety of new kinds of
proceedings to be initiated at the FCC by outside parties--for example,
petitions for preemption of state and local barriers to entry under
section 253 of the Act and petitions by Bell Operating Companies for
entrance into the long-distance market pursuant to section 271. These
additional burdens have required additional resources in OGC to help
ensure that Commission orders interpret the 1996 Act in a consistent
and legally correct manner.
Apart from the sheer increase in the volume of the work, enactment
of the 1996 Telecommunications Act has shifted the emphasis of much of
the agency's legal work from applying broad public interest provisions
to interpreting detailed and complex statutory provisions. This has
created an increased need for the kind of high quality and experienced
lawyers that have been added to the Administrative Law Division. Our
experience is that devoting the resources at the drafting stage to
ensuring a high quality and sophisticated legal product increases
substantially the likelihood of success on appeal, to the ultimate
benefit not only of the FCC, but of the industries we regulate and the
public.
Enactment of the 1996 Telecommunications Act and the implementing
rulemakings and other proceedings are also leading to an increase in
litigation against the agency. As the agency issues one after another
important order for the future of the telecommunications industries,
there are almost always several entities with the incentives and
resources to mount a sophisticated and aggressive legal attack in
court. If current trends continue, for example, there will be a more
than 25 percent increase in the number of appeals filed against the FCC
in fiscal year 1998 than in fiscal year 1997. We have added high
quality, experienced lawyers to our Litigation Division to ensure that
the agency can effectively defend itself in these appeals.
I should note that, to some extent, these developments regarding
increased responsibilities relating to statutory interpretation and
implementation, as well as related litigation, are a continuation of
trends that began with the 1992 Cable Act, as well as the 1993 Omnibus
Budget Reconciliation Act. Implementation of these statutory provisions
regarding cable television regulation, auctions, mobile radio services
and regulatory fees substantially increased the FCC's workload.
Finally, with respect to the Competition Division, the transfer of
that Division to OGC has enabled it, in response to past criticisms of
the FCC from courts and commentators, to focus much more broadly on
ensuring that the FCC provides sophisticated and consistent competition
analysis across all of its substantive responsibilities. The
competitive analysis expertise of the Competition Division has enabled
us to defend successfully several controversial and legally complex
orders involving competition issues. Moreover, the Competition Division
has served as a forceful voice within the Commission for pursuing in a
far-reaching and consistent manner the overarching pro-competitive and
deregulatory goals of the 1996 Telecommunications Act.
The increase in OGC resources has brought tangible benefits to the
FCC and the public. In the last few years, the FCC's success rate in
the courts of appeals has increased substantially.
Question. How big was the Wireless Bureau Front Office when it
started? How big is it now? Why does Wireless need over 20 folks in the
Front Office alone?
Answer. In December 1994, the Wireless Telecommunications Bureau's
Front Office originated with 13 personnel (plus one vacancy). The
Bureau's total personnel ceiling was 307.5. As of today, the Wireless
Bureau Front Office consists of 16 personnel, while the Bureau ceiling
now is 340.5.
The Wireless Telecommunications Bureau recently completed a
reorganization of its structure, to enable it to better manage the
significant changes in its assigned responsibilities resulting from new
legislative, technological developments, and shifts in the wireless
telecommunications industry and marketplace. This reorganization is
designed to improve the Bureau's efficiency and provide for a better
alignment of division-level activities to industry and consumer
services and functions. In establishing these new division
responsibilities, the reorganization plan nominally resulted in a Front
Office structure with a ceiling of more than 20 staff.
Dan Phythyon, who recently became the Wireless Bureau Chief, is in
the process of implementing the final steps of this reorganization, and
is completing his own review of the Front Office staffing and
structure. The purpose of this review is to ensure that the Wireless
Bureau Front office remains no larger than necessary to perform its job
in an efficient manner. We fully expect that the size of the Front
Office will remain below 20 staff. Once the Bureau reorganization is
finalized, there will be a public announcement of its new structure,
including the composition of and responsibilities covered by its Front
Office. We will provide the Subcommittee with additional information at
that time.
Question. Chairman Hundt, the purpose of the Telecommunications
Act, we thought, was to promote wide-spread competition in the various
sectors of the telecommunications industry. We were led to believe that
different entities would build networks and provide bandwidth so that
consumers would enjoy the fruits of the information age. As I
understand it, your policy will lead to many different entities
reselling the same network or service, but that's not the same as
building out networks or increasing bandwidth. How would you respond to
that?
Answer. As we stated in the Interconnection First Report and Order,
the Telecommunications Act of 1996 contemplates three paths of entry
into the local market: the construction of new networks, the use of
unbundled network elements of the incumbent's network, and resale of
the incumbent's services. We anticipated that competitive carriers
would use a variety of methods to enter the local telephone market, and
that some carriers might first enter the market through resale, and
gradually offer unique services through the use of their own
facilities, the incumbent's unbundled network elements, or a
combination of the two. In its Joint Explanatory Statement at 148,
Congress recognized that ``it is unlikely that competitors will have a
fully redundant network in place when they initially offer local
service, because the investment necessary is so significant.'' The
Telecommunications Act of 1996 was intended to eliminate statutory and
regulatory barriers and economic impediments that retard efficient
entry into the telecommunications marketplace. The interconnection
provisions of the 1996 Act did not express a preference for any
particular entry strategy. The Commission's rules are designed to
permit efficient competitive entry through a variety of methods
consistent with the 1996 Act. We are in the early stages of what we
expect will be a thriving competitive market, in which consumers can
choose from among a variety of providers, services, and service
packages. As with any burgeoning new market, we anticipate that there
will be a significant amount of testing different product offerings and
market entry strategies. It is too early to determine which services
and entry methods will succeed. A review of the interconnection
agreements that parties have reached, as well as discussions with
industry participants, however, suggest that many competitive carriers
intend to move from resale to use of their own facilities.
subcommittee recess
Senator Gregg. Well, thank you. I appreciate your time.
Mr. Hundt. Thanks very much.
Senator Gregg. The subcommittee is recessed.
[Whereupon, at 10:31 a.m., Wednesday, April 16, the
subcommittee was recessed, to reconvene subject to the call of
the Chair.]
DEPARTMENTS OF COMMERCE, JUSTICE, AND STATE, THE JUDICIARY, AND RELATED
AGENCIES APPROPRIATIONS FOR FISCAL YEAR 1998
----------
THURSDAY, APRIL 17, 1997
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 1:30 p.m., in room S-146, the
Capitol, Hon. Judd Gregg (chairman) presiding.
Present: Senators Gregg and McConnell.
THE JUDICIARY
Supreme Court of the United States
STATEMENT OF HON. ANTHONY M. KENNEDY, ASSOCIATE JUSTICE
ACCOMPANIED BY:
HON. DAVID H. SOUTER, ASSOCIATE JUSTICE
JAMES C. DUFF, ADMINISTRATIVE ASSISTANT TO THE CHIEF JUSTICE
BILL SUTER, CLERK
DALE BOSLEY, MARSHAL
TONY DONNELLY, DIRECTOR OF BUDGET AND PERSONNEL
opening remarks
Senator Gregg. OK, we'll get started. I know the Justices
have hearings going on of their own. So they probably don't
have too much time, but we do appreciate your coming by in this
unique constitutional format. I have no opening statement, so
we'll go right to your thoughts.
Justice Kennedy. Thank you very much, Senator. Justice
Souter and I are pleased to be here. And we have with us a
number of court officers and court staff: our clerk, William
Suter, our marshal, Dale Bosley, our budget and personnel
officer Tony Donnelly.
And I wish to thank the members of your staff for their
cooperation and the assistance they have given to ours. This is
always an important way for me to learn more about the
budgeting process.
Our budget this year, Senator, does ask for an increase of
$3.318 million. Part of that is buildings and grounds, which is
presented by the Architect of the Capitol. When that is
presented, we do endorse, of course, the Architect's
suggestions.
That building of ours was built for under $9 million,
beginning in 1934. I think it was occupied in 1935. The
estimate for upgrading the electricity and the plumbing--the
innards of the building--is something like $20 million. Maybe
you can understand that. I can't quite understand that.
But that's what the Architect is studying, and that's what
he's working toward, so in the next few years we are going to
be asking for a very substantial appropriation for this
building. But it has come to the point where very, very
substantial facilities renovations are going to be necessary.
Part of the increase the Architect asked for this year is
for studies for that. He also is going to recommend in the
coming years, I think, additional installations to protect the
perimeter of the building for security concerns.
Our own portion of the budget includes, again, an increase
of $2.121 million; $1.5 million of this is for adjustment to
base; and $617,000 is for an increase in program. This is all
security. The amount of $217,000 is for six police positions,
and $400,000 is to enhance the police radio system.
There is a dedicated channel that the police think they
should have on a new radio system. The one they have now does
not work well.
The graphs in the court's budget submission show the work
of the court remains constant, with some increase in unpaid
petitions, which are generally criminal cases, and habeas cases
filed by prisoners. The court is abreast of this work, and is
well staffed, and, we think, very well managed by our
administrative people.
prepared statement
And we appreciate, Senator, the opportunity to be here. We
recognize that we are a very small part of the courts' budget,
and the courts' budget is a very small part of the Federal
budget. But we do think that this is important, for us to meet
with you and to report to you on the condition of our
institution. And I have no further statements by way of
supplementing the written statement that we have given to you
and your staff.
[The statement follows:]
Prepared Statement of Justice Anthony M. Kennedy
Mr. Chairman and Members of the Committee, Justice Souter
and I appreciate this opportunity to appear before your
Committee to address the budget requirements and requests of
the Supreme Court for the fiscal year 1998.
We have with us today James Duff, Administrative Assistant
to the Chief Justice; Dale Bosley, Marshal of the Court; Bill
Suter, Clerk of the Court; and Tony Donnelly, Director of
Budget and Personnel.
As is customary, the Supreme Court's budget request is
divided between the ``Salaries and Expenses of the Court'' and
``Care of the Building and Grounds''. For the ``Care of the
Building and Grounds'' the total fiscal year 1998 budget
request is $3,997,000. Mr. Alan M. Hantman, Architect of the
Capitol, will submit a separate statement to the Subcommittee
regarding that portion of the total budget. I would like first
to point out, however, that the proposed study of building
improvements and utility systems upgrade is of particular
importance in the Court's total budget request. Due to the age
of the Court building, the Architect anticipates the need for
substantial spending over several years to upgrade the
electrical, plumbing and heating, ventilating and air-
conditioning systems. We ask for your approval of this effort
to modernize the building support systems. The Architect of the
Capitol will address this matter in more detail.
With regard to the ``Salaries and Expenses'' portion of the
Court's budget, our total fiscal year 1998 budget estimate is
$29,278,000. This is an increase of $2,121,000, or 7.8 percent,
over the budget authority for 1997. Most of the increase
represents base adjustments--that is, required increases in
salary and benefits costs and inflationary increases in fixed
costs. Specifically, $1,269,000 of the adjustment represents
required increases in salary and benefit costs. And $235,000 is
the amount requested for inflationary increases in fixed costs,
allowing us to keep up with rising costs in all of our
necessary operations.
Although we are requesting slightly more of an increase in
our budget for 1998, (last year's budget request was for a 5.1
percent increase,) last year our request included only
inflationary increases to the Court's budget base and nothing
for new programs. As we mentioned in last year's request, we
anticipated seeking additional funds in the 1998 budget for
increased security. Based upon our initial review of our
security needs, we are therefore seeking $617,000 over base
adjustments to fund two increases in the Court's security
program. These are: the hiring of six additional Police
Officers, and the installation of an enhanced Police radio
system.
$217,000 of this request is to fund the addition of six
Police Officers in order to strengthen the Court's overall
security. Our intent is to add two officers to each of the
three Police shifts that provide exterior security for the
Supreme Court over a full twenty four hour period seven days
per week. The Marshal recommends that we augment security by
adding manpower to each shift in order to create a stronger,
full-time security presence at the Supreme Court building. The
U.S. Secret Service has recently completed a review of the
Court's overall security program, and they have indicated
support for this strengthening of security. Subsequent budget
requests may propose further increases and security
improvements consistent with recommendations of the U.S. Secret
Service and the study funded this fiscal year. Adding new
positions will also reduce over-time now often required of
officers.
$400,000 of the request for security programs is a non-
recurring increase to fund an evaluation of the remote
communications needs of the Supreme Court Police and the
purchase and installation of an enhanced Police radio system.
The Court's Police radio system that is used to communicate
with our Police Officers has become out of date and unreliable.
We find that security is seriously compromised when
communications between the Police Office and the Officers
performing security details are delayed, unclear and
unreliable.
We continue our efforts to make the most efficient use of
the Court's existing resources and to minimize the need to
request additional funding or personnel. During this Court
Term, we will redevelop the Court's opinion writing system and
all other personal computer applications to take advantage of
the most up-to-date computer software technology. Implementing
these changes and training Court users in the new software and
applications will require substantial effort by the Court's
Office of Data Systems. While we intend to accomplish these
changes working within the existing budget base, we anticipate
the need to increase the Court's budget over the next few years
to enable the replacement of aging computer hardware and
technology infrastructure such as the local area network,
cabling and telecommunications. Also, we anticipate that
modifications to software and updates to hardware will be
necessary to accommodate changes to computer systems that must
take place by the year 2000. Although it is not always easy to
define specific savings that stem from spending on automation,
we are confident that the Court's spending in this area and its
attempt to make the most of emerging technology has increased
the efficiency with which we address our caseload.
This concludes a brief summary of our request. We will be
pleased to respond to any questions that the members of the
Committee may have.
Justice Kennedy. Perhaps Justice Souter has something to
add.
Justice Souter. Thank you. But I don't think there are any
untouched bases, and I will stick to carrying the bags until
somebody has a question for me.
Senator Gregg. I have one question. The $20 million for
building renovation, do you expect that in next year's budget,
or the year after?
Justice Kennedy. I think in the next 3 years. The sum has
not been requested here, but this is just a warning that we
hear that kind of figure being brooded about for the structural
installations which are necessary. Electricity, for instance,
has to be completely redone.
Ninth circuit split
Senator Gregg. There's been some proposals that we split
the ninth circuit. In fact, on the floor of the Senate last
year there was significant discussion about this. What are your
thoughts on that?
Justice Kennedy. I was on the ninth circuit from 1975 to
1987, and when I first came to the Senate for my confirmation
hearing as a circuit judge, that question was being asked,
because there was a report by a commission headed by Senator
Hruska, Roman Hruska. And at that time I said I didn't know
enough about it to make a judgment.
When I got on the court, I felt that it should not be
split, that perhaps there was a place in the system for a very
major circuit, and that there would be certain costs savings by
having a very large circuit.
And so I was a defender of trying the experiment, and the
experiment has now gone to the extent where we have 28 active
judges. The ninth circuit has--oh, I would suppose 22 percent
of the Nation's population and 22 percent of its judicial
business.
I have increasing doubts and increasing reservations about
the wisdom of retaining the ninth circuit in its historic size
and with its historic jurisdiction. We have very dedicated
judges on that circuit, very scholarly judges. They are working
with tremendous expedition to dispose of the caseload. But I
think institutionally, and from the collegial standpoint, that
it is too large to have the discipline and control that's
necessary for an effective circuit. I am willing to think
further about it.
I had hoped that there would be a commission report so that
we could study the commission report. But I understand that
there is no commission authorized as of this time, and I think
the Congress ought very seriously and at once to address this
problem and make up--and come to some resolution one way or the
other as to the size of the ninth circuit.
The Hruska report is good reading. Actually the division
that it recommends makes considerable sense. One problem is the
State of California has about 30 million people. That's as many
people as were in the United States in 1860. It's a huge
population. That's just the State of California.
So as you talk about splitting the ninth circuit, what are
you going to do with the State of California? That probably
requires, oh, 15 circuit judges. You would have a big circuit
with just one State.
One answer, and that was the answer of the Hruska report,
was to split California. And that requires a special mechanism
in the event there is a split between the northern and the
southern circuits which affects the State of California, and
that that should be studied.
Senator Gregg. Thank you. Do you have any thoughts on that,
Justice Souter?
Justice Souter. I really don't. Please don't split the
first circuit, but the ninth--[Laughter.]
The ninth is not a subject of my expertise.
Senator Gregg. Well, we thank you for your time, and we
won't take any more of it. We appreciate your submission, and
we'll try to assist you with these facilities issues.
Justice Kennedy. Thank you very much, Senator.
Justice Souter. Thank you.
Senator Gregg. We will take a brief recess. So we shall
reconvene here.
[A brief recess was taken.]
U.S. Courts
STATEMENT OF HON. JOHN G. HEYBURN II, CHAIRMAN,
COMMITTEE ON THE BUDGET, JUDICIAL
CONFERENCE OF THE UNITED STATES
remarks of senator mc connell
Senator Gregg. We are joined by the Senator from Kentucky.
Senator McConnell. Mr. Chairman, I am just here to
introduce to the committee a good friend of mine, of over one-
quarter of century duration, who is a Federal district judge
for the Western District of Kentucky, and who chairs the Budget
Committee of the judiciary.
John's wife Martha who is an ophthalmologist, an
outstanding physician. John has had a very distinguished career
in the law. In my previous incarnation as the county executive
of Jefferson County, John was one of the lawyers who
represented me and my office in country government.
He's a Harvard graduate, and a graduate of the University
of Kentucky College of Law, which is a lot more important in
Kentucky.
And John is not only, as I said, a long time personal
friend, but an extremely outstanding jurist. Periodically the
lawyers in our State do their ratings, which they get to do
anonymously, and John invariably has outstanding scores from
those who come before him. So he performs his duties in an
evenhanded and fair way.
I'd also like to ask that his biography appear in the
record at this point.
Senator Gregg. Without objection.
[The information follows:]
Biographical Sketch of John Gilpin Heyburn II
John Gilpin Heyburn II was born November 12, 1948, the son
of Henry R. Heyburn and Frances Starks Heyburn. Both his
grandfather and father were attorneys and civic leaders in
Louisville, Kentucky.
Judge Heyburn received his early education in the
Louisville public schools and graduated from Milton Academy,
Milton, Massachusetts. In 1970 he received his A.B. degree from
Harvard College, Cambridge, Massachusetts, where he majored in
history, received seven varsity letters for participation in
cross country and track and was named to the All-Ivy League
cross country team.
Prior to entering law school, Judge Heyburn worked for a
number of public service and research institutions, including
the Park Duvalle Neighborhood Health Center, the Louisville and
Jefferson County Youth Commission and the University of
Louisville Urban Study Center. During that time Judge Heyburn
also served as an officer in the United States Army Reserves.
In 1976, Judge Heyburn received his J.D. degree from the
University of Kentucky College of Law, where he was a member of
the school's National Moot Court Team.
From 1976 until his appointment to the bench, Judge Heyburn
was associated with the law firm of Brown, Todd and Heyburn,
which at the time of his departure numbered approximately 120
attorneys. He was a partner at the firm from 1982 through 1992.
Judge Heyburn's practice focused on commercial litigation, with
a particular interest in construction contract litigation, a
subject upon which he wrote and spoke extensively. Judge
Heyburn also served as special counsel to County Judge
Executive Mitch McConnell and as counsel for two citizen
commissions established to draft a new governmental charter for
Louisville and Jefferson County.
Judge Heyburn served as a director of the Louisville Bar
Foundation and as chairman of the continuing legal education
programs for the 1991 Kentucky Bar Association Annual
Convention. He also served as President of the University of
Kentucky College of Law Alumni Association and as a member of
the College of Law's Visiting Committee. As a director of
Kentucky Citizens for Judicial Improvement, Judge Heyburn was
active in the effort to reform Kentucky's judicial system by
way of constitutional amendment in 1976.
Judge Heyburn was active in civil and political affairs in
Kentucky. Among other things, he was Chair of the Jefferson
County Republican Party, Chair of the 1988 Republican Kentucky
State Convention, delegate to the 1984 and 1988 Republican
National Conventions and a candidate for Jefferson County Judge
Executive in 1989. In civic affairs, Judge Heyburn served as a
director of numerous charitable and public service institutions
and served as Chair of the Louisville and Jefferson County
Crime Commission.
On March 20, 1992, President Bush nominated Judge Heyburn
to the United States District Court for the Western District of
Kentucky to succeed the Honorable Thomas A. Ballantine, Jr. His
nomination was confirmed by the United States Senate on August
14, 1992, and he took the oath of office on August 28, 1992.
In 1994, Judge Heyburn was appointed to serve on the Budget
Committee of the Judicial Conference of the United States. In
January 1997, Judge Heyburn was appointed by Chief Justice
Rehnquist to serve as Chairman of the Budget Committee.
Judge Heyburn is married to the former Martha Blackledge
Keeney, who is an ophthalmologist and eye surgeon. They have
two sons born in 1988 and 1991.
Senator McConnell. I hope that the Senator from New
Hampshire will not be too rough on my old friend, Judge
Heyburn.
Senator Gregg. Thank you very much. We appreciate your
coming by, Senator. And with that strong endorsement and
introduction, Judge, we'll turn it over to you.
opening statement
Judge Heyburn. Thank you very much, Mr. Chairman. If it is
all right, I would like to make a brief statement in the
beginning, in addition to the written statement that we are
submitting.
It is a real honor for me to appear before your committee
for the first time, and in doing so, to represent the many fine
men and women of the Federal judiciary who do so much to assure
equal justice to all of our law abiding citizens and swift
punishment for those who do not abide by the laws.
Thank you, first of all, for the appropriation that we
received last year. While we didn't get everything we asked
for, we did get enough after fee collections and carryover,
and, I believe, also with the aid of sound, conservative
management of our resources, to adequately cover all of our
essential services.
More important, I'm pleased to say that we've set our
requests for fiscal year 1998 at a 7.8-percent increase over
those estimated fiscal year 1997 obligated funds. And that's
our lowest requested increase in 12 years.
We have accomplished this by carefully balancing the dual
responsibilities that we have as an independent constitutional
branch. That first responsibility is to perform our essential
duties in law enforcement. And that second responsibility,
which is equally important, is to spend the taxpayer's dollars
wisely.
The first among the responsibilities that we have is that
of law enforcement, and those responsibilities are continuing
to increase. The Justice Department continues to bring to bear
substantial new crime fighting resources that tend to increase
the workload that we have.
There are more people under supervision and under probation
now than ever before. And that all contributes to an increase
in our workload. Make no mistake about it: we are part of the
justice system, and because of that, to fund law enforcement
and prosecutors without giving the judiciary sufficient
resources--if you did that--would only create a bottleneck that
would really jam up the entire system. And none of us want
that. And our request, I believe it's conservative, but it also
recognizes that important reality.
Equally important in our view is our continuing
judiciarywide effort to be more efficient. We recognize this as
a responsibility, and the Budget Committee and our Economy
Subcommittee are leading the effort to sensitize the judiciary
to new budgetary constraints.
We are serious about it. We have worked hard at it. We
recognize that our efforts are only beginning, but we believe
they've already borne fruit, and I pledge to you to continue
our effort to find efficiencies in every area that commonsense
dictates.
I would be remiss if I didn't say that there's probably a
limit to what we can do in terms of efficiencies without
diminishing in some way a system of justice which, even with
all its faults, is the most accessible and the fairest in the
world.
Although we are a coequal branch within the constitutional
government, the powers of the judiciary are circumscribed. But
in a nation that's built on the rule of law, the limited powers
we do have are essential to the stability of society.
I have no doubt, Mr. Chairman, that you appreciate and
understand those relationships, and in my view that's all the
more reason why the judiciary needs to receive whatever funds
you believe are necessary to accomplish our role.
And we look at the budgetary process as a way that we can
engage in a dialog with you to determine what those appropriate
resources are.
One other thing I would like to mention just briefly, is
the matter of judicial compensation. I always feel a little
funny asking for money, particularly when it's for myself, in
essence. And it would be a lot easier, I suppose, for me not to
bring up the subject at all. But I bring up the subject without
hesitation because I believe it's important. We don't become
judges for the money. But it is important to have, in my view--
and I can elaborate on this later if you would like me to--
cost-of-living increases to maintain the stature and the
excellence of the Federal judiciary.
I believe it's vital, and I'm putting in a word for that.
It's not really a budgetary matter. The cost is minor. It is a
fundamental matter of the continuing excellence of the Federal
judiciary that's served us so well.
In closing I would like to make a couple of comments about
two relatively small accounts in funding terms, but big in
terms of what they do for the judiciary. And that's the
Administrative Office of the Courts and the Federal Judicial
Center.
The Federal Judicial Center's funding has remained about
the same for the last 5 years, but it does a lot of work that's
very vital for the judiciary. It's worked hard to enhance its
record of alternatives to travel-based education, providing the
kind of education to our administrative staff and to judges in
a less expensive way. And we believe it deserves additional
funding.
And together with the Administrative Office, it has
developed a number of new automation technologies, such as
satellite communication and videoconferencing, which has
enabled both of them to do their work in a better and more
efficient way.
The Federal Judicial Center and the Administrative Office--
the Administrative Office is the backbone of everything we do,
and is critical to our efficiency and cost-savings efforts.
They spearhead at a staff level all the efforts that we have
been making. So appropriate funding for these agencies is
essential.
prepared statements
I would like to submit my own written testimony for the
record, as well as that of Judge Zobel and Director Mecham. In
addition, I submit on behalf of the U.S. Court of Appeals for
the Federal Circuit the testimony of Chief Judge Glenn Archer,
and on behalf of the U.S. Court of International Trade, both of
which have their separate budget line items--I'm sure there is
a historical reason for that, somewhere along the line--the
statement of Judge Gregory Carmen for the International Trade
Court.
And having said that, I'd be delighted to answer any
questions that you might have.
[The statements follow:]
Prepared Statement of Hon. John G. Heyburn II
introduction
Mr. Chairman and Members of the Subcommittee, thank you for the
opportunity to testify today on the judiciary's fiscal year 1998 budget
request. It is indeed a pleasure to appear before you for the first
time as Chairman of the Judicial Conference Committee on the Budget. I
look forward to working with you, the Members of the Subcommittee, and
the staff and continuing the excellent working relationship that my
predecessor Chief Judge Richard S. Arnold enjoyed with all of you.
With me today are Judge William G. Young of the United States
District Court for the District of Massachusetts who is also a member
of the Budget Committee and is Co-Chairman of our Economy Subcommittee,
and Leonidas Ralph Mecham, Director of the Administrative Office of the
United States Courts and member of the Judicial Conference Executive
Committee.
On behalf of the entire Judiciary, I want to thank you, Mr.
Chairman, Senator Hollings, and all the Members of the Subcommittee for
your extraordinary efforts in providing the courts with our fiscal year
1997 appropriation. With the budget constraints under which you worked,
we greatly appreciate your support for the judiciary. While you did not
provide our full appropriations request, the funds available to the
judiciary in 1997 (appropriations, normal fee collections, and
carryover amounts) represent a 13.8 percent increase over 1996
obligations, allowing the courts to handle our known workload
increases. Your willingness to work with us and provide this funding
will ensure the effective functioning of the court system. I also want
to recognize the committee staff for the excellent work they do and
express my appreciation for their high level of professionalism.
overview
I would like to make three key points in my presentation today,
which I will highlight now, and elaborate on later. First, the
judiciary performs an essential role in our society, especially in law
enforcement. The judiciary is a key link in our system of justice and
must have the resources to do its job so that law enforcement efforts
are successful. Our streets are made safer when those accused of crimes
have a fair and speedy hearing in our courts and, if found guilty, are
appropriately sentenced. The judiciary also helps to assure the safety
of our communities by supervising those accused prior to trial and
those convicted upon their release from prison. Law enforcement has
been a high priority of the Congress and the citizens of this country.
Since 1994 the Congress has increased funding for the U.S. Attorneys by
20 percent, the FBI by 30 percent, the DEA by 32 percent, and the INS
by 101 percent, an average increase of 52 percent. All of the new
investigators and prosecutors hired with these funds are creating
additional work for the courts. This Committee has recognized the
judiciary's law enforcement role in the past by providing the Judiciary
with a 29 percent increase over the same time period. We ask that you
continue to do so in fiscal year 1998 by providing the resources needed
to handle our growing workload.
Second, the judiciary's workload continues to increase. Congress
gives us more responsibility and more citizens ask the courts to
resolve their disputes and problems. In fiscal year 1996, appeals,
civil and criminal filings in U.S. district courts, and bankruptcy
petitions all rose. Although there may be momentary fluctuations, we
expect this growth to continue.
Third, while the judiciary cannot control its workload, it has made
significant strides to work more efficiently, thus limiting the
resources required to handle the increasing workload. Our report on
Optimal Utilization of Judicial Resources, recently sent at your
request, identifies numerous initiatives to enhance efficiency and
productivity. These include an analysis of and reduction in space
utilization, improved use of personnel resources including contracting
when appropriate, effective use of automation, and technological
innovations such as videoconferencing for training and some courtroom
proceedings. These efforts and many more have allowed us to handle
increasing workloads while exercising fiscal constraint.
restrained budget request
In the face of increasing workloads, and recognizing the budget
constraints of Congress, the judiciary is making every effort to
minimize its budget request. Over the last several years the judiciary
has worked to refine and improve its budget formulation and financial
management processes. Also, under the leadership of our previous
chairman, Chief Judge Richard S. Arnold, the judiciary has made great
strides in becoming more efficient. This has allowed us to develop a
fiscal year 1998 budget that grows by only 7.8 percent over fiscal year
1997 obligations. This results in the lowest appropriations increase
requested by the judiciary in 12 years. By comparison, the Department
of Justice, our primary litigant, continues to grow. For fiscal year
1998, the President is requesting an increase of between 7 percent and
13 percent for those Justice activities--U.S. Attorneys, FBI, DEA and
INS--that affect the judiciary's workload.
The judiciary's 1998 appropriations request of $3.6 billion
includes only those funds necessary to continue our current workload
(offset by efficiency and other savings), and to handle the additional
responsibilities Congress has given us and the accompanying workload
increase. We are requesting a 7.8 percent increase in overall spending
in fiscal year 1998, which requires an 11.6 percent increase in
appropriations. The 7.8 percent increase breaks down to 4.6 percent for
current services (maintaining staffing, and funding for inflation, pay
adjustments, and other costs related to existing workload), 2.8 percent
to maintain a current level of service for uncontrollable workload
increases, and .4 percent for our highest priority program needs. The
latter two categories include: increases in juror days; confirmation of
additional judicial officers; growing bankruptcy filings which require
additional deputy clerks; increases in the number of individuals under
supervised release which require additional pretrial and probation
officers; and increases in the number of court security officers. We
believe this is a very restrained request when compared with the
resources provided to the Justice Department by Congress, and the
uncontrollable workload increases created by Congress which we continue
to face. A detailed explanation of our fiscal year 1998 request is
included as an Appendix.
judiciary's role in society
The judiciary performs a critical and unique role in our society.
It is an independent and separate branch of government that touches the
lives of all citizens. The judiciary serves this country and its people
in a wide variety of ways.
Most citizens take their federal juror duty seriously. I have
always been impressed that citizens are proud to serve and proud of the
service and protection which our country's justice system provides
them. In many instances it is the only personal contact that citizens
have with their federal government. More importantly, it provides an
opportunity for these individuals to be actively involved in the
operation of their government. Almost 600,000 people a year enter our
federal courthouses to participate in the jury process and to ensure
the constitutional rights of individuals.
Most people never see and are probably unaware of the judiciary's
law enforcement component that provides public safety throughout the
nation's communities. Probation and pretrial services officers monitor
the activities of individuals accused of crimes and awaiting trial or
convicted of crimes and sentenced to terms of probation or supervised
release. Criminals who have been incarcerated in federal prisons for
years must now serve a term of supervised release upon their return to
society. Probation officers monitor the activities of these convicted
criminals, including drug testing and treatment, to make our streets
safer and take action to return them to prison should they engage in
forbidden activities. The number of individuals supervised by the
judiciary (120,000) exceeds those people incarcerated in federal prison
facilities (105,000). In fact, the judiciary is saving the federal
government between $31 and $62 million annually by placing individuals
in more cost effective monitored home confinement, rather than
detaining them in prisons or jails.
Through our bankruptcy system, the judiciary plays a fundamental
role in our economy. Bankruptcy courts provide a mechanism for debtors
and creditors to resolve financial problems in a way that they can
continue with their businesses and their lives. About $30 billion in
debt is discharged in our bankruptcy system annually. The projected
bankruptcy filings of approximately 1.3 million in 1997 (a 43 percent
increase over fiscal year 1995), equates to one bankruptcy for every 75
households in the United States. The timely resolution of these
financial difficulties helps to keep this nation's economy running
smoothly.
Two million victims of crime receive benefits each year from the
Crime Victims Fund. Over the last four years the judiciary deposited
over $1 billion in criminal fines into the Fund.
judicial compensation
To be effective, the judiciary and its presiding judicial officers
must be adequately compensated. The funding provided to the courts and
the compensation given to judicial officers is a recognition of the
value our society places upon the institution and the individuals
responsible for carrying out justice in our nation. Unfortunately,
federal judges salaries are falling behind the level of pay of other
legal professionals, including most lawyers arguing cases before them.
Federal judges have not received a pay adjustment since 1993 and
increases in the cost of living have eroded their salaries. The
judiciary is seeking an ECI salary adjustment for judges and staff
comparable to that being recommended for general schedule employees for
1998.
Over the last four years, judges have been the only career federal
employees who have not received an ECI salary adjustment. Further,
judges are not eligible for the locality pay increases that other
career employees receive. Therefore, the Judicial Conference submitted,
and legislation was introduced to provide a catch-up ECI adjustment for
the previous four years in which judges were denied an adjustment. If
judges had received the annual ECI salary adjustments provided by
statute and received by all other career employees, then compensation
would be 9.6 percent higher than present. In real terms, relative to
inflation, judges' compensation has been effectively reduced by 12.2
percent over the past four years.
uncontrollable workload
The judiciary is unique among other government entities. One of the
ways in which we are unique is that we do not control our workload; it
is determined by the Constitution and statutes. Among its many other
responsibilities, the courts must: handle every case filed by the
government, businesses, and individuals; supervise every defendant who
is released pending prosecution; monitor every convicted criminal
sentenced to a term of supervised release; pay jurors in every civil
and criminal trial; and provide and compensate counsel for every
financially eligible defendant. The workload is driven by the laws
enacted by Congress, the citizens of our country who come to us to
resolve their disputes and financial problems, and to a great extent
the prosecutorial policies of, and resources provided to, the
Department of Justice.
Over the years, our funding and staffing increases have not kept
pace with workload increases. Case filings increased almost 67 percent
from 1985 to 1995, but, just as important, so has the workload
associated with the cases. For example, the proportion of more complex
cases has grown, and the number of multi-defendant cases has increased.
Also, imposition of Sentencing Guidelines has resulted in substantial
workload not only on the courts, but also on probation officers and
public defenders. All of these factors have resulted in increased
workload above the absolute increase in cases. Staff and judge
increases have not kept pace with this workload.
From 1985 to 1995 there has been a large growth in the probation
and pretrial services area. The imposition of supervised release,
tremendous growth in individuals requiring drug treatment, and the use
of labor intensive home confinement (which results in significant
savings for prisons) all contribute to an ever-expanding workload.
capital cases increase defender services costs
The Defender Services account requires $354 million to meet
projected 1998 workload. As discussed in our recent report to Congress,
the growth in this activity over the past two years is primarily
attributed to an increase in the overall number of capital cases and in
particular high profile capital trials that are very costly. The
remaining activities in the account have not experienced any real
growth other than inflationary increases. Justice Department decisions
about whether and how to prosecute a case and what the charges will be,
directly impact Defender Services resource requirements. Dramatic
increases in workload and cost have been experienced in recent years,
primarily attributable to the Justice Department's additional death
penalty prosecutions and charging policies.
The judiciary is concerned about and recognizes the need to contain
the cost of providing constitutionally mandated counsel to financially
eligible defendants. Several initiatives are being pursued to control
representation costs in ways that will not compromise the
constitutional right of a defendant to a fair trial. These initiatives
include improved case management techniques, attorney training, voucher
review enhancements, and data collection and analysis improvements.
Further, we are applying flat-fee concepts in a variety of contexts as
part of our overall effort to manage habeas costs.
legislative initiatives
The judiciary's workload is affected greatly by laws that have been
and will be enacted. For example, the Antiterrorism and Effective Death
Penalty Act of 1996 (Public Law 104-131, 110 Stat. 1214) is expected to
dramatically increase the number of victim restitution proceedings
while imposing considerable financial accounting and tracking
responsibilities on court clerks and probation officers. An intent of
the Prison Litigation Reform Act (Public Law 104-134, 110 Stat. 1321)
was to reduce the overall number of prisoner petitions. While this may
ultimately occur, additional review of those that are filed is more
complex, requiring substantial new administrative procedures. Increased
judiciary expenses associated with special master appointments and
administrative record keeping are also expected. Legislation proposed
so far by the 105th Congress (such as juvenile crime control measures,
victims rights constitutional amendment, property rights protections,
and child support enforcement) is expected to continue this trend of
creating additional cases and costly new administrative requirements
for the federal courts.
A legislative initiative that the judiciary is seeking that would
be beneficial to the judicial system is to classify as mandatory those
activities of the judiciary that are constitutionally entitled and
uncontrollable. Both the fees paid to jurors and compensation paid to
court appointed counsel should be categorized as mandatory. The
Constitution mandates the right to a trial by jury, both in criminal
(Sixth Amendment) and in civil (Seventh Amendment) cases, and the daily
rate is set by statute. The right to counsel in criminal prosecutions
is also provided for in the Constitution (Sixth Amendment). The
judiciary has no discretion in whether to provide these constitutional
rights, so the funding to support them should not be discretionary.
working more efficiently
While the judiciary cannot control its workload, we are endeavoring
to better manage how efficiently we process our workload and are proud
of our accomplishments in this area.
staffing
The largest dollar savings come from doing more work with fewer
people. As you know, the judiciary uses formulas to determine how many
people should be devoted to doing the job. In recent years we have
requested funding for only 84 percent of the people we believe are
needed to run the judicial system as indicated by the formulas. This
enabled us to achieve immediate economies and stimulate creative
solutions to doing more work with fewer people. Each court determines
how best to use its limited resources to accomplish its work. At the
national level, we help the courts through systems development and
other initiatives. One of these is the Methods Analysis Program, which
identifies suggested business practices with the potential to result in
more efficient and effective operations and to foster implementation of
these practices in the courts. We are also able to handle our workload
at 84 percent of formula through the use of automation and technology
in lieu of manual processes. It is because of our extensive economy and
efficiency efforts that we are able to staff the courts at only 84
percent of the workload formula and still maintain the level of service
that our system of justice deserves.
space
Another resource that we have studied carefully is the utilization
of space. As you know, because of increases in the number of judgeships
and support staff over the past 15 years, and especially because of
enhanced security requirements, the judiciary was severely short of
adequate courthouse facilities. Congress responded to our needs and
initiated an extensive, long term courthouse construction program. GSA
is building, renovating and expanding court facilities nationwide which
will provide the secure space we require. Unfortunately, for this
subcommittee and our budget, this will result in a significant increase
in our rental costs over the next three years and into the future.
To moderate this budgetary pressure, the judiciary undertook an
extraordinary effort to identify ways to reduce rent costs. The bottom
line is that we have succeeded in trimming our future rent costs by
about $12 million per year. Courthouses, unavoidably, remain a
significant and growing cost of doing business. We are continuing to
look for ways to achieve further savings. These efforts will enable us
to control our future needs to some degree. However, it will be
difficult to achieve significant additional savings.
automation and technology
The use of automation and technology has been critical to allowing
the judiciary to handle a continuously growing workload while staffing
the courts at a level below that determined to be necessary by our
workload formulas. This has allowed us to minimize overall spending
increases while maintaining a high level of service to the public. For
example, initiatives such as processing millions of bankruptcy notices
through the Bankruptcy Noticing Center are producing significant
savings. A follow-on initiative that may be considered is having
bankruptcy docket information automatically updated to reflect notices
distributed by the Bankruptcy Noticing Center.
Other automation initiatives which offer the potential for reduced
cost and improvements in the quality of support for case processing are
at very preliminary stages of development or being pilot tested. The
judiciary currently is exploring a number of new major technology-based
initiatives to improve communications, make information more accessible
to the public and the judiciary, and improve courtroom proceedings.
This includes the use of electronic filing, electronic courtroom
technology, and the electronic dissemination of information as well as
technologies to improve the quality and efficiency of courtroom
proceedings.
In addition, the following automation initiatives which have been
initiated or are being considered by the judiciary, are indicative of
the emphasis being placed on improving the way the judiciary operates,
and, where possible, reducing costs.
--Using numerous new approaches to the operations and maintenance of
the automation program saving over $10 million annually.
--Using and exploring the future potential of video and computer-
based training as a means to conduct training more cost
effectively.
--Exploring opportunities to realize savings and efficiencies by
reducing the production and handling of paper documents through
use of electronic case files.
--Experimenting with electronic filing to eliminate repetitive, time-
consuming manual tasks involved in docketing.
--Using and exploring the future potential of electronic public
access systems to save court staff resources in responding to
public needs for information and to permit the public to gain
direct, rapid, and easy access to official court records.
--Implementing about 100 automated systems to improve operating
efficiency and effectiveness for routine, administrative-type
tasks by automating manual business processes or updating
outmoded systems and practices.
--Designing an electronic bankruptcy noticing system to transmit
electronically bankruptcy notices to large creditors rather
than through the more expensive printing and mailing system
currently used.
--Exploring expanded use of Internet and Intranet technologies to
distribute judiciary publications and other information at
lower cost.
--Exploring opportunities to realize efficiencies through the use of
document imaging, retrieval, and display technologies in the
courtroom.
--Conducting experiments in process innovation to examine how courts
can reengineer business processes to make better use of
automation and technology and identify efficiencies.
--Deploying and enhancing automated case management systems, which
facilitates speedy resolution of pending cases by providing
critical information needed to manage caseload.
videoconferencing
We know of your interest in videoconferencing and wanted to
elaborate on some of the efforts we are pursuing. Videoconferencing can
be used for the handling of routine and case-related administrative
responsibilities, training, and courtroom proceedings.
The Prisoner Civil Rights Videoconferencing Project is being
implemented in twenty-one district courts, which have qualified for
participation. The district courts receive funding and program support
to use videoconferencing in prisoner civil pretrial proceedings. This
project has the potential to result in personnel and travel cost
savings in the federal courts, the federal Bureau of Prisons and state
and local governments. Because prisoners are not being transported, it
eliminates the associated security risks to judicial officers, court
staff, other federal, state and local officials, and the public. For
example, some pre-trial hearings in the Unabomber case were held by
televideo in New Jersey while the defendant and his attorney remained
in California.
Courts are also experimenting with the use of videoconferencing in
other judicial proceedings. A few bankruptcy courts are using
videoconferencing to conduct evidentiary and nonevidentiary proceedings
between remote locations, reducing non-productive travel time, saving
the judiciary, the bar, and the public travel costs, and allowing the
more frequent and prompt scheduling of hearings in court locations
without resident bankruptcy judges. On a very limited basis, one court
of appeals circuit is experimenting with using videoconferencing to
hear oral arguments where counsel or parties prefer not to travel to
the main courthouse.
The judiciary has used videoconferencing for administrative
meetings and is taking steps to use it for distance learning. The
Administrative Office, the Federal Judicial Center and the courts are
working together to install satellite capabilities to establish a
permanent capability for supporting long distance training and
conferences. In fiscal year 1996, a total of $2 million was earmarked
in the Judiciary Information Technology Fund to procure satellite
downlinks at selected courts to initiate the program. As the cost of
videoconferencing systems declines and systems become more widely
available in the courts, usage should increase.
Because of the limited resources available to the judiciary to
support videoconferencing, we have coordinated closely with other
federal government entities and state and local governments to share
the use of and, in some instances, the cost of videoconferencing.
administrative office staff contributions
I would be remiss if I did not point out the pivotal role of
Administrative Office staff in these efficiency efforts in addition to
all of their other extensive support of the courts and the Judicial
Conference. The satellite downlink capability for videoconferencing and
development of the staffing formulas which I previously mentioned, the
efforts to utilize staff resources more efficiently, the extensive
analysis of rental costs, the development of technology, and the report
on Optimal Utilization of Judicial Resources, to name a few, were all
spearheaded by Administrative Office staff. The courts cannot do this
work on their own.
The Administrative Office also provides daily support to the courts
and the Judicial Conference in a variety of other ways. Some of these
are:
--Research and analyze hundreds of matters each year for
consideration by Judicial Conference committees.
--Develop new ways for handling court business and provide training
and assistance to judges and court employees to help them
implement programs, improve operations, and manage the courts.
--Support the planning efforts of the Judicial Conference by
conducting strategic studies and providing technical
assistance, research, and analysis related to planning issues
and topics.
--Provide centralized core administrative functions such as payroll,
personnel, budget, and accounting services.
--Prepare manuals and a variety of other publications that include
essential information regarding judicial business.
A $5 million (6.6 percent) increase is requested for the
Administrative Office in 1998, yet through the rental cost study alone,
they have helped reduce rent costs by $12 million in all future years.
Small investments in AO staff produce significant overall savings.
Unfortunately, while total judiciary FTE have increased by 13 percent
from 1995 to 1997, Administrative Office staffing has declined by three
percent. Lower AO staffing has delayed efforts to provide some basic
support services to the judiciary, such as uniform national automated
accounting and financial systems and a replacement for the outdated
Criminal Justice Act Payment system. It has also hindered their efforts
in other areas, which could over time lead to a deterioration in
support for our judicial system. The fiscal year 1998 request will
simply allow the Administrative Office to begin to restore staffing
back to the level authorized for fiscal year 1995.
federal judicial center support
I would also like to comment briefly on the Federal Judicial
Center's importance and urge full funding of its request of
$18,425,000, a 5.3 percent increase over its current level. Even with
this modest increase the FJC's funding remains about the same as it was
5 years ago.
Judges' work changes constantly due to new statutes, new appellate
case law, new procedural rules, and developments in related fields,
such as the impact of science on the kinds of evidence in litigation.
We turn to the Center, be it for help on managing a capital case or a
mass tort case, or to understand last April's prison litigation and
habeas reform acts, or for techniques for more efficient juror
selection. The Center teaches our probation and pretrial officers how
to supervise defendants, efficiently and appropriately, before trial
and after incarceration, as well as to help judges determine criminal
sentences. The Center's management training programs teach court staff
the tools used in the private sector to reduce costs, streamline
operations, and better serve the public.
Over 80 percent of court participants in Center training programs
attend training in their home cities. For in-court training, the Center
provides the courts self-contained curriculum packages, on-line
computer conferencing, videotapes, manuals, diskette, and CD-ROM's. It
also plans eight satellite broadcasts this year.
looking to the future
The judiciary is not only looking at ways to improve and work
better now, but is continually planning for the future. In December
1995, the Judicial Conference adopted its first comprehensive Long
Range Plan for the Federal Courts, which sets forth specific
recommendations for conserving core values while preserving flexibility
to respond to new challenges. There are numerous recommendations aimed
at optimal use of judiciary financial, human, physical, and
technological resources.
Other planning efforts include a strategic business plan for the
judiciary produced in September 1996. This plan provides a foundation
for more specific plans and planning processes. The Long Range Plan for
Automation in the Federal Judiciary supports the Long Range Plan for
the courts as well as the strategic business plan.
The judiciary's workload continues to grow. As workload grows, so
does our need for additional personnel and related space. Together,
personnel and rent represent most of the courts' operating budget. The
efficiency efforts underway will help to offset these increases, but
they cannot be relied upon exclusively to replace needed appropriations
in the future. If our budget requests are not funded, staffing will
have to be further reduced. Ultimately, this will affect our ability to
provide the services required by the Constitution, expected by the
Congress, and relied upon by the citizens.
conclusion
Let me conclude by saying the judiciary performs a critical service
for our society and affects the lives of all of its citizens. As an
integral component of the war on crime, the judiciary must have the
resources to process the cases generated by the ever increasing number
of law enforcement officers and federal prosecutors.
We recognize the budget constraints you have and will continue to
face. We want to work with you as we have done in the past to ensure
that the judiciary receives adequate funding within those constraints.
We have and will continue to use those resources wisely and
efficiently.
I want to thank you for this opportunity to testify before you
today and we are available to provide any additional information you
may need.
______
Appendix
summary
The fiscal year 1998 budget request for the Courts of Appeals,
District Courts and Other Judicial Services totals $3,461,324,000, an
increase of $363,324,000 over our fiscal year 1997 appropriation level.
However, to get a true picture of the financial requirements of the
judiciary, it is important to point out that in addition to
appropriated funds, the judiciary requires the use of other funding
sources to supplement our appropriations. Included in these sources of
funding are fee collections, carryover of fee balances from a prior
year, and the use of no-year funds. When all sources of funds are
considered, the increase in obligations for fiscal year 1998 is only,
$266,254,000.
Of the $266 million increase in obligations over 57 percent ($153
million) is necessary to provide for inflation and other uncontrollable
adjustments for existing judges and staff in order to continue current
operations. The remaining 43 percent ($113 million) is primarily needed
to respond to increasing workload. The request for the principal
programs are summarized below.
salaries and expenses
The salaries and expenses of the circuit, district, and bankruptcy
courts, and probation and pretrial services offices account for most of
our request. A total of $3,067,449,000 is required for this activity,
$212.2 million over fiscal year 1997 estimated obligations. Other
sources of funding totaling $225.6 million are expected to be available
to offset the S&E requirements leaving an appropriation need of
$2,842,840,000. Included in these other sources of funding are $74
million in funds expected to carry forward from fiscal year 1997;
$126.9 million in fee collections; $22.2 million from the Violent Crime
Reduction Trust Fund (VCRTF); and $2.5 million from the Vaccine Injury
Trust Fund.
Over 58 percent of the $212 million increase ($124 million) is
needed to fund uncontrollable costs such as inflation and the
annualized costs of additional personnel and space brought on in fiscal
year 1997. The current services portion of the request also includes
rent and related costs associated with new space that the General
Services Administration (GSA) will deliver in fiscal year 1998. The
total rent bill from GSA is estimated to be $574 million for 1998, a
5.2 percent increase over fiscal year 1997, and a 175 percent increase
over fiscal year 1988.
The remaining increase ($88 million) will primarily fund the
personnel needed to address increases in our uncontrollable workload,
and modest enhancements in our automation program. The increases fund
the following:
Additional Court Support Personnel.--Workload continues to increase
in our district, appeals and bankruptcy courts. We anticipate that
bankruptcy filings will increase over 20 percent and district and
appellate filings will also increase. In probation, the number of
offenders received for supervision will continue to increase, but more
significant is the shift from relatively low-risk probation cases to
high-risk violent offenders on supervised release. Consequently, an
increase of $47.9 million would fund 979 new court support employees
and related expenses (exclusive of judges' staff) in appellate,
district and bankruptcy courts and $21 million for 349 new probation
and pretrial services officers and supporting personnel.
It is important to note that even with these increases the courts
will have to continue to operate with only 84 percent of the staff that
should be on-board to meet projected workload as identified by our work
measurement formulae. This is the same staffing level as is provided in
fiscal year 1996 and fiscal year 1997.
Judges.--An increase of $8.9 million is requested for 13 new
magistrate judge positions and 50 support staff positions. This
increase is needed to provide an effective, yet less costly, way of
providing help for Article III judges to handle the large volume of
civil and criminal cases facing the courts.
Probation and Pretrial Services Programs.--An increase of $8.8
million is needed for the Drug-Dependent Offender Program. Of the
requested increase, $5.1 million will be used to place high-risk
substance abusers in structured, in-patient programs. The remaining
$3.7 million is requested to implement the mandatory drug testing
provision of the Violent Crime Control and Law Enforcement Act of 1994.
An increase of $1.3 million is requested for contract in-patient mental
treatment necessary to supervise and properly control an additional 100
persons found incompetent to stand trial or not guilty by reason of
insanity.
Automation.--The 1998 request includes enhancements in the area of
automation which include fundamental improvements to the courts
business processes of accounting and financial systems, personnel
management, court appointed attorney payment processing, and library
inventory management. These automation projects will strengthen the
judiciary's information management capabilities and enable more
effective and efficient program management and resources. Overall,
however, less funding will be required in fiscal year 1998 in the area
of automation because of program reductions.
defender services
A total of $354,482,000 is requested for the Defender Services
program, which provides representation for indigent criminal
defendants. Of this amount, $329,529,000 is requested in direct
appropriations and $24,953,000 is requested as a reimbursement from the
Violent Crime Reduction Trust Fund. The total requirements in fiscal
year 1998 are $21,284,000 over the fiscal year 1997 projected
requirements of $333,198,000.
Most of the increase ($20,684,000) is needed for uncontrollable
costs, such as pay and benefit cost adjustments, inflation and a
projected increase in caseload. Included in these costs are funds for
an additional 67 FTE to handle a projected caseload of 85,300 CJA
representations. An increase from the anticipated fiscal year 1997
level of 84,400. Also included is a $5 per in-court and out-of-court
hour rate adjustment for private panel attorneys in those districts
which do not currently receive a $75 per hour compensation rate. Panel
attorney rates in 77 of the 94 districts, while raised in 1996 for the
first time since 1984, are still an impediment to our ability to
attract qualified attorneys to serve as court-appointed counsel.
The remaining increase ($600,000) would fund two new federal and
community defender organizations. The Congress urged us to establish
more defender organizations as an alternative to using panel attorneys
in districts where this would be appropriate. With these funds, we
would have defender organizations which serve 66 districts in fiscal
year 1998, up from 64 districts in fiscal year 1997.
fees and expenses of jurors and commissioners
For the Fees of Jurors program, a total of $71,707,000 is required,
$3.3 million over fiscal year 1997 estimated obligations. This amount
funds inflationary adjustments, and a projected increase in the number
of juror days.
court security
For the Court Security program, a total of $170,973,000 is
required, $29.5 million over fiscal year 1997 estimated obligations.
The request provides funding for inflation, including costs associated
with a wage labor rate increase for court security officers, and other
uncontrollable costs ($7 million).
The remaining increase of $22.5 million would provide for
additional court security officers, security equipment and
administrative support to meet the courts' most urgent requirements for
security coverage at new facilities coming on line in fiscal year 1998,
and to bring security at existing facilities up to the minimal level
deemed necessary by the Marshals Service.
violent crime reduction trust fund
The Violent Crime Control and Law Enforcement Act of 1994 (Crime
Bill) created the Violent Crime Reduction Trust Fund. The amounts in
the trust fund are to be appropriated to finance expenses authorized by
the Crime Bill and the Antiterrorism and Effective Death Penalty Act of
1996. The judiciary was authorized $50 million in fiscal year 1998 to
help meet the increased demands for judicial activities in the federal
courts. Of the amount authorized for the judiciary in the trust fund:
(1) $27.9 million provides funds to handle additional workload
associated with the hiring of new Assistant U.S. Attorneys; (2) $17.2
million will fund the Judiciary's workload increases in support of the
Safety Valve, Three Strikes, Death Penalty, and Reimposition of
Supervised Release provisions; and (3) $4.9 million will fund Mandatory
Drug Testing, Criminal Aliens and Immigration Enforcement, Changes in
Federal Rules of Evidence, and Notification of Changes of Address
provisions that impact on our workload and resources.
______
Prepared Statement of Leonidas Ralph Mecham, Director, Administrative
Office of the U.S. Courts
Mr. Chairman and Members of the Subcommittee, thank you for
inviting me to testify on the Administrative Office's (AO) fiscal year
1998 budget request. Knowing the overall budget constraints under which
you worked, the Subcommittee was very supportive and fair to the AO
last year. I want to thank you, Chairman Gregg, and the Members of the
Subcommittee for providing an increase in funding for fiscal year 1997.
The level of funding provided the AO in fiscal year 1997 is sufficient
to halt the decline in staffing levels which we have been experiencing
since 1995. The AO and the courts are partners in administering justice
and we appreciate your recognition of our role. Thanks also to the
Committee staff for their continued professionalism and cooperation. We
look forward to working with you all during this budget cycle.
ao plays a unique role
The AO plays a unique role within the federal government. In his
statement to this subcommittee, Judge John Heyburn, Chairman of the
Committee on the Budget of the Judicial Conference, discusses the role
of the judiciary in society and the fact that, in some way, the
judiciary impacts the lives of all American citizens. Many citizens use
the courts to resolve disputes, others benefit from interpretations
made by the courts, many serve on juries, businesses and consumers
settle debts in bankruptcy court, and safety for all is enhanced by
pretrial services and probation officers who supervise individuals
considered a safety risk to their community. Because the AO is actively
involved in each of these court activities, the AO indirectly touches
the lives of all citizens, exerting a much larger force than its budget
and staff size would indicate.
The judicial branch is organized differently from the executive
branch. Most executive agencies have several administrative layers,
including departmental, bureau, district, and field offices. The
Administrative Office provides administrative and operational support
directly to the federal courts so they can focus on their primary
mission of adjudicating cases. Unlike other federal entities the
judiciary has one-stop shopping for all its administrative needs
because the AO provides such a broad range of services to the courts.
The AO handles not only centralized administrative functions like
budgeting and accounting, but directly supports court activities, such
as developing computer applications, designing financial and personnel
systems, and providing training. This unique administrative structure
creates economies of scale that individual courts could not achieve and
gives one office insight into all court matters, so cross-cutting
improvements are easier to generate. Therefore, funding for the AO
enhances the efficiency of all the courts.
Justice Department Administration Receives 60 percent More
Proportionately than the AO
If pressed to find a government entity somewhat comparable to the
AO, I would point to the general administration accounts at the
Department of Justice. Both play an important role in law enforcement.
Both are responsible for supporting the nation's battle against crime.
However, appropriations for the Department of Justice general
administration accounts increased 17.8 percent between fiscal years
1995 and 1997, while AO appropriations increased by less than 5
percent. Between 1995 and 1997, staffing associated with management and
administration at DOJ has increased from 6,554 FTE to 7,461 FTE. During
that period total AO FTE declined from 953 FTE to 923 FTE. Viewed
another way, the AO's share of the federal judiciary budget in fiscal
year 1997 was 2.6 percent (including the reimbursables from the
courts), compared to 4.3 percent for the general administration
accounts in the Department of Justice. In spite of the similarity of
their missions, the AO receives proportionately less resources to
support the judiciary than the general administration accounts receive
to support the Department of Justice.
You might ask, ``How has this low funding level impacted on the
AO's ability to adequately support the courts?'' The primary area
impacted by the hiring freeze is our ability to maintain an aggressive
pace in improving our national financial systems. A cornerstone of our
financial management process is decentralized decision making. We have
an ambitious plan to pursue new initiatives and upgrade aging systems.
Limited staffing has slowed our efforts to upgrade the CJA payment
system, adopt national accounting and payroll systems and implement
more efficient ways of administering court funding allotments.
Chief Justice Rehnquist Stresses Value of the AO
In his fiscal year 1996 annual report on the courts, Chief Justice
Rehnquist discussed the important and unique role of the AO. He
emphasized the AO's ``central role in the judiciary's efforts to
economize'' and highlighted many AO accomplishments such as ``analyzed
program and operating costs, conducted studies and evaluations, and
identified opportunities for improvement or savings.'' The Chief
Justice expressed concern about the discrepancy in the growth rates of
the AO's budget and the judiciary's budget. He noted that the AO's
budget ``has been growing at a much slower rate than the judiciary's as
a whole.'' Despite a shrinking proportion of funds, the AO expanded its
service to the judiciary in the last twenty years, but I am here to
tell you that we have probably reached the limit of what we can take on
without additional staff.
ao funding
The fiscal year 1998 funding request for the AO is modest. It
allows for no new initiatives or programs. We are requesting total
funding of $90,712,000, a 6 percent increase over expected fiscal year
1997 obligations. This total includes all sources of funds--
appropriations, the court reimbursable program, fiscal year 1998 fee
collections, prior year carryover and independent counsel
reimbursements.
The AO sincerely appreciates the 4 percent increase in
appropriations provided for fiscal year 1997 after essentially level
funding over the last four years. The funds are sufficient to provide a
current services level of activity. However, the 1997 funding does not
allow the AO to lift the limited hiring freeze it has been operating
under since 1993. The result of the freeze is that fiscal year 1997
staffing will be the same as fiscal year 1996, but still well below the
level authorized for fiscal year 1995.
About half of the increase requested for fiscal year 1998 is for
pay and benefit cost adjustments. Nearly 90 percent of the AO budget
funds personnel, so pay and benefit adjustments represent a significant
cost for us. The other half of the requested increase is for an
additional 23 FTE which would restore staffing and services to 1995
authorized levels. Restoration of the 1995 staffing levels is critical
to the ability of the AO to provide necessary support to the whole
judiciary. Without adequate staffing, the AO's efforts to improve the
economy and efficiency of the judiciary will be delayed and in some
cases halted.
ao achievements
Support for Supervision of 120,000 Individuals
The AO is proud of its service to the courts, especially its
oversight and management support of the law enforcement functions of
the judiciary. The AO is vitally involved in the work conducted by the
nation's approximately 7,000 probation and pretrial services personnel.
These people are on the front lines of the war on crime, monitoring the
activities of 120,000 individuals, 15,000 more than are in federal
penitentiaries. The AO manages a national contract for the home
confinement program, a significant tool for monitoring those awaiting
trial or convicted of crimes. Home confinement provides an alternative
to more costly incarceration, saving the federal prisons between $31
and $62 million a year.
Drug Testing--720,000 Specimens
Another area in which the AO provides central program support at a
reduced cost is drug testing of those under supervision. The AO
oversees the national drug-testing contract for the analysis of over
720,000 urine specimens a year and is working with the Department of
Justice on implementing a universal drug testing project in selected
courts, which will allow the judiciary to detect and treat additional
drug abusers.
The AO commissioned a study on non-instrumented drug testing
devices (hand-held urine test kits) that will result in probation and
pretrial services officers using the most proficient and cost
beneficial urine test devices for detecting illicit drug use. In
addition, the AO is also studying additional drug testing technology
that will reduce testing expenditures without impacting the ability to
detect drug use.
The court security program provides protection to the judges, the
court staff, and visitors to the courts, with operational control by
the U.S. Marshals Service and program oversight by the AO. This program
involves about 2,600 court security officers and security equipment in
over 400 facilities.
Efficiencies from Decentralization
A major initiative for the AO over the past few years is
decentralizing budget, management and personnel functions to local
managers. Decentralizing gives the courts increased flexibility to meet
their individual needs in the most cost-effective way possible. To
complement the decentralized budget and management system, the AO
developed a decentralized personnel system for the courts that provides
the courts the flexibility to allocate dollars for personnel needs
rather than a set number of positions. Courts have the choice of hiring
staff, hiring contractors, or automating their work. To further improve
financial management, the AO is simplifying its system of allotting
funds so that the number of categories of funding for the courts is
reduced from 57 to 3.
Efficiency Through Automated Systems
Because of this streamlining and decentralization, the AO places a
high priority on program management and oversight. The AO conducts
quarterly financial reviews, which allow us to provide the Congress
with periodic updates of savings or program adjustments that affect our
need for appropriations. The AO is also working with court financial
and technical experts to determine the best software for the
judiciary's financial and budgetary requirements. The goal is to
implement a standardized, automated accounting system in the courts
which will ensure more auditable, accurate, and timely financial
reports. The AO is also acquiring a new personnel and payroll system
that automates and integrates the personnel and payroll functions and
enables data entry and retrieval at local court sites.
AO Staffs 24 Judicial Conference Committees
A basic function of the AO is to provide support services to the
policy making body that governs the judiciary, the Judicial Conference
of the United States. The Judicial Conference has 24 committees that
consider hundreds of issues each year with the help of subject matter
experts on the AO staff. AO staff work with the committees on
developing and implementing policies, developing long range planning,
and coordinating economy and efficiency efforts.
AO Support for 2,000 Judges
A key priority for the AO is support of Article III, bankruptcy and
magistrate judges. The AO provides the judges with legal counsel,
orientation and training programs, payroll and other human resources
services, statistical reports, program management advice, and chambers
and courtroom automation capabilities. Similarly, the AO assists court
administrators through court management reviews and on-site technical
visits to monitor compliance with guidelines and assess program
effectiveness.
applying technology in the courts
The AO has an excellent track record in assisting the courts with
technological advances, helping them to absorb some of the growth in
workload over the last several years when they were not provided 100
percent of the staffing authorized by our workload formulae. The AO has
a Technology Enhancement Office devoted to identifying and analyzing
court business problems and opportunities for service enhancements that
might result from the innovative application of information technology.
Videoconferencing
A major initiative of this office is to expand the use of
videoconferencing in court proceedings. Between 1991 and 1994, the
judiciary conducted pilot programs for videoconferencing certain civil
hearings. Based on an evaluation of the pilot programs, the Judicial
Conference endorsed videoconferencing as a viable case management tool
in civil prisoner pretrial proceedings and authorized funding to expand
videoconferencing to additional courts and to cost-share with state or
federal prison authorities. Currently, 21 district courts have met the
criteria to participate in the project and 7 district courts have
implemented the use of videoconferencing.
In addition, the AO is working with the courts to establish what
other types of proceedings are appropriate for videoconferencing. The
AO and the FJC are also establishing a joint videoconferencing and long
distance learning facility. Some AO training and seminars are already
provided through videoconferencing and we are working to add more.
In various other ways, the AO is applying technology to the work of
the courts. The AO spearheads automation initiatives which offer the
potential for reduced cost and improvements in the quality of support
for case processing. The AO is supporting a number of new major
technology-based initiatives to improve communications, make
information more accessible to the public and the judiciary, and
improve courtroom proceedings. This includes the use of electronic
filing, electronic courtroom technology, and the electronic
dissemination of information as well as technologies to improve the
quality and efficiency of courtroom proceedings.
AO Automation and Technology Initiatives
As detailed in the November 1996 ``Report to Congress on the
Optimal Utilization of Judicial Resources'' that was prepared at your
request, the following automation initiatives are indicative of the
support provided by the AO to improve the way the judiciary operates,
and, where possible, reduce costs.
Implementing the Jury Modernization Project will assist courts in
empaneling juries by creating jury wheels of eligible citizens,
processing summons for prospective jurors, processing questionnaires,
and paying jurors.
Exploring the use of mobile computing for probation and pretrial
services officers so that they can spend more time out in the community
and less time in the office.
Using and exploring the future potential of video and computer-
based training as a means to conduct training more cost effectively.
Exploring opportunities to realize savings and efficiencies by
reducing the production and handling of paper documents through use of
electronic case files.
Experimenting with electronic filing to eliminate repetitive, time-
consuming manual tasks involved in docketing.
Using and exploring the future potential of electronic public
access systems to save court staff resources in responding to public
needs for information and to permit the public to gain direct, rapid,
and easy access to official court records.
Designing an electronic bankruptcy noticing system to transmit
electronically bankruptcy notices to large creditors rather than
through the more expensive printing and mailing system currently used.
Exploring expanded use of Internet and Intranet technologies to
distribute judiciary publications and other information at lower cost.
Exploring opportunities to realize efficiencies through the use of
document imaging, retrieval, and display technologies in the courtroom.
Deploying and enhancing automated case management systems, which
facilitates speedy resolution of pending cases by providing critical
information needed to manage caseload.
ao support of economy and efficiency efforts
The judiciary is committed to improving the overall fiscal
responsibility, accountability, and efficiency of its operations. The
Economy Subcommittee of the Judicial Conference's Budget Committee
coordinates the efforts of the various program committees of the
conference in developing and implementing economy and efficiency
initiatives. The Economy Subcommittee receives staff support from
throughout the AO and together they perform a function within the
judiciary similar to the Office of Management and Budget's role in the
Executive Branch. The impact of this team effort is showcased in the
``Report to Congress on the Optimal Utilization of Judicial
Resources.'' The Economy Subcommittee and the AO not only spearheaded
the production of the report, but were responsible for many of the
efficiencies it tallies.
Millions of Dollars Saved
I am very proud of the accomplishments identified in the Optimal
Utilization report. They have saved the federal government millions of
dollars and improved the judiciary's service to the public. Good
examples of the economy measures implemented by the judiciary with the
help of the AO are: assigning visiting judges to provide short-term
assistance as needed; developing and updating staffing formulas for
distributing court staff resources in a way that is consistent with the
workload; developing criteria for consideration by the Judicial
Conference for the release of visiting courtroom facilities and other
types of space; providing increased flexibility in personnel and budget
systems that enables the courts to maximize use of scarce resources by
contracting out for goods and services when it is cost-effective;
identifying and promoting use of additional contract opportunities by
the courts; establishing centralized, automated paperwork processing
systems for the courts such as the Bankruptcy Noticing Center and the
Central Violations Bureau; improving the terms of the judiciary's
computerized legal research contract; and facilitating the Methods
Analysis program which scrutinizes the courts' work processes in order
to make recommendations on improvements.
Future Economies Planned by the AO
But the AO is not going to rest on its laurels. As the Optimal
Utilization report indicates, the AO continues to plan for future
economies. Some of the most exciting efforts have already been
mentioned, such as expanding the use of videoconferencing and
implementing the electronic courtroom. Other promising areas are:
developing criteria for consideration by the Judicial Conference for
not filling vacant judgeships or even eliminating judgeships in
district courts; developing a national incentive program to encourage
the courts to manage space costs more effectively; containing the cost
of death penalty representations by encouraging courts to maintain
minimum average caseload-per-attorney ratios, improving record-keeping,
and applying case management techniques used in complex civil
litigation; and assessing the recommendations of the National Academy
of Public Administration on possible ways to make court administrative
functions more efficient.
The AO looks forward to working with Congress and the courts on
streamlining operations and saving money as the overall federal budget
continues to shrink and the courts' workload continues to expand. That
is the AO's mission and we are excited about the challenge.
summary
Mr. Chairman and members of the subcommittee, you have been very
generous in your funding for the courts in the past and very patient in
listening to our needs for fiscal year 1998. Although I know you face
competing demands from many worthy programs, I ask for careful
consideration of the judiciary's needs and those of the Administrative
Office. Few government functions are as basic to individual rights or
as important to society in total as the federal courts. The nation
relies on the federal courts to administer equal justice under the law.
The courts, in turn, rely on the AO for support in carrying out their
mission in the best, most efficient way possible.
That concludes my prepared statement. I would be pleased to answer
any questions you may have.
______
Prepared Statement of Hon. Rya W. Zobel, Director, Federal Judicial
Center
Mr. Chairman and members of the subcommittee: My name is Rya Zobel.
I am a U.S. district judge and have been the director of the Federal
Judicial Center since 1995.
The Center is the federal courts' agency for education of judges
and supporting staff and for analysis and evaluation of judicial
procedures and case management. This appropriations request has been
endorsed by the Center's Board--the Chief Justice as chairman, two
circuit, three district, one bankruptcy and one magistrate judge, and
the director of the Administrative Office as an ex officio member. It
has been coordinated with the Administrative Office and the U.S.
Sentencing Commission and with the Judicial Conference's Budget
Committee, whose chairman, Judge Heyburn, will speak for the Center
today. I am available to answer any questions you may have of me.
For 1998, the Center respectfully requests an appropriation of
$18,425,000, 5.3 percent over our current appropriation. The amount
requested is about the same as our 1994 appropriation and $500,000 less
than was available to us in 1992.
The requested increase covers two things. First is $630,000 for
adjustments to our base for inflation and increased pay and benefits
costs. Second is $300,000 in program growth for recurring costs of
equipment to enhance our distance education capability and for two
video producers and one multimedia specialist. This will help us keep
pace with the demand for videotapes for initial orientation and local
training programs while producing more satellite broadcasts and
computer-based training. Of this requested program growth, $100,000 is
for equipment in our research and development budget activity, but, as
our budget request explains, this equipment is for distance education
technology in direct support of our training mission.
Even if we add these three positions, the Center's staffing
strength will be almost 10 percent below what it was in 1995, when I
became director.
I hope you will consider this information as you assess our
request.
Reducing travel costs.--More than 80 percent of participants in
Center training programs attend in their home cities using Center-
produced curriculum packages, on-line computer conferences, satellite
broadcasts, and videoconferences. There are also many individual users
of Center videotapes, manuals, diskettes, and CD-ROM's. We have reduced
our travel expenditures since 1995 by more than 22 percent ($1.2
million). We intend to reduce them an additional $200,000 in fiscal
1998 and have calculated those reductions into our estimate of overall
increased program needs.
Teletraining.--We plan eight satellite broadcasts in 1997. In 1996
we presented two national satellite broadcasts--one for judges and
others on the 1996 Habeas Reform Act, another for appellate staff
attorneys--and a two-way videoconference for appellate deputy clerks.
Two 1996 developments will increase use of satellite technology over
the next few years.
--Equipping federal courts with satellite downlinks.--Without
downlinks in the courts, we must rent sites across the country
and even then cannot reach many court locations. Last summer we
assessed the feasibility of, and the courts' receptivity to,
placing downlinks in courthouses. I am grateful that the
Judicial Conference's Executive Committee, on the
recommendation of the Administrative Office, set aside funds to
place downlinks in sufficient courts to reach most judiciary
personnel. That installation will begin soon.
--Adding a second broadcast studio.--We adjusted our fiscal 1996
spending to begin construction of a second video studio, this
one dedicated to satellite and two-way video programs. We
received financial support from the Sentencing Commission and
we are working with the Administrative Office on building
renovations. This second studio will augment our ability to
broadcast educational programs and to assist the Administrative
Office and the Sentencing Commission in similar efforts. As the
Chief Justice recently said, ``Center expertise in
videoproduction and curriculum design will enable the entire
third branch to make good use of this form of communication and
education.''
Results-oriented education and analysis.--Over 98 percent of our
appropriated funds for judicial education are devoted to orientation of
new judges and basic continuing legal education for all judges,
including updates on legislation and case law, techniques for court and
case management, and basic substantive knowledge and skills that all
judges need to process cases more efficiently and avoid costly delays
and reversals.
For example, to help implement last April's Prisoner Litigation
Reform Act and Habeas Reform Act, the Center provided judges and staff
not only two satellite seminars but also a Resource Guide for Managing
Prisoner Civil Rights Litigation and a newsletter Habeas & Prisoner
Litigation Case Law Update, which reports cases under the statutes.
These products came from our pro se litigation and capital-case
management projects already in place. The Center's most popular
publication with judges is the ``Manual on Recurring Problems in
Criminal Trials,'' now in its fourth edition (the Justice Department
also makes this publication available electronically to its attorneys,
and numerous defense counsels have sought it either in hard copy or
from our Internet site).
The outcomes of our programs are more efficient and more effective
courts. The sums cited in the following examples are fairly small but
amount to real savings when aggregated. As important, they demonstrate
a commitment to use new knowledge to promote efficiency in court
operations.
--Since 1995, the Center's ``Maximizing Productivity Project'' has
helped managers in 60 court units to make more effective use of
staff, refine work processes, and expand the use of automation.
For example, a bankruptcy clerk's office credited the project
with enabling it to use savings from staff salaries to
refurbish key equipment and automation hardware, and, over
three years, to release $600,000 for use by other courts.
(However, not all bankruptcy courts have this court's high
proportion of Chapter 7 cases, which are more amenable to
automation and thus allow these savings.) A probation-pretrial
services office reorganized its staff to reduce clerical
personnel and increase by 16 percent the number of officers for
presentence investigation and supervision of offenders.
--A before-and-after comparison of juror utilization in the five
districts that participated in our most recent utilization
workshop shows a savings of $360,000 in juror fees and a
reduction of 5,615 in the number of jurors called into the
courthouse unnecessarily.
--Our ``Leadership Development Project'' is a three-year course of
mainly in-district training, workplace analysis, and
implementation of management improvements. In one district, a
probation officer instituted a program by which offenders help
pay for costs of their counseling, drug tests, and related
services, at an expected savings of $68,700 in the first year
in which this plan is fully operational.
--Probation officers will use the Center's ``risk prediction index''
to identify offenders who need less supervision than others.
Based on the index, one large district will be able to shift
enough offenders to non-reporting/administrative status to
allow up to fifteen officers to concentrate on more dangerous
offenders.
--Selected probation and pretrial services officers participate in
FJC ``System Impact Seminars,'' selecting tracks such as
substance abuse or financial investigation, to learn techniques
that they in turn adapt for particular problems in their
districts--a ``system impact.''
Clarification of Center's mission.--The Center's Board has launched
a strategic planning process to assess whether we are assigning the
right priorities to our many statutory missions in this era of tightly
restricted funding. This process has involved consultation with the
users of our services and will make for a stronger agency. The
committee, comprising the judges on the Center Board and a member of
the Judicial Conference Executive Committee, will report to the
Center's full Board later this year.
I thank the subcommittee again for its support. I will be glad to
answer any questions you might have about our fiscal 1998 request or
about the Center and its missions.
______
Prepared Statement of Gregory W. Carman, Chief Judge, U.S. Court of
International Trade
Mr. Chairman, Members of the Committee: The Court's budget request
for fiscal year 1998 is $11,478,000, which is $364,000 or approximately
three percent more than the $11,114,000 provided for in fiscal year
1997.
The overall increase of $364,000 consists of ``Mandatory
Adjustments to Base and Built-in-Changes'' as follows: $302,000 is
requested for pay and benefit cost adjustments for judicial officers
and court personnel; $12,000 is requested for other mandatory changes,
including increases in postage and printing; $20,000 is requested for
inflationary adjustments for lawbooks; and $30,000 is requested for GSA
space rental increases.
I would like to emphasize that the Court will continue, as it has
in the past, to conserve its financial resources through sound and
prudent personnel and fiscal management practices.
The Court's ``General Statement and Information'' and
``Justification of Changes'', which provide more detailed descriptions
of each line item adjustment, have been submitted previously. If the
Committee requires any additional information, we will be pleased to
submit it.
______
Prepared Statement of Glenn L. Archer, Jr., Chief Judge, U.S. Court of
Appeals for the Federal Circuit
Mr. Chairman, I am pleased to submit my statement to the Committee
for the fiscal year 1998 budget estimate.
The amount of our 1998 budget request totals $16,156,000. This is
an increase of $1,143,000 over the 1997 appropriation of $15,013,000.
$599,000 of the increase is for mandatory, uncontrollable increases in
costs. The remaining increase of $544,000 is for funding for additional
positions.
Partial funding for third in-chambers law clerk.--The court is
requesting the additional positions to begin providing third law clerks
to the judges. The Judges of this court now have two permanent in-
chambers law clerks (compared to three or four for all other circuit
judges). The third law clerk is needed because of the complexity of the
court's caseload and because all merits decisions are handled in
chambers without assistance from a central legal staff. Although the
court has asked for 10 full-time-equivalent positions in prior years,
this funding request is for five full-time-equivalent law clerk
positions. We have reduced our request this year to five positions
because of the current budget restraints and the desire of Congress to
reduce the deficit. I ask the Committee to approve this court's long-
standing need by authorizing the reduced funding requested.
Funding for information technology positions.--Also included in
this requested increase of $544,000 is funding for staff positions
which are needed because of the increasing use of computers and
computer-related services. The increasing use of computer technology by
the Judges and the central staff contributes to the efficiency of the
court's operations, but a trained staff is needed to install and
maintain the more sophisticated and productive computers and related
equipment and systems, as well as to keep up with changes in
technology, and offer long range planning for the court's future
technology needs. Thus, I request funding for these staff positions,
the full time equivalent of three positions in the clerk's office, and
one position in the administrative services office.
Mandatory Increases
As stated above, our fiscal year 1998 increases in mandatory items,
over which the court has no control, total $599,000. As described in
our budget materials, these mandatory increases result primarily from
inflation and pay increases.
Program Changes and Requests
Personnel Requests--Additional Law Clerks
The sum of $360,000 is requested for the third law clerk positions.
This would cover an increase of five full time equivalent law clerk
positions. This does not provide a third law clerk for each of the
twelve active Judges. However, it would allow the court to hire five
additional law clerks on a permanent basis. The base budget of this
circuit currently provides for two law clerks and one secretary in each
chambers, which is one law clerk and one secretary (or additional law
clerk) less than the Judicial Conference of the United States has
authorized for active judges in all of the other circuits.
The third law clerk positions for all twelve Judges of this court
have previously been included in our budget requests for a 1993
supplemental appropriation and in the court's appropriation requests in
1994, 1995, 1996 and 1997. This long-standing need, however, has been
denied by Congress without explanation.
One additional in-chambers law clerk for each active Judge of this
court has become a necessity because of the increased complexity of our
cases, such as patent infringement cases which often have a large
number of difficult issues and because of the additional subject
jurisdiction which the Congress has given to this court, such as review
of Veterans' cases and the appellate jurisdiction under the recently
enacted Congressional Accountability Act of 1995 and the Presidential
and Executive Office Accountability Act of 1996. During the past few
years, the court has hired temporary third law clerks for Judges by
using lapsed funds from a vacant judgeship and from vacant staff
positions which we decided were not as urgently needed as the
additional in-chambers law clerks. As to the latter, we have, for
example, delayed implementing our settlement program and deferred
hiring three non-legal support staff. The additional, though temporary,
help of the in-chambers law clerks has enabled the court to moderate
the rise in median disposition time for cases, which is now about eight
months, and to prevent a serious backlog of undecided cases.
The court has a great need to have the temporary third law clerk
positions made permanent and funded. We anticipate the appointment of a
Judge to fill the current vacancy before the end of fiscal year 1997.
Once the court has a full complement of Judges, the lapsed funds from a
judicial vacancy will no longer be available to hire such clerks on a
temporary basis. Further, with only temporary positions we are unable
to make a job offer to a potential law clerk at the normal time or to
guarantee any employment beyond the end of the fiscal year. These
hiring obstacles make it difficult for Judges to hire the best
qualified law clerks.
Personnel Requests--Administrative Staff Positions
Clerk's Office.--The court requests funding for the equivalent of
three additional clerical positions for the Clerk's Office at a cost of
$131,000. There is now only one secretary in the Clerk's Office.
Another Secretary position is needed to assist the chief deputy clerk
and the operations manager and to insure that the secretarial functions
for the entire office, now exclusively provided by the secretary to the
Clerk, are available whenever required. A Systems Manager position is
needed because the complexity of the Clerk's database management system
has grown beyond the competence of the nontechnical staff to maintain
as extra duties. Two Deputy Clerk positions are needed, one position
for a calendar/deputy clerk to alleviate the calendar functions now
performed by the chief deputy clerk as an extra duty, and one position
for a records manager to develop a records management system now
required to keep pace with the large increase in the permanent records
which the court has accumulated since its creation in 1982 and which
must be maintained and preserved.
Administrative Services Office.--The Administrative Services Office
is responsible for the operations of the court, such as personnel,
payroll, coordinating and monitoring of the court's budget, printing
and distribution of opinions, maintenance of computers and all other
equipment, all purchasing for the court, coordination of building
maintenance with GSA, and the like. Because of the increased use of
computers by the Judges and staff of the court and the development of
e-mail communication, as well as a public bulletin board for
distribution of opinions, we find it necessary to request a Systems
Manager position at a cost of $53,000. We are currently provided with
only one systems staff member on a permanent basis and it is not
possible for this person to keep up with the daily requests and
problems throughout the court. With the demands for, and growing use
of, computers and computer-related services, we feel this request is
fully justified.
I will be glad, Mr. Chairman, to answer any questions the committee
may have or meet with Committee members or staff about our budget
requests.
Defender services
Senator Gregg. Thank you, Judge, and I appreciate your time
in coming here today. I know it's quite a trip.
I want to talk a little bit about the Public Defender
Program, because this is the place where we've seen the most
explosive increase in cost.
In fact, I was just looking at this chart that my staff
gave me which shows me that in 1986 we spent $59 million for
the Public Defender Program. By 1996, we had spent $305
million. Next year we're talking about going to $333 million.
And I think I saw a report, or maybe it was an anecdotal
statement made to me by somebody, that the attorneys for
McVeigh are expecting to charge the Government somewhere in the
vicinity of $50 million to defend that case, which I found
incomprehensible and outrageous.
I recall when I was a lawyer, which was a while ago, I had
a public defender case assigned to me by the Federal court, and
it was a fairly controversial, high-visibility public case in
New Hampshire involving a political issue and a criminal trial.
I defended this fellow as aggressively as I could, and ended up
reaching an agreement where there was no further prosecution.
And we used, as I recall at the time, about 22,000 dollars'
worth of billable time from my office. I ran a small country
practice.
I went to the Federal judge, and I asked for my $22,000
billable time. He gave me what was the going rate at that time,
which I think ended up being $1,000 or something, and simply
ignored my request for further funds on the basis of time.
It does appear, however, that the reimbursement process
here has gotten a bit out of control. I notice, for example, on
capital offenses, that the average cost for a capital offense--
granted, a capital offense is a major item and deserves to have
maybe more attention given, although I don't know if that is
defendable, but I guess it is perceived that way, anyway--the
average cost for a capital offense is $81,000. My entry
question is, Do you see any way of controlling these costs? Are
judges aggressively limiting public defender costs in a fair
way, obviously recognizing there has to be a Public Defender
Program, but recognizing also that this should not be a jar of
money into which a group of attorneys decide to stick their
hands.
What is the present structure now, and could it be
conceivable that the McVeigh case would generate that type of a
legal fee which the people of this country would have to pay?
Judge Heyburn. No. 1, you ask a number of excellent
questions, some of which I have excellent answers to, and some
of which I don't have answers to. And I'll try to be responsive
across the board, and then if there is something that you would
like to go into further, or you think I've missed, please tell
me, because it's not my intention to pass over something. It's
just a big subject, a subject I'm very interested in, and I
know you are as well. And we could spend a lot of time talking
about it, and I know we don't have a lot of time.
Let me respond by saying a couple of things. First of all,
the history of defender services is in part a success story of
management. We recognized some time ago, and I say we, the
judiciary, that defender services costs were increasing, and
traditionally these were supplied almost solely by panel
attorneys.
The costs of defender services from 1990 to 1991 and from
1991 to 1992 went up 35 and 38 percent respectively each year.
That's a lot. At about that time the decision was made that
defender services could be better provided and more efficiently
through public defender organizations.
The process of evolution started at that time. Since that
time, for the last 5 years, the cost of defender services
overall has increased approximately 7 to 8 percent per year.
We can see that the cost of defender services as a whole is
not going through the roof. We'd maybe like it to be less, but
it's not what it used to be.
I think, in part, that is because of the transition from
the provision of those services from panel attorneys to
defender organizations. Ten years ago, 60 to 70 percent of
defender services may have been provided by panel attorneys.
Now the percentage has almost flipped.
So we've made that transition. You make these decisions.
You never know what the impact is going to be. In retrospect
it's been a good one, because the per representation cost of
public defenders has been going up over the last 5 years about
2 or 3 percent--basically at the inflationary rate.
Capital cases
If you look at the numbers overall, where is the
significant increase, and you've highlighted it exactly. It is
in the capital cases. And the costs of panel attorney
representation over all has been going up 9 to 10 percent per
year, starkly different from that of the defender services.
The reason for that, again, relates to the capital cases.
What is happening is that the panel attorneys are no longer
getting the easy cases. The only time a panel attorney in those
districts where we have a defender organization, the only time
they get a case is when it's a multidefendant case, and the
defender organization can't, because of a conflict, represent
two defendants or three defendants. So the panel attorneys get
the more complicated cases, and they usually get the capital
cases. So it's not surprising that their per cost of
representation is increasing.
What is driving that is the point that you made, and that
is that the per cost of representation of capital cases has
sort of gone through the roof. Part of that is related to some
major cases, such as the Oklahoma City case. I'll discuss that
in a minute.
We have done an extensive study of trying to figure out why
the costs of capital cases are increasing so much more than any
other area. And if you look at defender services generally, if
you take out capital cases, the defender budget would basically
not be increasing a whole lot more than inflation.
So we've pretty much identified from the research I've
seen, and I've spent a lot of time on it, the reason why it's
increasing. And we've tried to determine, well, why is the cost
of the capital cases increasing so much.
And as best we can tell these are the possible answers, and
I can't tell you which is the greater influence. But you've got
a number of things going on here. You've got a whole lot of
people involved in the process who are inexperienced at what
they're doing.
The U.S. attorneys haven't, heretofore, been bringing a lot
of capital cases, so they devote an incredible amount of
resources to them, and they are inexperienced at doing it,
because up until 3 or 4 years ago they weren't bringing any.
The people who are defending may be inexperienced, and they
try to match in some equivalent form--although probably not
completely--whatever resources they perceive are being put into
the prosecution, which are tremendous.
The other part of the troika is the judges. And we have
tremendous Federal judges, but the fact of the matter is, we
have, unless you've been a State judge, no experience in a
capital case. And we can't discount that as a factor in the
management of the cases. We are not experienced at it.
And so you have three groups of inexperienced people trying
these very complicated and high stakes cases and part of the
result is inefficiencies. Time and expense because of
inexperience that wouldn't result otherwise in your every day
drug case, where we all know what the rules of evidence are,
and we've done it a lot of times.
So that drives up the cost. The total cost on capital cases
is being driven up by two factors. In pure numbers, several
years ago there were one or two capital cases. Now, this year,
there are about 150 defendants. So by sheer numbers the cost of
defense of capital cases is going up. That's something we
absolutely can't control.
The other factor that is driving up the per cost of
representation is that the cases that exist now as a matrix
tend to be more mature. There are more of them going to trial
this year than there were last year. And, of course, this is
definitely true of the Oklahoma City case. When you get to
trial the intensity and the expense is going to be greater. So
if you factor that into the average, it's going to go up. So
all those factors are going to contribute to the increase in
costs, the increase in per representation cost.
What can we do about it? Part of it we can't control,
because the judges are not likely to get experience in doing
this. It's unlikely that many judges will ever try more than
one of these kinds of cases. The same may be true of the
prosecutors and the defense counsel.
Cost containment
From our point of view, what we can do, and what we are
trying to do is to make the judges aware, those who have these
kinds of cases, that there are resources--other judges who have
tried these kinds of cases, put them in contact with these
judges so that they can take steps to run the cases more
efficiently, and reduce expenses.
Quite frankly, another part of the problem is sometimes how
these cases are brought. There might be a multidefendant
indictment, and only one of the defendants has the death
penalty possibility. But if they are all tried together, then
all of the counsel who are representing the other defendants
are dragged into this lengthy and very complicated case.
So one possibility from a trial strategy point of view
would be thinking about severing a case like that, where you
normally wouldn't, in a normal drug case, but in this kind of
case, you wouldn't lose anything in terms of justice. It would
save a tremendous amount of expense for those who weren't
subject to the ultimate penalty.
So there are a number of different things that people have
thought up, most of them by judges after they made the mistake,
or after the fact, because they didn't have the experience to
deal with it ahead of time. So we're trying to bring that
experience to bear among the judges who are having these cases.
And, of course, we don't know what impact that will have.
Oklahoma City may be the case of the century and it may be
an aberration. Whether or not the defense costs are $50
million, I have no idea, and I really wouldn't want to comment
about those costs until we can see what they really are.
But there are tremendous resources being brought to bear in
the prosecution of that case, and one can only expect that
those defending would try to match it in some way, shape, or
form, although I'm sure they won't.
And we all have a concern about that, but I think it's best
that we wait until it's over, and then we can assess it, see if
we can learn anything from it. It may be like the O.J. Simpson
trial, that there's not necessarily anything that we can learn
from it, because we hope a similar case will never happen
again. It really is an aberration.
Senator Gregg. The difference, of course, is that in the
O.J. Simpson trial it wasn't the American taxpayer who was
footing the bill for defense.
Judge Heyburn. That's true.
Senator Gregg. And I think it's very hard to explain to the
taxpayer how those types of dollars--let's say it's one-tenth
of that, let's say it's $5 million--and I have no idea what the
number is. But I guess my concern is that there doesn't appear
to be restraints in place that would make it clear to an
attorney in that type of a case that they don't have a
bottomless pit, that they don't have a blank check from the
taxpayers of this country in this area.
I don't see where there's a loss of a person's right to
adequate defense if he has an inexperienced attorney who
charges $500 an hour versus a public defender who knows how to
try a case who charges public defense fees. And why shouldn't
the attorneys charging $500 an hour in the private sector be
required to be reimbursed at the public defender rate?
Judge Heyburn. I don't think those lawyers are charging
$500 an hour.
Senator Gregg. To what extent do we limit their
reimbursement?
Judge Heyburn. Those reimbursements are limited in a number
of ways. The hourly rate is limited by statute to $125 an hour.
So if Congress in its wisdom would choose to reduce that----
Senator Gregg. Is there an upper limit on the amount of
hours that could be charged?
Judge Heyburn. No; the way that is limited is that every
request for payment or reimbursement is reviewed by the judge
in the case. And, indeed, sometimes prior to any particular
action taking place there may be a review. And that is a
process that most judges take seriously, and it's obviously a
process which varies, depending on the case and the
circumstances.
The only way we can look at a particular situation and make
a judgment about whether the expenses were appropriate or not
is, unfortunately, or fortunately, after the fact.
And this is a very unusual case. I would urge everyone to
resist the temptation to speculate about whether the funds
being used are appropriate or inappropriate until the case is
over and we know what the result is, and can fully look at how
the moneys were spent. There may be some things which have been
in the press which are true, and some which are untrue.
Capital case cost information
Senator Gregg. Well, I think what would be helpful is if
$81,000 is the average cost of a criminal capital prosecution,
and there were 83 cases in 1996-97, if you could give this
committee, or if your crack staff, which we know is very
effective, could get this committee those cases which exceeded
the average, how much was spent, so we could get a sense of
whether or not there are some cases where they are running up
huge bills.
And then we would be interested in ideas on if there is
action that needs to be taken legislatively in this area, to
try to control this explosive cost in capital case prosecution
area, what they are, what your recommendations are that the
legislation should do.
Judge Heyburn. We would be glad to do that. I think we are
on the same side of this issue, because we have a lot of judges
out there who are required to make very difficult judgments.
They approve all of these payments, and having done it myself
we have a process of approving all these. I know how difficult
it can be when you are attempting to be fair and at the same
time trying to avoid a waste of time and money in a trial. But
we'd be glad to get you that information, and maybe there are
some conclusions we can draw from it.
[The information follows:]
As of March 31, 1997, there have been nine cases with 13
defendants in which the defendant was tried, convicted, and
sentenced to death in federal court. Of these 13 defendants,
defense counsel was provided by government-paid private (panel)
attorneys in eight instances. Counsel for four defendants was
provided by either a federal defender or a retained attorney.
One defendant's counsel was provided by both a panel attorney
and a federal defender. The amount the federal government paid
for the legal defense in the trial of each of the eight
defendants using panel attorneys, including attorney's fees,
experts, and related expenses, ranged from $144,013 to
$426,114, with the average costs totaling $284,123. Costs
exceeded the average for three of these eight defendants.
The Judiciary has undertaken several initiatives to try to
control costs in federal capital prosecutions. We believe
administrative, rather than legislative approaches are the more
appropriate way to address this issue.
The Defender Services Committee of the Judicial Conference
of the United States has initiated, and is continuing to
examine, ways to contain the cost of defense representation in
capital cases, such as: case budgeting; enhanced training of
judges and attorneys; employment of case-management techniques
currently used in complex civil litigation; and improvements in
panel attorney voucher reviews. In addition, shortly after the
hearing, the Committee established a Subcommittee on Federal
Death Penalty Cases to examine the availability, quality, and
compensation of appointed counsel in federal capital
prosecutions. The Subcommittee, chaired by Judge James R.
Spencer of the Eastern District of Virginia, will submit a
written report, including recommendations for providing cost-
effective representation in this area, to the Defender Services
Committee in May 1998.
Senator Gregg. Well, I would think there would be. It would
just seem to me that there has to be some upper limit here.
Attorneys who are defending these cases should understand that
this is not a carte blanche, that there is an upper limit.
Maybe it's four times the average, or something. But there has
got to be some sort of limit, so that we just simply don't
spend a dramatic amount of money on specific cases. You can
still get justice. It's not an issue, I think, of justice.
Videoconferencing
What about the electronics area? I know you're always
taking a look at this. Are there areas of videoconferencing, or
utilizing the explosion in electronic capability to
communicate, that could reduce the cost of operating the court
system, such as reducing the access to courts of TV and things
like that?
Judge Heyburn. The greatest savings we've seen so far are
in the educational programs, and educational programs by
videoconferencing, where we're able to draw a number of judges,
but particularly staff and clerical people into educational
programs without travel.
But a number of the other courts under the leadership of
the Administrative Office are experimenting with
videoconferencing. A number of bankruptcy courts are doing
this. In prisoner litigation, it's proved to be very effective
in certain circumstances, where you can have a videoconference
from a prison, or for a pretrial conference with judges and
lawyers.
And this has proved not only economical from the judges and
the defense counsel's point of view--often you have State
lawyers representing the prison--but also from a security point
of view where you don't have to move the prisoners around, or
you don't have to have judges traveling into prisons.
We also have had a number--the second circuit court of
appeals, as a matter of fact, is experimenting with
videoconferencing of appellate arguments. So there's a lot of
experimentation going on, and where appropriate we are trying
to implement those technologies.
The difficulty is that unless you have a sufficient volume
of a particular kind of proceeding from particular places to
another stated place, then the expense of the equipment and
everything doesn't justify whatever savings there are.
So we're trying to find where it can be appropriately and
efficiently used. And we're working at it hard, and we've found
some areas where it seems to be very effective.
Cost-of-living adjustment
Senator Gregg. Well, on the pay raise issue, as you know, I
agree with your concerns. I think keeping quality people in the
judiciary is critical and you've got to pay them a fair salary,
especially people who have children, who are raising families.
But, unfortunately, you're linked to the Congress on this
issue, so I don't have a resolution of it. I sympathize with
your position.
Judge Heyburn. Well, I'm glad to have your sympathy, and
you have mine, I suppose. But, of course, one solution is the
delinking of the two. There are some reasons why it would be
appropriate to delink. We are an independent branch. Congress
naturally has political concerns and other concerns that don't
necessarily apply to the judiciary.
My immediate suggestion would be the possibility of
delinking the two. We think Congress needs a pay raise, too,
and we would like to have both of us get a pay raise. Because
to a certain extent it's getting to the point where the failure
to give a pay raise to the judiciary is holding down career
employees of the entire Government. If it's not already, it
will shortly.
This is not something new. I was just reading the
Federalist Papers, concerning arguments about whether the
President's salary should be capped, or the judiciary salary
should be capped, and Alexander Hamilton very aptly said the
control over a man's substance amounts to the control over his
will.
We've not quite gotten to that point with regard to the
judiciary's salaries. But the point is well made, and they were
discussing whether or not the Constitution should have a cap on
judicial or executive salaries. And Hamilton made the point
that the judiciary is different from the executive branch, and
that from time to time it will appear that a salary which was
previously adequate would at a point in time appear to be
inadequate.
I believe that all the evidence--there's a broader
philosophical----
Senator Gregg. Well, I think the point is that if we're
going to get good people in the judiciary, we're in competition
with the marketplace that pays 2, 3, 4, 5, 10 times what they
are being paid.
You can get people in the judiciary--we're getting good
people, still--but you can also get people who maybe couldn't
make as much out in the private sector, and those aren't the
folks you want. You want the people who could make two or three
times, but they've got to have a livable wage. And they have to
have something that doesn't make the sacrifice too great.
Judge Heyburn. You're exactly right. If you're in it for
the money, the judiciary, of course, is the wrong place to be.
But another telling comparison, and, of course, every
locality is difficult--it may not be quite true in Washington
yet--but you go to California, Chicago, LA and you will find
fourth or fifth year associates--these are people who are 27,
28 years old--making as much as or more than U.S. district
judges and court of appeals judges.
And that is a sobering fact, indeed, for those of us who
are on the judiciary. We love our jobs, and I'm not at this
point prepared to trade places with a fourth or fifth year
associate. But the comparison is something.
Senator Gregg. I think the concern is very legitimate, and
we'll see what we can do about it. It's an issue that is beyond
this capacity to probably address dramatically.
Thank you very much. We appreciate your time.
subcommittee recess
Judge Heyburn. Thank you. We very much appreciate the
capable and expert assistance of your staff. And our staff has
worked well with them, to answer a number of questions that
came up prior to this hearing, and we really appreciate their
efforts.
Senator Gregg. The same is true of yours.
Judge Heyburn. Thank you, sir.
Senator Gregg. Thank you. The hearing is concluded.
[Whereupon, at 2:21 p.m., Thursday, April 17, the
subcommittee was recessed, to reconvene subject to the call of
the Chair.]
DEPARTMENTS OF COMMERCE, JUSTICE, AND STATE, THE JUDICIARY, AND RELATED
AGENCIES APPROPRIATIONS FOR FISCAL YEAR 1998
----------
THURSDAY, APRIL 24, 1997
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 1:59 p.m., in room S-146, the
Capitol, Hon. Judd Gregg (chairman) presiding.
Present: Senators Gregg, Stevens, Campbell, Hollings,
Bumpers, Lautenberg, and Mikulski.
Also present: Senator Faircloth.
DEPARTMENT OF COMMERCE
National Oceanic and Atmospheric Administration
STATEMENT OF D. JAMES BAKER, UNDER SECRETARY, OCEANS
AND ATMOSPHERE
ACCOMPANIED BY ANDREW MOXAM, DEPUTY CHIEF FINANCIAL OFFICER, CHIEF
ADMINISTRATIVE OFFICER
opening remarks
Senator Gregg. We will get started then and does anybody
have any opening statements they wish to make?
[No response.]
Senator Gregg. If not, then we will proceed right to
testimony. We thank you very much, Dr. Baker, for being here
today and obviously are interested in knowing what is going on
in NOAA and your giving us your thoughts and inputs on how we
should approach the budget.
fiscal year 1998 NOAA budget review
Dr. Baker. Thank you, Mr. Chairman and members of the
subcommittee. We appreciate the opportunity to testify on the
NOAA 1998 request. NOAA's budget requests the resources
necessary to maintain essential services, to facilitate
continuing progress in some critical investment areas, and to
address its statutory obligations.
NOAA provides the United States with the most advanced
weather and climate prediction system in the world and provides
the scientific base for managing natural resources and solving
environmental problems. Its comprehensive system for acquiring
observations from satellites to ships to radars provides the
quality data and information that are critical to the safe
conduct of daily life and basic functioning of a modern
competitive economy.
The total 1998 NOAA request is $2.1 billion in new budget
authority. The request is a net increase of about $78 million
over the 1997 enacted level. Of this total, $1.5 billion are in
the ``Operations, research and facilities'' account and about
$500 million are in the new ``Capital assets acquisitions''
account and $7 million are for fisheries funds and other
special accounts.
NOAA's budget is allocated according to strategic plan
elements. The first of these is advancing short-term warnings
and forecasts. During this past year, the Nation continued to
experience the benefits of Weather Service modernization. NOAA
installed an additional 19 Nexrad radars, 28 automated surface
observing stations, and 13 automated weather interactive
processing systems, while four new weather forecast office
facilities were built or leased.
The NESDIS launch of NOAA's satellite, GOES-K, which will
be designated GOES-10 once it is in orbit, was delayed from
this morning until tomorrow morning. Once it is launched, it
will provide an on-orbit spare so that we can prevent the one
GOES situation that NOAA had a few years ago. All of these
improvements in the Weather Service can be directly attributed
to saving lives and reducing the effects of natural disasters.
With these new technologies, NOAA issued numerous warnings
this past year with lead times of tornadoes in excess of 15
minutes. The spring outlook issued by the Weather Service for
North Dakota forecast recordbreaking floods for the Red River.
The fact is that even the Weather Service predictions for flood
levels have been shown to be low only emphasizes the severity
of this event. There was no data available that could have
predicted this 1,000-year flood event.
The losses suffered in these States would have been much
worse without the technologies and the people behind them. The
data provided by the Weather Service and its cooperative
efforts with FEMA, the U.S. Geological Survey, and the Army
Corps of Engineers highlight the continuing need for NOAA to
maintain the necessary level for Weather Service base
operations, which is reflected in its $10.8 million request for
a base restoration for this effort.
NOAA was required in 1997 to reduce Weather Service
staffing and of the 272 incumbered positions required to be
reduced on October 1 only 132 remain. Taking into account the
reprogramming recently submitted by the Secretary, 12 of these
encumbered positions will not be affected this year. The
remaining 120 will be eliminated by the use of a RIF, 41
reassignments and 57 buyouts and 10 retirements.
NOAA requested about $1.2 billion to address this strategic
element, an increase of about $40 million over the 1997
enacted. This element represents the largest portion of NOAA,
more than one-half of its activity. The satellite estimates
within this request will be updated shortly and the revised
numbers will be provided.
There is a good news story in that the polar satellites
continue to far exceed their expected lifetimes. We have been
recently informed by NASA that they are reducing their internal
requirement for forward funding. After reviewing the NASA
requirements in the context of our programs, NOAA believes that
the proper level of forward funding should be 2 months rather
than 3 months and this saves some funding for all of us.
The second of NOAA's strategic plan elements is
implementing the El Nino forecasts. NOAA's goal here is to
introduce an operational program for systematic production of
regionally accurate climate forecasts, critically important for
agriculture. In 1996, NOAA developed and implemented an
improved version of the coupled forecast model resulting in
skill improvements for the entire record. NOAA requested about
$115 million to address this strategic goal.
Our third strategic element under assessment is predicting
and assessing decadal to centennial change, and long-term
global change. NOAA's goal is to provide accurate measurements
of the changing environment and to develop the science and
science-based options that are necessary for policy decisions.
To accomplish this effort NOAA is requesting a total of about
$91 million.
The final element of our plan under the environmental
assessment and prediction goal is to promote safe navigation.
NOAA appreciates that over the past several years this
committee has been very supportive of its nautical charting
capabilities. As you know, 90 percent of the cargo that comes
into the country comes through the Nation's ports. NOAA
requests $85 million to address this strategic element, a net
decrease of $7 million from 1997, which represents its proposal
to transfer aeronautical charting over to the Department of
Transportation. It does represent an increase of about $7
million in the base mapping and charting functions that we
have.
The NOAA ship, Ronald H. Brown, will be commissioned on
July 19 at its home port in Charleston. With its advanced
meteorological and scientific systems, it is a unique vessel in
the U.S. oceanographic fleet in its ability to conduct both
atmospheric and oceanographic research in support of NOAA's
environmental assessment and prediction goal. NOAA will be
offering part of this ship for use by the university community.
The first of the strategic elements under NOAA's
environmental stewardship goal is to build sustainable
fisheries. NOAA continues to make progress toward rebuilding
and maintaining the health of U.S. fisheries. Successful
efforts in this element will add billions of dollars to the
economy over the next 10 years. NOAA requests $332 million to
address this element, a net increase of about $5 million over
1997.
The second of NOAA's stewardship plan elements is to
recover protected species which is concerned with the
conservation of the Nation's living marine resources. We
request about $70 million to address this strategic element.
The third strategic element under stewardship is sustained
healthy coasts, which focuses on improving our understanding of
the way coastal ecosystems function, coupled with an ability to
predict responses of ecosystems to human activities and to take
appropriate action. In August 1996, President Clinton announced
a bold new initiative challenging the Federal Government and
the States and the Congress to protect all communities from
toxic pollution. NOAA has a key role in this interagency
initiative that is designed to make coastal waters safe and
clean for all Americans by the year 2000. NOAA is an important
participant in the President's clean water initiative designed
to protect all communities from pollution that is threatening
their waters. Building on existing programs within the National
Ocean Service, the initiative will utilize the coastal zone
management program, will expand our coastal monitoring
activities, as well as develop state-of-the-art monitoring
technologies at the University of New Hampshire program. This
past year we have increased the pace of coastal habitat
restoration with 50 projects benefiting 40,000 acres in
partnership with Federal, State, and local agencies. We request
about $212 million to address this strategic goal.
Mr. Chairman, before I conclude, I would like to state that
NOAA recognizes that we have had problems in the past with
responding to congressional inquiries, report requests, and
providing written answers to questions in a prompt manner. I
want to assure you that I take this problem very seriously and
we have instigated several steps to assure that you receive
requested material as quickly as we can provide it.
prepared statement
In conclusion, Mr. Chairman, may I say that every day in
some way every person in the United States uses the services
that are provided by NOAA. We welcome the coming discussion on
our goals, priorities, and operations with Congress, our
constituents, and the public.
Thank you.
[The statement follows:]
Prepared Statement of Dr. D. James Baker
introduction
Thank you, Mr. Chairman, and members of the Subcommittee, for this
opportunity to testify on the President's fiscal year 1998 Budget
Request of the National Oceanic and Atmospheric Administration (NOAA).
As America moves into the 21st century, our domestic security and
global competitiveness will depend on the types of capabilities,
services and products delivered by NOAA. I would like to address how
this proposed budget maintains an appropriate balance among the
environmental assessment and prediction, and environmental stewardship,
needs of the nation. I am accompanied today by Terry Garcia, Acting
Assistant Secretary for Oceans and Atmosphere; Diana H. Josephson,
Deputy Under Secretary; and Joseph Kammerer, Chief Financial Officer/
Chief Administrative Officer. Also, NOAA's Assistant Administrators and
Office Directors are present.
noaa role: doing what's needed
NOAA's fiscal year 1998 budget continues to reflect this
Administration's commitment to meeting the challenges facing America by
putting to good and efficient use technology and information, to insure
the continued security, prosperity, and vitality of our Nation. NOAA
has applied cutting-edge technologies and innovations to provide the
U.S. with the most advanced weather and climate prediction systems in
the world. NOAA conducts research to improve operations, develop new
technologies, and supply the scientific basis for managing natural
resources and solving environmental problems. NOAA's comprehensive
system for acquiring observations--from satellites to ships to radars--
provides the quality data and information critical to the safe conduct
of daily life and basic functioning of a modern economy.
The fiscal year 1998 NOAA budget represents the right level of
investment to protect the environment and assure economic growth.
Investment in our Nation's and the world's environmental health is an
investment in economic well-being. NOAA plays a key role in a
Department whose structure encourages the integration of economic,
statistical and environmental information and technology development to
assure a future of economic opportunity and prosperity for all
Americans.
The mission of the National Oceanic and Atmospheric Administration
(NOAA) is to describe and predict changes in the Earth's environment,
and conserve and manage the Nation's coastal and marine resources to
ensure sustainable economic opportunities. This mission involves basic
responsibilities of government for ensuring general public safety,
national security and environmental well-being, and promoting economic
growth. The successful execution of this mission depends on adequate
funding for, and synergy among component activities of NOAA. Common end
products and services include weather warnings and forecasts,
environmental technologies, marine fisheries statistics and
regulations, nautical charts, assessments of environmental changes, and
hazardous materials response information. These capabilities, products
and services support the domestic security and global competitiveness
of the United States, and affect the lives of nearly every citizen
every day.
In a period of strongly competing government priorities, the
President's fiscal year 1998 Budget Request for NOAA affirms the
agency's role by providing the resources to maintain essential
services, facilitate continuing progress in critical investment areas,
and address statutory obligations. This proposed budget ensures an
appropriate balance among the environmental assessment, prediction and
stewardship needs of the Nation.
NOAA's services typically require highly concentrated investments
but yield widely dispersed benefits. These services affect the lives of
nearly every citizen every day, thus NOAA's work represents a wise and
appropriate investment by the taxpayer.
NOAA's strategic planning process defines and validates its
business activities, guides the development of operating plans, and
forms the basis for management decisions. The Strategic Plan provides
the framework for articulating and organizing the agency's goals and
work objectives. NOAA's goals for the future will enhance opportunities
for our citizens, the health of the U.S. economy, the protection of our
environment, and the sustainable use of our national resources.
The challenge of investing strategically in the Nations future is
accompanied by the requirement to be more effective, to identify and
realize opportunities for savings and to focus the efforts of
Government on what matters to people. Performance is what counts, and
the fiscal year 1998 budget includes measures which track results to
the level of investment. Success in this changing world increasingly
will depend on partnerships with business and industry, universities,
state and local governments, and international parties. NOAA will
continue to develop partnerships to leverage resources and talent, and
provide the means for meeting program requirements more effectively.
NOAA has made the Government Performance and Results Act (GPRA)
operational following strong participation as a pilot agency. During
the pilot period, NOAA was selected by the Office of Management and
Budget as one of ten exemplars and was commended by the GPRA review
panel of the National Association of Public Administration (NAPA).
Currently, NOAA is working with the General Accounting Office to
identify best practices for Federal agencies to follow, contributing to
National Performance Review (NPR) performance measurement benchmarking
studies, and assisting the Department of Commerce with developing a DOC
Strategic Plan for submission to OMB by September, 1997. NOAA views the
GPRA as a management tool to facilitate decision-making. NOAA has
integrated performance measures into its planning, budgeting, and
management review cycles, and is designing a program evaluation process
to measure agency-wide progress toward meeting goals.
highlights of the fiscal year 1998 budget
The total fiscal year 1998 NOAA request is $2.1 billion in new
budget authority. The request is a net increase of $78.5 million over
the fiscal year 1997 enacted level. Of this total, $1,540.8 million are
in the Operations, Research and Facilities (ORF) account, $503.5
million are in a new Capital Assets Acquisition account, and $6.9
million are for fisheries funds and other special accounts.
NOAA's budget is predicated on the need to ensure the continued
delivery of essential science, technology and services to the Nation.
Highlights of the request are presented, as follows, in the context of
the NOAA Strategic Plan and with an emphasis on the major operational
units and programs contributing to the strategic goals. The Strategic
Plan establishes the seven major goals of the agency, and guides the
most effective combined application of the entire suite of agency
assets for attaining these goals, which are grouped into two missions,
Environmental Stewardship, and Environmental Assessment and Prediction.
Resources for program administration, acquisition of data, aircraft
services, and supporting infrastructure are included in the total
request for each strategic goal.
account structure changes
The fiscal year 1998 President's Budget contains a number of
proposed changes to the NOAA account structure. First, is the
establishment of a Capital Assets Acquisition account which will seek
multi-year appropriations for capital projects contained formerly in
the Operations Research and Facilities account, Construction account
and Fleet Modernization, Shipbuilding and Conversion account. In
addition, NOAA proposes to eliminate the Fleet Modernization,
Shipbuilding and Conversion and Construction accounts and incorporate
the projects not requested in the Capital Assets Acquisition account
into two new activities: Facilities and Fleet Maintenance and Planning
within the Operation, Research and Facilities account.
The NOAA budget request includes transfers of $66.4 million from
the Department of Agriculture to the Promote and Develop Fishery
Products and Research Pertaining to American Fisheries account and $5.2
million from the Department of Interior to the Damage Assessment and
Restoration Revolving Fund.
NOAA also proposes to change the Fishing Vessel Obligation
Guarantee account to the Fisheries Finance, Program account. This
proposed change is the result of a recent amendment to the Magnuson-
Stevens Fishery Conservation and Management Act that changed the
program from a loan guarantee program to a direct loan program. This
program includes accounts for loans previously awarded as loan
guarantees and the new direct loans.
The budget also proposes an increase in the financing from the
deobligation of prior year recoveries to $24 million to reflect
anticipated one time major contract savings of $10 million. The fiscal
year 1998 request reflects scoring of the spending authority for the
Coastal Zone Management Fund (CZMF) as discretionary budget authority.
environmental assessment and prediction
Advancing Short-Term Warning and Forecast Services to provide
significantly improved short-term warning and forecast products and
services that enhance public safety and the economic productivity of
the Nation.
NOAA requests $1,178.4 million to address this strategic goal, a
net increase of $39 million over fiscal year 1997. The objectives are
to: complete weather service modernization; maintain operational
satellite coverage; strengthen observing and prediction systems; and
improve customer service to the public.
These objectives will be accomplished primarily through the efforts
of the National Weather Service (NWS), the National Environmental
Satellite, Data and Information Service (NESDIS) and the Office of
Oceanic and Atmospheric Research (OAR).
For the NWS, the request includes: $438 million, a net decrease of
$8.1 million from 1997, to support the current operational and research
infrastructure and continue planned streamlining activities under the
modernization, including the critical restoration of funding for NWS
base operations of $10.8 million; and $191.6 million for major systems
acquisition supporting the modernization, a net increase of $14.4
million. Within the total amount for systems acquisition, the request
includes $116.9 million for continued deployment of the Advanced
Weather Interactive Processing System (AWIPS), an increase of $16.9
million over 1997.
For NESDIS, $372.1 million is needed to ensure continuous GOES and
Polar-orbiting satellite coverage. Of this amount, $51.5 million is
required to meet NOAA's commitment to share development costs with the
Department of Defense for the National Polar-orbiting Operational
Environmental Satellite System. While this represents an increase of
$22.5 million over the 1997 enacted, this program continues to account
for government-wide savings in excess of $1 billion over the life of
the program and remains a major success story of the National
Performance Review. In addition, $51.4 million is requested for the
continuation of Environmental Observing Services and the portion of
Data and Information Services included within this goal.
For OAR, a total of $49.6 million is requested to advance the
science of weather forecasting over land, sea and space, and to improve
weather-related observing technologies, a decrease of $2.4 million from
1997.
The scientific and capital investment required for the
modernization of weather services including radars and satellites,
advanced computer models and communications systems, and field
restructuring is paying off with lives saved, property damages avoided,
and impacts mitigated for weather-sensitive sectors of the economy.
During 1996, NWS forecasters issued numerous tornado warnings with lead
times in excess of 15 minutes, reducing the loss of life. During
Hurricane Fran, warnings were issued 31 hours before the storm made
landfall; flood potential statements were issued two to three days in
advance as the storm headed north; and six hours of advance notice were
provided for flash flooding. In January of 1996, the NWS issued three-
to five-day advance forecasts of the east coast blizzard, prompting
emergency authorities to significantly enhance response preparations
and airlines to move their air fleets from affected regions. These
results show that improved warning and forecast services are enhancing
public safety and the economic productivity of the Nation. Once
modernization is completed, the Nation should realize annual benefits
to the economy of some $7 billion.
Implementing Seasonal to Interannual Climate Forecasts to increase
society's ability to mitigate economic losses and social disruption by
working together with academic and multinational partners, in order to
issue monthly and seasonal probability outlooks for temperature and
rainfall for up to a year in advance.
NOAA requests $115.3 million to address this strategic goal, a net
increase of $3.1 million over fiscal year 1997. The objectives are to:
deliver useful climate forecasts and information; enhance observing and
data systems providing input to model predictions; invest in process
and modeling research leading to improved predictions; and assess the
impacts of climate variability on human activity and economic
potential.
These objectives will be accomplished primarily through the efforts
of the NOAA Climate and Global Change Program, the OAR Environmental
Research Laboratories (ERL's), NESDIS, and the NWS National Centers for
Environmental Prediction.
For OAR, the request provides $66.8 million to: develop operational
El Nino-Southern Oscillation (ENSO) observations, including an increase
of $4.9 million over 1997 to ensure an operating base for the Tropical
Oceans-Global Atmosphere (TOGA) system and reflect the maintenance
responsibilities from NOAA's Climate and Global Change program. Funding
will also be used to improve dynamical seasonal prediction activities
at the National Centers for Environmental Prediction, including
automating the production of climate forecasts and delivering forecast
and monitoring products; support the International Research Institute
for climate prediction; improve climate modeling over North America;
and assess socio-economic impacts.
For NESDIS, $37.2 million is needed for observing and data systems
and data management requirements including the National Climatic Data
Center, for improvements to the satellite active archive, and for
linking NESDIS data centers and other NOAA centers of data via a
virtual data system. In addition, $2.8 million is requested for the
National Ocean Service (NOS) to maintain and improve observing and data
delivery systems that support climate forecasting requirements, and
$4.7 million is requested for the NWS to provide operational climate
predictions and analyses under central forecast guidance, and update
products on delivery systems.
Emerging capabilities to forecast climate are the result of federal
investments in basic research, development and deployment of global
observing and data systems, and the transition of research findings to
operational needs. Climate services will be as important to 21st
century economies and societies as weather forecasting is today, and
the future capacity to deliver uniform climate information will
continue to depend strongly on federal support for process and modeling
research, and for the collection of global data needed to initialize
and validate climate models. For example, the insurance industry has
become increasingly vocal in its support of the essential science
underlying climate prediction, due to the tremendous economic impact of
weather related natural disasters. According to the Worldwatch
Institute's 1996 State of the World report, since 1990, insurance
providers worldwide have paid out $48 billion for weather-related
losses, compared with losses of $14 billion for the entire decade of
the 1980's.
Predict and Assess Decadal to Centennial Changes in the global
environment, specifically for: climate change and greenhouse warming;
ozone layer depletion; and air quality improvement.
NOAA requests $90.6 million to address this strategic goal, a net
increase of $3.2 million over fiscal year 1997. The objectives are to:
characterize the agents and processes that force climate change;
examine the role of the ocean in influencing change; ensure a long-term
climate record; guide the rehabilitation of the ozone layer; provide
the scientific basis for improved air quality by understanding and
monitoring surface ozone; and develop predictive models scientific
assessments, and human impacts information related to long-term change.
These objectives will be accomplished largely through the efforts
of the NOAA Climate and Global Change Program and OAR. In OAR, the
request includes: $28.7 million for climate and global change research
an increase of $1.9 million; $7 million for the Global Learning and
Observations to Benefit the Environment (GLOBE) Program, an increase of
$1 million over 1997; $25.9 million for long-term climate and air
quality research, including an increase of $1 million for NOAA's health
of the atmosphere initiative in preparation for the Nation's first
scientific air quality assessment; $1.5 million for advanced computing
support; and $7.7 million for improving our understanding of the role
of oceans in influencing climate change. In addition, $3.2 million is
requested in NESDIS for data and information services supporting the
long-term climate record; and $8.2 million is needed in the NWS to
continue to provide temperature, precipitation, evaporation and river
stage data for climatic and hydrologic monitoring and services.
In collaboration with university, government and international
partners, NOAA provides the measurements, research, models, predictions
and assessments that form the scientific basis for understanding global
change phenomena. For over three decades of long-term monitoring, NOAA
has produced incontestable evidence that carbon dioxide is increasing
in the atmosphere. NOAA also has documented a decrease in tropospheric
levels of ozone-depleting chemicals, a first-time observation that
demonstrates the emerging effectiveness of the Montreal Protocol. Late
in 1995, the U.N. Intergovernmental Panel on Climate Change (IPCC)
released findings indicating that temperature may increase 1 to 3.5
degrees Celsius, and sea level may rise 15 to 95 centimeters, by the
year 2100. These global trends will affect both natural processes and
human systems, including agriculture, energy, and the worldwide
transmission of diseases. NOAA played a lead role in developing the
scientific assessments upon which the IPCC report was based. Decisions
on actions to mitigate anticipated changes on the order of decades to
centuries will never receive domestic and international backing unless
they are supported by sound science. NOAA continues to work to provide
leadership and science-based information for these types of decisions,
focusing on climate change and greenhouse warming, ozone layer
depletion, and air quality improvement.
Promote Safe Navigation by building, maintaining, and delivering a
digital nautical charting database which integrates satellite
positioning, tidal heights and currents, radars and sonars, and
navigational aids.
NOAA requests $84.7 million to address this strategic goal, a net
decrease of $7.2 million from fiscal year 1997. The objectives are to:
deliver a digital nautical charting database to underpin new electronic
navigational systems; update nautical surveys using full-bottom
coverage technologies; install systems to provide mariners with real-
time observations and forecasts of water levels, tides and currents,
and weather conditions in major ports; transform the obsolete geodetic
reference frame into a Global Positioning System-based system; and
provide for the two-year transition of aeronautical charting to the
Federal Aviation Administration (FAA).
These objectives will be accomplished largely through NOS's
mapping, charting and geodesy, and observation and prediction
subactivities. NOS is requesting $25 million to deliver digital
nautical charting databases, including the production of raster
nautical charts; $11.8 million to update nautical surveys; $23.2
million to acquire oceanographic and hydrographic data and to make
available marine predictions and advanced oceanographic observations
important to pilots and port authorities and; $19.2 million to provide
a national spatial reference system that utilizes the Global
Positioning System (GPS) for navigation and positioning.
This request also reflects a $14.5 million decrease for the first
stage of a two-year transfer of the aeronautical charting program to
the Department of Transportation. In fiscal year 1998, the funds will
be transferred but the program's employees will remain in NOAA and
would continue the processing and delivery of aeronautical information
on a reimbursable basis. In fiscal year 1999, the employees will also
be transferred and NOAA's involvement with the program will end.
Finally, NOAA is requesting $12.6 million to replace funds formerly
received from the National Imaging and Mapping Agency (NIMA, formerly
the Defense Mapping Agency, DMA). This increase will result in the
entire compilation cost of the nautical charts being included in NOAA's
budget.
Sea-going commerce has tripled in the last 50 years, and 98 percent
of our international trade by weight moves through U.S. ports. Fifty
percent of the total tonnage is oil or other hazardous material.
Despite the risk that accompanies increasing traffic, and the
competitive advantage of modern observations and systems, much of the
Nation's charting and geodetic infrastructure is not up to world
standards. Accurate charts and modern navigation systems are required
for safe and efficient maritime transport. NOAA collects, processes and
distributes such information in support of national, commercial and
individual needs. NOAA is working to modernize U.S. marine and air
navigation, mapping and surveying, and to provide a precise satellite-
derived reference system as the basis for the Nation's 21st century
positioning needs. For example, during 1996, NOAA's NOS produced 235
new editions of nautical charts and 14,682 new aeronautical charts and
associated products; acquired and processed data from 50 hydrographic
surveys and two airborne laser surveys; reduced the data-to-chart time
from years to six months by implementing a ``just-in-time'' delivery
system for applying new hydrographic data to nautical chart editions;
and installed 153 Federal Base Network stations, and 47 continuously
operating reference stations, that will form the basic positional
framework for the Nation's future spatial data infrastructure.
environmental stewardship
Build Sustainable Fisheries to greatly increase, over the next
decade, the Nation's wealth and quality of life through sustainable
fisheries that support fishing industry jobs, safe and wholesome foods,
and recreational opportunities.
NOAA requests $332 million to address this strategic goal, a net
increase of $5.1 million over fiscal year 1997. The objectives are to:
assess the status of fishery resources; advance fishery predictions;
manage for economic growth by developing plans for reducing excessive
fishing and capital investment; ensure adequate compliance with fishery
regulations; and provide research and services for fishery-dependent
industries to maximize benefits from marine resources.
These objectives will be accomplished primarily through the efforts
of the National Marine Fisheries Service (NMFS), OAR and NOAA's Coastal
Ocean Program (COP). For NMFS, the request is $256.3 million (this
includes $19.4 million for Acquisition of Data previously funded in the
Marine Services subactivity), a net increase of $7.6 million over 1997
to: collect, evaluate and disseminate fisheries data including
developing strategies for bycatch reduction; conduct conservation and
management operations including funding of Regional Fishery Management
Councils for developing and amending fishery management plans; execute
provisions of the recently-passed Magnuson-Stevens Fishery Conservation
and Management Act including providing for new national standards and
implementing essential fish habitat requirements; improve at-sea and
shoreside compliance; and provide grants and other assistance for
fisheries development programs. NOAA also requests an increase of $23
million to address new facilities needs, including the replacement of
the Tiburon, California fisheries laboratory at Santa Cruz, and to
maintain existing laboratories. For OAR, funding of $23.5 million in
the Sea Grant Program, National Undersea Research Program (NURP), and
marine prediction research subactivities is needed to: improve
technologies for tracking and estimating aquatic biomass; advance
aquaculture and economic growth initiatives; apply new computing
techniques; and provide for other research activities including in-situ
undersea research. For COP, $7.4 million is requested to strengthen
abilities to assess and predict natural and human-induced changes and
their impact on fisheries health.
There is a strong consensus among lawmakers, fishery managers, the
fishing industry and the public, that depleted fishery resources must
be restored and healthy fisheries must be maintained and managed for
greater efficiency. Of the fishery stock groups under the purview of
NOAA for which population status is known, 36 percent are overutilized.
Even fisheries that are producing a large catch are doing so with
unnecessary cost and waste. Well-managed fisheries produce significant
and continuous benefits, such as the $1 billion Alaskan groundfish
fishery. Controlled access measures implemented in the $180 million
Alaskan halibut/sablefish fishery have resulted in reduced accidents
and property loss, increased economic value of the resource, and
reduced bycatch. Since 1994, NOAA has increased the number of fishery
management plans with access controls implemented by 41 percent. NOAA
estimates that restoring fisheries will have a potential $25 billion
total positive impact on the national economy.
NOAA is providing the federal leadership and support to make this
happen. Accurate and timely resource assessments are being used to
guide management decisions. NMFS, the Coastal Ocean Program, the
National Sea Grant College Program, OAR's Environmental Technology
Laboratory, and other parts of NOAA, are conducting research to advance
fishery predictions, reduce costs of conventional stock assessments,
develop advanced remote sensing techniques, improve fishery habitat and
mitigate harmful algal blooms. The recently reauthorized Magnuson-
Stevens Fishery Conservation and Management Act (MSFCMA) strengthens
the ability of NMFS and the eight Regional Fisheries Management
Councils to apply the results of research in adopting management
measures that will ensure sustainable fisheries for the Nation.
Enforcement is carried out to ensure compliance with regulations, and
NOAA is working with state and international partners to develop
policies for managing fisheries that occupy multiple geo-political
zones. In addition, NOAA continues to design and implement harvest
capacity reduction programs, and programs to provide fishermen with
economic and technical support during stock rebuilding efforts.
Recover Protected Species to conserve marine species and to recover
those in danger of extinction. By 2005, NOAA will be on the road to
recovering every marine species at risk and maintaining the healthy
marine ecosystems upon which they depend.
NOAA requests $69.7 million to address this strategic goal, a net
increase of $7 million over fiscal year 1997.
The objectives are to: assess the status of, and impacts to,
protected species; and develop and implement conservation and recovery
plans for depleted marine mammals and endangered and threatened
species.
These objectives will be accomplished primarily through the efforts
of NMFS. The request includes: $37.8 million for status reviews and
stock assessments; and $25.8 million, an increase of $7.6 million over
1997, for developing recovery, conservation and take reduction plans
for the management of protected and depleted species. The majority of
the requested increase will ensure that NMFS can address major
responsibilities for responding to currently listed and proposed for
listing West Coast salmon and steelhead species under the Endangered
Species Act (ESA). Increases are also requested to expand recovery
actions for endangered Kemp's ridley turtles, strengthen Atlantic right
whale recovery efforts, and establish cooperative conservation program
agreements under the ESA with additional states, including Alaska,
California and Washington.
The existence of the Marine Mammal Protection Act, the Endangered
Species Act and other legislation provide a clear indication of public
support for strong efforts to conserve living marine resources. The
desired outcome of this effort is to recover species in danger of
extinction in a manner compatible with the sustainable use of marine
resources. During 1996, NMFS initiated four marine mammal take
reduction plans and updated fifty marine mammal stock assessments,
strengthened turtle excluder device requirements and increased
cooperation with Mexico to maximize hatchling production of turtles,
and conducted hundreds of ESA Sec. 7 and Sec. 10 consultations. These
and other accomplishments have improved the status of species while
minimizing the impact of conservation measures on economic and social
activities.
Sustain Healthy Coasts in order to maintain the health,
productivity, and biodiversity of the Nation's coastal ecosystems.
NOAA requests $212.2 million to address this strategic goal, a net
increase of $18.7 million over fiscal year 1997. The objectives are to:
protect, conserve and restore coastal habitats and their biodiversity;
promote clean coastal waters to sustain living marine resources and
ensure safe recreation, healthy seafood and economic vitality; and
foster well-planned and revitalized coastal communities that sustain
coastal economies, are compatible with the natural environment, and
minimize the risks from natural hazards.
These objectives will be accomplished primarily through the efforts
of NOS, COP, OAR, NMFS and NESDIS. For NOS, the request includes $128.4
million, an increase of $26.5 million over 1997 for: pollution
response, damage assessment and restoration needs; estuarine and
coastal monitoring and assessment activities; support for estuarine
reserves and marine sanctuaries; conduct of NOAA's Coastal Zone
Management program; and NOAA's continuing work in interagency
environmental initiatives, including the President's Clean Water
Initiative and continued restoration of the South Florida ecosystem.
NOAA is an important participant in the President's Clean Water
Initiative which is designed to protect all communities from pollution
threatening their waters. Building on existing programs in Coastal and
Great Lakes, the initiative will utilize the Coastal Zone Management
Program; expand NOAA's Coastal Monitoring activities, as well as
develop new state of the monitoring technologies at the University of
New Hampshire program. For COP, $7.7 million is needed to support
regional-scale modeling and prediction of cumulative impacts of
multiple stressors on habitats and living marine resources.
For OAR, $37.7 million, a decrease of $7.1 million from 1997, is
requested for research, outreach and technology development through Sea
Grant, NURP and the ERL's on coastal issues such as: control and
prevention of nonindigenous species; monitoring, assessment and
restoration of degraded habitat and water quality; reduction of non-
point source pollution; fate of toxic chemicals; impacts of harmful
algal blooms; and community preparedness for coastal hazards including
hurricanes and oil spills.
For NMFS, the request includes $19.7 million for fisheries habitat
protection and restoration activities including providing technical
support for improving wetlands, and conducting permit reviews for
projects affecting living marine resources including licensing of dams.
Of the increase requested for NMFS in fiscal year 1998, much of the
effort in fiscal year 1998 will be focused on actions that contribute
to the recovery of endangered West Coast salmon and steelhead species.
In addition, $4.9 million is required in NESDIS for data and
information services related to improving the understanding of coastal
functions and for ocean remote sensing.
Maintaining the health, productivity and biodiversity of coastal
ecosystems is essential to the sustainable development of coastal
economies and the future welfare of the Nation. This goal addresses the
practical needs and concerns of resource managers, as well as
strengthening the watershed and regional management frameworks provided
by state Coastal Zone Management programs. This is an enormous
challenge considering that well over half of the U.S. population lives
on the 10 percent of land defined as coastal. Coastal concerns require
integrated solutions because problems transcend state and natural
boundaries. Successful management of these biologically, geographically
and economically complex areas depends strongly on federal guidance and
collaboration, such as with the unveiling of the final management plan
for the Florida Keys National Marine Sanctuary and the conditional
approval of 27 of 29 states coastal non-point pollution programs,
during 1996.
In addition to activities stressing planning, prevention and
sustainable use, NOAA provides monitoring and rapid response
capabilities to limit harm to ecosystems affected by human
intervention. During 1996, NOAA completed the first Nationwide
assessment of the spatial extent of toxic contaminants in sediments and
bivalves in coastal waters, documented the magnitude and extent of
contaminants in heavily contaminated Boston Harbor, and provided
technical and scientific assistance to the Coast Guard at 70 oil and
chemical spills.
reducing costs and improving effectiveness
In an environment of tightening dollars and increasingly complex
challenges, NOAA is reducing costs and improving program effectiveness.
NOAA is saving money through streamlining personnel and processes,
outsourcing where appropriate, and leveraging external resources and
talent. NOAA holds managers accountable for results, and for using
performance measures to validate progress. The highest priority
continues to be to ensure that critical services are provided well.
committee on environment and natural resources
Through the National Science and Technology Council's (NSTC)
Committee on Environment and Natural Resources (CENR), NOAA works with
other federal agencies and non-governmental experts to design and
prioritize the government's environment and natural resources research
and development agenda. This interagency planning and coordination
ensures the effective application of available resources.
The NSTC has identified Improving Environmental Quality as one of
its six goals. Improving environmental quality requires supporting a
broad and comprehensive research agenda, including: (1) observing,
documenting, understanding, assessing and predicting environmental
change and its consequences; (2) using natural resources in a
sustainable manner; (3) understanding and preserving biodiversity; and
(4) developing analytical tools that integrate social, economic and
natural sciences to support policy formulation. NOAA's fisheries and
protected species programs are embodied in this priority area of
concern.
Agencies are expected to continue strong support of a number of
ongoing interagency programs and initiatives that are priorities for
fiscal year 1998, and in which NOAA will participate. These include:
The U.S. Global Change Research Program, with increased emphasis on
consequences of changes on humans and ecosystems, particularly at
regional levels; The North American Research Strategy for Tropospheric
Ozone; National Environmental Monitoring and Research Initiatives;
Natural disaster reduction (including the Hazard Information and Loss
Reduction Initiative), with enhanced international cooperation in
science and technology to reduce the damage to communities caused by
natural disasters through improved monitoring, mitigation and response;
Environmental technologies, with an emphasis on energy efficiency R&D
and lowering carbon dioxide emissions; Endocrine disrupter research,
focusing on understanding how low concentrations of chemicals can
affect the growth and reproduction of living marine mammals; and NOAA
R&D as the systematic study to gain knowledge or understanding
necessary to determine the means by which a recognized and specific
need may be met.
``national performance review'' and streamlining
In an effort to create a government that works better and costs
less, NOAA is reinventing itself by achieving the goals outlined in the
National Performance Review (NPR). Weather Service modernization, begun
well before the NPR, is re-invention in the making. Owing to the range
and effectiveness of new technologies, the NWS is realigning its field
structure to reduce the number of offices from over 300 to 119. A
National Institute of Standards and Technology study shows that every
dollar spent on weather service modernization buys eight dollars in
benefits for the taxpayers. The scientific and technological basis for
this modernization has been provided by NOAA's own research and
development capabilities, which now are being applied to maximize the
benefits from the new systems. As a result, the U.S. now enjoys the
most modern and efficient weather service in the world. A brief status
of other NOAA NPR initiatives follows:
Streamlining personnel and processes.--By 1999, NOAA plans to have
reduced its workforce by 14 percent from 1993 levels. This will require
the elimination of 2,061 full-time equivalents (FTE's) through phased
annual reductions in the NOAA Streamlining Plan. NOAA proposes in
fiscal year 1998 to begin to transfer to the Department of
Transportation (DOT) the production of aeronautical charts. In fiscal
year 1998, NOAA would operate the aeronautical charting program on a
fully reimbursable basis, with the entire program, including FTE's,
being fully transferred to DOT in fiscal year 1999. NOAA has simplified
administrative processes, delegated authorities downward, and made
progress toward implementing the Commerce Administrative Management
System, which will greatly improve financial management and
accountability.
Converging satellites.--NOAA is working with the Department of
Defense to merge civilian and defense weather satellites. NOAA and DOD
recently agreed to defer the need for the first satellite in the
system. A comprehensive program evaluation, which will include a
thorough review of current cost estimates, program content, and
acquisition status, will be conducted in the spring of 1997.
Disestablishing the NOAA Corps.--The fiscal year 1998 budget
request calls for the disestablishment of the NOAA Corps. The Corps,
which is a uniformed service, has been downsized significantly in the
last two years and pursuant to the Department's fiscal year 1997
appropriations act, will be reduced in size to not more than 299
officers by September 30, 1997. The disestablishment legislation is
expected to propose that essential NOAA functions be continued through
the use of civilian employees. The fiscal year 1998 budget includes an
increase of $6 million over 1997 to fund costs associated with the
proposed disestabishment.
Closing NWS field offices.--The NWS expects the Secretary of
Commerce to be in a position to certify ``no degradation of service''
in order to automate and/or close over 100 weather service offices in
fiscal year 1997, under the current provisions of Public Law 102-567,
the law governing weather service modernization. In order to expedite
closure of about 200 NWS field offices, NOAA continues to propose
amending Public Law 102-567. The proposed amendments will streamline
certification provisions related to the restructuring and closure of
weather service offices without compromising the quality of the review.
The fiscal year 1998 budget includes $3.1 million in savings from
streamlining activities.
Privatizing specialized weather services.--NOAA continues to
encourage development of the private weather industry. NOAA has
privatized specialized weather services including agriculture, fruit
frost, fire weather for non-Federal non-wildfire land management, and
specialized event forecasts. The on-going NWS modernization, resulting
in new and expanded data sets, will support continuing opportunities
for private companies to provide weather services.
Expanding private sector ship support.--NOAA is expanding the use
of private contractors and cooperative arrangements with universities
for ship support, and collecting information to assess private sector
interest, capability and costs for meeting requirements. NOAA has
completed contracts for hydrographic surveys, and will continue this
effort during fiscal year 1997 with $6 million in dedicated funding.
The National Ocean Service plans to award contracts in fiscal year 1997
for surveys in the Gulf of Mexico to acquire hydrographic data for area
approaches to Texas and Louisiana ports. These contracts should include
a second year option. Additional smaller contracts are also planned.
NOAA is also expanding the use of private sector contractors for data
compilation and management services to improve the capability to
prepare survey data for application to nautical charts.
Transforming seafood inspection.--The National Performance Review
and the Administration's fiscal year 1998 budget request identifies the
Seafood Inspection Program as one of nine organizations government-wide
which, through legislation, will be converted into a performance-based
organization (PBO). PBO's are discrete units of a department that will
operate in a more business-like manner to better serve the needs of its
customers while retaining its status as a Federal entity. Once
designated, the PBO would be headed by a competitively hired Chief
Operating Officer whose continued service would depend on successful
achievement of performance goals. The PBO would remain a Federal
entity.
Improving fisheries management.--In cooperation with the fishing
industry, NOAA will implement access controls for 25 of 39 Fishery
Management Plans by the end of fiscal year 1997. Under new legislative
authorities in the Magnuson-Stevens Act, NOAA will work with
stakeholders to establish user fees for individual fishing quotas in
certain Alaskan fisheries.
Streamlining regulations.--NOAA is revising and streamlining 70
parts of the Code of Federal Regulations and eliminating 400 pages.
This will reduce the reporting burden on the public, and reduce by 27
percent the reporting burden hours of the National Marine Fisheries
Service.
benefits of partnership
NOAA builds partnerships with universities; international, federal,
state and local entities; industries and businesses; and groups and
individuals to address common needs and leverage resources. For
example, the Fishery Management Councils and the Interstate Marine
Fishery Commissions are examples of innovative partnerships bringing
resource managers and fishing interests to the same table to address
concerns. International leadership and collaboration helps to ensure
the conservation of living marine resources, especially straddling fish
stocks and endangered marine species. NOAA continues to work with local
communities to formulate and oversee policies and programs to address
fishery resource disasters in the Pacific Northwest, the Northeast, and
the Gulf of Mexico. Lastly, NOAA provides technical assistance and
financial support for the development and implementation of state
coastal zone management plans through a unique state-federal
partnership with coastal states.
NOAA depends strongly on universities to help accomplish science
objectives in its mission areas. NOAA and university scientists
collaborate on severe weather, climate, and fisheries research via a
network of Joint and Cooperative Institutes at universities. NOAA also
funds academic researchers through competitive, peer-reviewed programs,
including the Climate and Global Change Program, Coastal Ocean Program,
the National Estuarine Research Reserve System, the National Sea Grant
College Program, the National Undersea Research Program, the
Saltonstall-Kennedy grants program, and the Cooperative Program for
Operational Meteorology Education and Training. NOAA has established a
NOAA-University partnership to enhance collaboration with universities,
and will host a series of workshops during 1997 with a broad range of
both academic and other constituents to provide for constituent input
and feedback into NOAA's strategic planning and budget formulation
process.
Weather and climate services are provided to the public and
industry through a unique partnership between the NWS and the private
meteorological sector. The NWS provides forecasts and warnings for
public safety, and the private sector promotes dissemination of
forecasts and the tailoring of basic information for business uses.
NOAA generally is seeking to reduce the costs of environmental data
collection and to improve access to space-based and other environmental
monitoring technologies by utilizing existing federal and international
assets, and planning for the next generation of polar-orbiting
satellites.
conclusion
As I have discussed above, NOAA's fiscal year 1998 budget
represents the most cost effective means to promote the Nation's
environmental and economic advantage, while maintaining an appropriate
balance among the environmental assessment and prediction and
environmental stewardship needs of the Nation. We welcome the coming
discussions on our goals, priorities, and operations with the Congress,
our constituents and the public. We believe that our budget will be
well received by all these groups because our budget represents
appropriate levels of investment to generate major economic returns.
Every day, in some way, every person in the U.S. is affected by the
mission of NOAA. Our budget enables us to continue this service.
Thank you. If you have any questions, I am prepared to answer them
at this time.
______
Biographical Sketch of D. James Baker
Dr. D. James Baker is Administrator of the National Oceanic and
Atmospheric Administration (NOAA) and Under Secretary for Oceans and
Atmosphere at the U.S. Department of Commerce. In this position, he is
responsible for the National Weather Service; the National
Environmental Satellite, Data, and Information Service; the National
Marine Fisheries Service; the National Ocean Service; and NOAA's Office
of Oceanic and Atmospheric Research. He serves as the United States
Commissioner to the International Whaling Commission.
He also serves as the Co-Chairman of the Committee on Environment
and Natural Resources of the National Science and Technology Council
and as an ex-officio member of the President's Council on Sustainable
Development. He is Vice Chairman of the Space Committee of the Gore/
Chernomyrdin Commission and Vice Chairman of the Science and Technology
Committee of the U.S./South Africa Binational Commission. He is also
the Chairman of Coastal America, and he served as Acting Chairman of
the Council on Environmental Quality from November 1993 to February
1994.
He was previously President of Joint Oceanographic Institutions
Incorporated, Dean of the College of Ocean and Fishery Sciences at the
University of Washington, and on the faculties of Harvard University
and the University of Rhode Island.
He is author of the book ``Planet Earth--The View from Space,''
published by Harvard University Press in 1990, and he has written more
than 80 articles on climate, oceanography, and space technology issues.
He is a fellow of the American Meteorological Society and of the
American Association for the Advancement of Science. He has served on
numerous advisory committees for the Administration, the National
Academy of Sciences, and various international bodies.
East coast flounder and striped bass catch quota
Senator Gregg. Senator Faircloth has advised me he has an
opening statement he would like to make.
Do you wish to make an opening statement?
Senator Faircloth. Yes, I do, Mr. Chairman.
Dr. Baker, I have been trading letters back and forth with
Rollie Schmitten of the National Marine Fisheries Service about
the treatment of the data that is used to calculate the
flounder quota for the entire east coast. I do not know whether
you are familiar with this or not----
Dr. Baker. Yes, I am, Senator.
Senator Faircloth [continuing]. Or have worked on it. But,
Mr. Chairman, I am here today to speak about this because the
summer flounder spawning stock is at a record high, but the
quotas are at an all-time low. They caught much of the 1997
quota in 10 days. There is such a bountiful supply of fish.
There seems to be no correlation. The summer flounder catch in
North Carolina averaged 11 million, close to 12 million pounds
between 1976 and 1988. This was just North Carolina.
Your fisheries management plan went into effect in 1989.
You first said 7 million and now you have dropped it to 3
million pounds per year. Now, they literally catch this quota
in 10 days, there is such a bountiful supply of fish.
Of course, North Carolina has a major coastline and is a
big fishery State. So, just literally hundreds, hundreds of
fishing boats run out for 8 to 10 days, the season's over, back
in. I thoroughly believe that the summer flounder stock
assessment is seriously flawed. Now, Mr. Schmitten has been
cooperative, and he has met and talked, but nothing has
happened.
Also, the striped bass population on the east coast raises
quota issues in that the population is fully recovered. In
fact, there is even a question that the population of striped
bass has reached such a level that they are interfering with
the reproduction of other species, such as shad. Yet, there is
a very, very limited taking you are allowing. Of course, an
increasing amount of the seafood in this country is coming from
South America.
The President has requested a $25 million increase, Mr.
Chairman. This will benefit NMFS.
Mr. Chairman, I intend to oppose funding at the levels they
have suggested when the Commerce budget is addressed by the
Senate Appropriations Committee, unless someone can assure me
that NMFS has a plan to resolve the enormous gap between the
stock assessments for the quotas, what those people who are
supposed to know believe it is, and what your people are saying
it is.
I want to ensure that the quotas are reflective of the
growing stock for both flounder and bass. And in an effort to
promote this, you will get some technical questions. I would
like for you to respond to these questions prior to a full
committee markup. And you will be given them today.
I expect the markup will be probably in early June, but I
will get those questions to you and I would look forward to an
answer and a chance to discuss them with you. Mr. Chairman, I
thank you.
Senator Gregg. Thank you, Senator Faircloth.
Senator Mikulski.
prepared statement of Senator Mikulski
Senator Mikulski. Mr. Chairman, I have a opening statement
but I ask unanimous consent that it go into the record, please?
Senator Gregg. Without objection.
[The statement follows:]
Prepared Statement of Senator Barbara A. Mikulski
Thank you Mr. Chairman, I want to welcome Dr. Baker today
and I look forward to hearing his testimony.
Mr. Chairman, NOAA is one our most important federal
agencies. NOAA is responsible for predicting our weather,
protecting our oceans and coastal areas and promoting critical
scientific research in atmospheric and environmental science.
As the recent flooding in North Dakota has shown us,
accurate, reliable weather prediction is absolutely critical.
My own State of Maryland has experienced the destruction of
flooding and our thoughts and prayers are with the people of
North Dakota and the entire Upper Midwest.
Thanks in part to accurate weather predictions, there has
been minimal loss of life--directly related to storm and
hurricanes despite widespread damage to property. Early
warnings of hurricanes have minimized loss of life and provide
a critical window to allow communities time to prepare for
severe storms.
It's simple, NOAA saves lives.
We cannot allow NOAA's infrastructure to deteriorate. NOAA
and the National Weather Service must have state of the art
equipment and facilities to meet their mission and give all us
the best possible weather prediction capability.
But NOAA also helps understand the dynamics of weather
through studying the atmosphere. Understanding how our
atmosphere works is also critical to protecting lives and
property--the more we know, the better we can prepare. As this
nation continues to cope with non-stop natural disasters, we
need to know if this is a short term phenomena or part of a
long term change in our weather and atmosphere.
Because of this, I was disturbed when NOAA announced staff
reductions at the Hurricane and Storm Centers. However, I
understand NOAA has reconsidered its earlier decision and will
not cut the Hurricane and Storm centers. While I applaud this
decision, I am still disturbed about the reductions at NOAA's
Silver Spring office. I believe any personnel or budget cuts
must be fully justified, proportional and fair. No single
office or division should carry the burden for an entire
agency.
I note the important role NOAA plays in managing our
natural resources. In Maryland NOAA is a critical partner in
the Chesapeake Bay Program through their work on living
resources such as crabs, oysters and the Coastal Zone
Management Program.
Finding ways to bring back our oysters and crabs will help
bring back the jobs that have been lost. We need answers as to
why these living resources have been declining and we need a
plan to bring them back. Our Chesapeake Bay watermen depend on
it.
So, as you can see, Mr. Chairman, I am a big NOAA
supporter. NOAA saves lives, saves property, helps us
understand the world around us and brings back jobs in our
fishing and coastal communities. I look forward to working with
you.
National Hurricane Center staffing
Senator Mikulski. Mr. Chairman, I am delighted about the
fact that NOAA has its headquarters in the State of Maryland
and, of course, plays such an important role in our Nation. We
look forward to working with you on so many of the funding
issues. But one of the issues that really affects Maryland very
directly, Dr. Baker, is the proposed cuts to the Hurricane
Prediction Center. As you know, hurricanes have a devastating
effect on the Eastern Shore. Our constituents in Maryland,
Delaware, and Virginia are deeply concerned whether there will
be adequate hurricane warnings to them. The last 3 years we
have been hit by more hurricanes than in the previous 10.
My question to you, Dr. Baker, is what is the status of
adequate staffing for the Prediction Center; and No. 2, what
can you tell us will be available for the hurricane season?
Senator Sarbanes and I, of course, feel very strongly about
this and would like to work with you on this.
Dr. Baker. Would you like me to answer at this point?
Senator Mikulski. Yes.
Dr. Baker. Thank you, Senator Mikulski.
We share your concern that the Weather Service continue to
provide the public adequate warning and forecast services. This
is at the very top of our priorities. I have made the
modernization of the Weather Service my No. 1 priority since I
have been in NOAA which is since the beginning of the
administration.
This past year, we had to take a number of cuts, including
some congressionally mandated cuts, and I asked the Weather
Service to go back and find ways that they could do this
without jeopardizing their warning services. They had to take
some cuts in the Tropical Prediction Center [TPC], which
includes the hurricane center and some of our other centers.
None of those cuts were, in fact, involved with the severe
weather warning system.
However, there was a lot of public concern about reductions
to the TPC. We listened to that public concern and I talked to
Secretary Daley. Thanks to the fact that we were able to change
our forward-funding stream on satellites, we were able to
release some money in fiscal year 1997. Due to these available
funds, we have announced that we will not take those reductions
in personnel that we had originally proposed at the hurricane
center. We will not be able to fill some of the vacancies but
we will not be taking additional reductions in personnel. So,
the hurricane center will be at exactly the same level of
staffing this year as it was last year. And we will continue to
monitor its performance.
Senator Mikulski. So, we will have adequate staff and they
will continue to be a priority on the warnings necessary for
coastal protection and coastal evacuation, if necessary?
Dr. Baker. Absolutely.
Chesapeake Bay blue crab stock assessment
Senator Mikulski. The other is a question that I would like
to raise on species. I know our cousin from Carolina has raised
his concerns about flounder. I will be on the Eastern Shore
this weekend, actually on a fishing trip with some people I do
every year. Usually this time it is only blues that are
available, so, we will, even if I catch a striped bass they
will toss it back.
Senator Lautenberg. What size?
Senator Mikulski. Well, let us just say I hope it is big
enough for me to----
Senator Lautenberg. To be a keeper.
Senator Mikulski [continuing]. Well, small enough for me to
reel it in, big enough for me to brag about.
But one of the other species that we are deeply concerned
about is the Chesapeake Bay blue crab. And, as you know,
Governor Glendening and us are trying to do really a species
management plan. Crucial to this is the winter dredge survey
that NOAA does. We have been advised it is one of the most
important techniques that we can do about species prediction
and species management. There is rumor that NOAA intends to cut
the funding for the winter dredge survey because they do not
regard it as research. Whatever we call it, the winter dredge
survey is crucial to us. Could you tell us what your plans are
for the winter dredge survey and the blue crabs in the bay?
Dr. Baker. Let me ask the expert on that, Nancy Foster, who
is our Deputy Director of Fisheries.
Dr. Foster. I cannot specifically answer the question about
the winter dredge survey, but I can tell you that we have no
plans to cut any blue crab work in the bay.
Senator Mikulski. Well, I might say, Dr. Baker, that the
work of NOAA on the blue crab has been great. The winter dredge
survey, the Blue Crab Advisory Commission, and for us--the blue
crabs here sparked a book called ``Beautiful Swimmer''--but for
us, this is absolutely crucial to the jobs of the watermen
industry where those jobs are shrinking and we just do not want
an endangered species to be both the blue crab and the
watermen. So, we would like to work with you to make sure that
that tool is in place and we would like to thank you for it.
NOAA facility at Goddard Space Flight Center
The other question that I have goes to Earth observatory.
Mr. Chairman, you might be interested to know as the ranking
member on the committee that looks at NASA that one of the
crucial interagency cooperative agreements and arrangements has
been NOAA/NASA. You have talked about forward funding in some
of the satellites but I understand you want to move a facility
that you have in Suitland to Goddard. What is that all about?
Dr. Baker. Well, Senator, we have two very important
facilities in Suitland and in Camp Springs. One is the
headquarters of our satellite operations. The other one is our
National Meteorological Center where we do the basic forecasts,
the National Center for Environmental Prediction.
Senator Faircloth. What did you say?
Dr. Baker. One facility is in Camp Springs, MD, and the
other facility is in Suitland, MD.
Senator Faircloth. Thank you.
Dr. Baker. We have to vacate both of these buildings
because the lease is running out and the buildings are old.
They are really not going to be suitable after roughly the year
2000. So, we looked for a combination of things. The lowest
cost option for us to house these people and the best possible
synergy. And interestingly enough, because of the availability
of Federal land at the Goddard Space Flight Center in
Greenbelt, MD, we were able to find an arrangement that would
both be the lowest cost option for us to find a facility, and
to build synergy with NASA. We have worked very closely with
NASA on their Earth observing program and our operational
satellite program. We do a lot of joint things.
In fact, NASA, NOAA, and the Department of Defense are the
three partners in the converged meteorological system that is
saving the country over $1 billion over the life of that
program. By putting everybody together, we are going to have a
synergy of activity that will allow us both to do new things
but to find ways to eliminate waste and duplication. It is
going to be, I think, a very good way to move forward with the
Federal program.
Senator Gregg. So, it is staying in Maryland.
Senator Mikulski. Well, it is not only to that it is
staying in Maryland. But, Mr. Chairman, you know, sometimes I
have not always supported the fact that agencies are built in
Maryland if we do not think we are going to get value for it.
And there was some talk about moving EPA to Maryland. We felt
it should stay in the Nation's Capital.
Senator Gregg. Well, I think there was talk about moving
this to New Hampshire.
Senator Mikulski. For which I would think would have no
value. [Laughter.]
Senator Gregg. Nicer weather.
Senator Mikulski. But I think really what we are trying to
do, and I think the committee would find this interesting,
where there is already Federal ownership of land, rather than
buying land, let us get value for what we need in laboratory or
management space. FDA, we hope to put on a base that has been
closed at White Oak. And that, here, I know that the space is
dated and out of use. And there are many questions that we
would like to have on fisheries management, satellite and Earth
observatory, but I know that my colleagues have many questions.
So, we look forward to working with you. But, Mr. Chairman,
this agency, whether it is in Vermont or Maryland or New
Hampshire, is really one of our main interests.
Senator Gregg. Well, it is not going to be in Vermont. They
do not even have a sea coast. But many think it is a good
agency.
Senator Mikulski. That has not stopped the Senator before.
Senator Gregg. Senator Faircloth, do you have any questions
relative to your situation? Did you want Dr. Baker to respond
to your opening statement in any way?
Senator Faircloth. No, no; unless he wants to. I would be
glad to hear it. I was going to ask a few questions but if he
has got a response I would be delighted to hear it.
Fisheries stock assessment accuracy
Dr. Baker. Well, Senator, I just want to tell you we take
this problem very seriously. The whole issue of accurate stock
assessment is one that is very important to us. And I recognize
your concern there and we will get back to you with answers on
all of that. And I want you to know that we will work very
closely with you on this.
Senator Faircloth. Well, I thank you and I look forward to
it. You know, Senator Lautenberg, Senator Mikulski, all of
their fishermen are telling the same thing. We have a 5\1/2\-
inch opening in the nets and they are catching their quotas,
literally the year's quotas up in 10 days.
Senator Gregg. Do you have any other questions?
Senator Faircloth. No, Mr. Chairman.
Senator Gregg. Senator Lautenberg.
Community right to know
Senator Lautenberg. Thank you, Mr. Chairman.
Welcome, Dr. Baker. Your Department of Government, I think,
is a very important one, and I am going to support the
President's budget. I am pleased with the overall list of
priorities. I am co-chairman of The Coastal Coalition and, of
course, am very interested in your programs. New Jersey has the
coastline and we have lots of fragility along that coastline.
And there are all kinds of disruptions in fishing--some are
caused by pollution, overcrowding, and so forth--but we are
interested in the reliable assessment of what the stocks are
and what is happening with the fishermen and their opportunity
to make a living. And we see that all the way up and down the
east coast, there are problems of people making investments in
larger, more efficient craft to catch the fish and then finding
out that they are sweeping it so clean in such a short time
that others are going out of business alongside them.
And we have to continue to invest in research and our
understanding as to what we have got there. Many of your
programs are ones that I am very interested in, and Senator
Mikulski and I share similar interests.
In the advanced warning programs, notice of violent weather
not only can save lots of lives but lots of money as well. It
is very important that it continue. The National Weather
Service--there is excellent work done there. We hope that we
continue to do the research there. And thanks for the work done
by the NOAA lab in Princeton, the work that they are doing on
global climate change and the ozone. Of course, as former
chairman, now ranking member of the Superfund Subcommittee, I
am interested in your assessment on the natural resources
damage that might ensue from these contaminated sites. I am the
author of the community right to know law and I was pleased to
see that the President added a series of chemicals to that.
But I am interested in knowing about the right to know, for
swimmers, and what we can do to make sure that the conditions
are clearly understood. There are diseases that are transmitted
through exposure in the water and we want to continue those
programs.
I am going to submit some questions in writing to you, but
I am curious that there is constant debate about this beach or
water quality testing. And, again, I will quote the swimmers
right to know. Everybody has a right to know whatever they are
doing. NOAA is requesting funding for a new right to know
program, for swimmers at our Nation's beaches. And what would
you be doing under this program?
Coastal monitoring
Dr. Baker. Well, Senator Lautenberg, this is a part of our
activity that was proposed by the President in his new
initiative. We call it expand every American's right to know
about toxic pollution. Our particular part of that was to
provide an additional $2.9 million to our coastal monitoring
and environmental assessment program which expands and improves
our coastal monitoring program. So that is additional funding
for better coastal monitoring.
We are going to collect more information on toxins in
water, sediments, and organisms in coastal areas and then
provide that information to coastal communities. Our coastal
centers, we have one in Charleston and one in New Hampshire,
will also be working on development of state-of-the-art coastal
pollution monitoring technology.
It will expand our existing programs of monitoring the
sediments, toxins, and organisms in coastal waters. The program
already goes on in Rutgers, which is a very important program
for us.
Senator Lautenberg. Very important.
Mr. Chairman, did you hear that one of those locations is
in New Hampshire?
Senator Gregg. I am surprised.
status of Stock assessment
Senator Lautenberg. It is at the top of the mount.
On April 16, just a short time ago, I wrote to you
concerning a proposal by Dr. Powell of the Haskin Shellfish
Research Lab at Rutgers. And I understand that a survey be
undertaken, dealing with our Atlantic surf clams and quahogs,
which would provide some significant data which might assist
you and the Mid-Atlantic Fisheries Management Council, in
setting reasonable harvest quotas; again, a stock assessment.
What is the status of that program?
Dr. Baker. Let me ask the Fisheries Director, Nancy, do you
have an answer on that?
Dr. Foster. Yes.
Dr. Baker. Nancy Foster.
Dr. Foster. We are doing a stock assessment that should be
out sometime next summer that will give the latest information.
Senator Lautenberg. OK, and thank you, Dr. Baker. We have
some other questions that we will submit and we will look for
your responses. And, once again, my compliments for having an
excellent organization, good programs, and I hope that we will
continue to fund you at levels that we can all get the response
that we like to get when we have to call on the Weather Service
to get information in advance of disaster.
Dr. Baker. Thank you.
Senator Bumpers. Mr. Chairman, I do not have any questions.
I just want to say I think NOAA does a great job and they have
always been very accommodating and I am a Johnny-One-Note with
regard to the importance of the Fort Smith weather station, and
I will submit a question in writing on that and not take up the
committee's time today. And, maybe you can come by the office
sometime, Dr. Baker, and visit with us.
Dr. Baker. I would like to do that. The State of Arkansas
provides lots of tornadoes for us to study.
Senator Bumpers. We provide plenty of tornadoes. All we
want you to do is tell us when they are coming.
Dr. Baker. You gave us tornadoes and you gave us the
Director of our Weather Service, as you know.
Senator Bumpers. That is right.
Dr. Baker. So, the State is very important to us.
Senator Bumpers. We have really been particularly hard hit
the last 2 years and it has cost hundreds of millions of
dollars. Not to compare it with the Grand Forks, but certainly
on a scale similar to it.
Senator Gregg. Senator Stevens.
NOAA corps disestablishment
Senator Stevens. Thank you, Mr. Chairman.
Dr. Baker, I do thank you for taking the steps to release
that million dollars to help with the research in the Bering
Sea, including the Russian zone. I am grateful for that. An
organization called The Military Coalition has suggested that
no cost savings will be realized from the elimination of the
NOAA corps.
NOAA corps
I believe you told us some time ago that some of the
uniformed corps would be absorbed by NOAA but is there any way
to refute their claim that there would be no savings if the
corps is eliminated?
Dr. Baker. Senator Stevens, that is a very good question.
There is an initial cost for us to transition those personnel
who have military retirement and military careers into a
civilian status. There is an initial cost. We save that cost
then over the long term. In the long term, but we are talking 5
to 10 years, we begin to show a savings.
We also believe that over the course of this process of
transitioning we will end up with fewer people in those
positions than we would have had, had the NOAA corps been in
place. We also save money in that way.
Senator Stevens. Well, let me do this, Mr. Chairman, if I
may, I would like to put in the record the letter we received
at the committee from The Military Coalition. If you have any
further comments once you see it, I would appreciate it if you
would put them in the record.
[The information follows:]
The Military Coalition,
Alexandria, Virginia, April 21, 1997.
Honorable Ted Stevens,
Commerce, Justice, State and Judiciary Subcommittee, Senate
Appropriations Committee, Washington, D.C.
Dear Senator Stevens: The Military Coalition, a consortium of
nationally prominent military and veterans organizations, representing
more than 5 million members of the seven uniformed services plus their
families and survivors, is writing regarding the Commerce, Justice,
State and Judiciary Subcommittee's consideration of fiscal year 1998
appropriations for the National Oceanic and Atmospheric Administration
(NOAA), scheduled for April 24, 1997. We want to express our strong
opposition to the administration's expected proposal to disestablish
the NOAA Corps of Commissioned Officers.
Elimination of the NOAA Corps must be based either on sound
economic or programmatic grounds. The reality is that no savings would
be realized by dissolving the NOAA Corps. Furthermore, elimination of
the NOAA Corps as a uniformed service may have unintended consequences
that are not in the national interest.
The original proposal to eliminate the NOAA Corps--put forth as a
recommendation in the National Performance Review--was not based on a
thorough economic analysis. In this regard, the GAO report released in
October 1996 (GAO-GGD-97-10, ``Federal Personnel Issues: Issues on the
Need for NOAA's Commissioned Corps'') found that there was only a 2
percent cost differential between the NOAA Corps and an equivalent
cadre of civil servants. In making this determination, however, the GAO
report did not consider moving costs or the cost of overtime that would
have to be paid to civilian workers. If these costs were to be
included, the alleged cost savings to be achieved through elimination
of the NOAA Corps would be non-existent.
In addition, the ostensible ``cost'' of eliminating the NOAA Corps
is only $6 million more than would have to be funded for the retired
pay line item ($8 million in 1997) as included in the NOAA budget. The
actual cost, however, will be at least $14 million, plus the retired
pay for current retirees and those who would be forced to retire if the
Corps is eliminated. This is because the retirement for NOAA Corps
retirees and those forced to retire is an unfunded liability and does
not appear in the proposed fiscal year 1998 NOAA budget. As a
consequence, in addition to the one-time elimination costs, the actual
cost to the retirement account is estimated to be well in excess of $10
million annually.
Since dissolution was first proposed, the NOAA Corps has downsized
significantly. What will be lost, if the proposal to eliminate the NOAA
Corps is pursued, is the dedicated uniformed scientists and engineers
who provide the flexibility, skills and response capability to this
nation for operating NOAA's ships.
A recent example is the NOAA Ship Rude, which provided crucial
survey support in response to the TWA Flight 800 recovery effort. The
Rude, managed and operated by NOAA Corps officers, located the crash
debris within days. The NOAA officers were the critical interface,
providing wreck data to Navy divers and members of the National
Transportation Safety Board. The NOAA Corps' role in the TWA 800 effort
was specifically recognized by Secretary Pena at a United States Coast
Guard Awards Ceremony with a Public Service Commendation and by the
Department of Commerce, with the Department's highest award--the
Commerce Medal.
Other critical capabilities that will be lost are the aircraft
pilots who penetrate hurricanes at low-altitudes in support of
hurricane research and the nation's only group of federal
hydrographers, whose job is to manage the collection of hydrographic
data for the nation's nautical charts. NOAA's nautical charts are
highly regarded by the maritime community. The loss of this expertise
could jeopardize the quality of these charts, which enhance the
nation's economy and serve to prevent the catastrophic environmental
damage that could result from the grounding of an oil tanker on an
uncharted rock. In addition, if the NOAA Corps were to be dissolved,
there remains the issue of tort liability in the national charting
program and the associated cost increases, which have not been
determined.
The Military Coalition urges you to carefully review all the
consequences of disestablishing the NOAA Corps. We believe that if you
objectively review the facts, you will agree that disbanding the NOAA
Corps is no longer supportable or in the national interest. It will be
most unfortunate should the nation lose this valuable group of men and
women who have dedicated their careers to serving our nation.
Accordingly, we recommend that you give the issues raised here serious
and careful consideration as the Subcommittee takes up the NOAA
appropriations bill for fiscal year 1998.
Sincerely,
The Military Coalition.
Nautical charting activity in Alaska
Senator Stevens. Now, NOAA currently operates eight
fisheries research vessels. The research vessel Miller Freeman
operates primarily off my State. The others are operating
through the rest of the country or the coastline off of the
rest of the country. One-half the coastline is off our State
and more than one-half of the fish caught by the United States,
in terms of volume and value are landed in Alaska. You have
seven NOAA vessels for fisheries research and none of them are
off my State. I understand that there are some problems with
regard to financing, but none of them are stationed in our
State.
I understand that the hydrographic vessel Rainer operates
in Alaska part time. But I have received complaints from our
maritime industry and the fishing industry that we seem to be
forgotten as far as the allocation of time from the NOAA
hydrographic fleet as well.
Now, you may want to think about that, but it is a serious
matter for us, particularly with regard to the mapping. Where
the shoals are located, particularly, is of great concern.
Is there any reason why there is not an increased tempo off
of Alaska as compared to the rest of the country?
Dr. Baker. Well, Senator Stevens, I think I would have to
get back to you and analyze that, so we could give you a full
answer. We are very concerned also about having adequate
mapping and charting, both in terms of doing the work, having
the equipment and ships to do it. So, we share that concern.
Senator Stevens. I understand allocations that we suffer as
far as Alaska is concerned based upon population but the work
of these vessels has no relationship to the population. And if
it is really related to the area covered by the vessels, we do
not understand why there are so many out there in the rest of
the United States and none in Alaska. I would appreciate your
response, if you would.
[The information follows:]
Lack of Increased Tempo Off of Alaska Compared to the Rest of the
Country
Currently the National Oceanic and Atmospheric
Administration's (NOAA's) fisheries research vessels Miller
Freeman and John N. Cobb spend most of their operating time in
Alaskan waters. These two ships combined operate around 420
days per year, or over one-fifth of the total of 2,000 days per
year for all NOAA's fisheries research vessels. In addition,
NOAA charters over 500 days per year on fishing vessels in
Alaskan waters where laboratories and multi-purpose vessel
support are not required. The ship time NOAA currently uses in
Alaskan waters for fisheries stock assessment and research is
well over one-third of the total fisheries related ship time
NOAA uses for all areas. Even with this amount of ship time
dedicated to Alaskan waters, to meet the requirements of the
Magnuson-Stevens Act, NOAA will need additional ship support.
For hydrography, NOAA's survey vessel Rainier operates in
Alaskan waters 220 days per year. The Rainier provides one-
third of the total NOAA ship time dedicated to hydrography and
is NOAA's most capable and effective survey platform with six
survey launches. NOAA needs to increase the rate of
hydrographic surveying in Alaskan waters and is exploring
options to do so. NOAA also needs the ability to procure modern
multibeam survey systems. One option being explored is the
charter back of Rainier's sister ship, the Fairweather, or an
alternate vessel using a contract crew and NOAA hydrographers.
This would effectively double NOAA's data acquisition rate in
Alaskan waters and reduce significantly the time required to
complete surveys of critical areas.
Halibut and sable fish individual fishing quotas
Senator Stevens. I asked you a question at the Commerce
Committee hearing earlier this year concerning the proposed
increase in 57 full-time equivalents. We have been told there
were 24 National Marine Fishery Service enforcement personnel
in the two new IFQ fisheries in Alaska in 1995 and there are
only eight now, notwithstanding the fact that there is just a
staggering increase in workload brought about by the IFQ
program.
Your people briefed my staff last week about temporary
enforcement people from the lower 48 but it does seem there
ought to be a more permanent plan if we are going to have this
IFQ program in effect, particularly since there is a test
period of just 2 years now under the Magnuson-Stevens Act.
We would like to have some effort made to provide the
personnel to ensure that the test period is a valid one in
terms of enforcement and recognition of violations to see
really how the test program works. I hope you agree that this
is not unreasonable. This is the major IFQ program we are going
to test in the 2-year period.
I would hope you would find some way--in the halibut/
sablefish IFQ fishery off Alaska--to monitor that so that the
test period really reflects the type of enforcement and
administrative review that it should if we are going to use
that as a judge to see whether we go with IFQ's, not only in
Alaska but throughout the rest of the country.
Dr. Baker. Well, the halibut/sablefish IFQ has been, I
think, one of the very successful tools that we have in
fisheries management. We are very concerned that we have
adequate enforcement which is one of the keys to making IFQ's
work. I was just briefed on this by the staff and I agreed that
we would find a way to try to alleviate that problem.
Facilities maintenance requirements
Senator Stevens. The last thing is one question I am asking
all of the agencies. We have no way to adequately determine the
backlog of maintenance, repair, and modernization. I think it
is an enormous sword of Damocles hanging over the executive
branch as a whole. Have you ever ascertained that for NOAA?
Dr. Baker. Yes, sir; we have been looking into that and it
is an enormous issue. We had some buildings in fisheries that
go back to 1880 and right now our estimate is $28 million.
Twenty-eight million dollar backlog on facilities maintenance
and repair. But we do have a list we have been looking at.
Senator Stevens. But that is just facilities.
Dr. Baker. Yes.
Senator Stevens. I am talking about ships, vehicles, test
systems, the equipment in the laboratories. Are we really
keeping up with new technology as far as your laboratories are
concerned? I would like to know what is the backlog? If you had
the money to catch up and say that you have a state-of-the-art
NOAA, what would it cost you to catch up?
Dr. Baker. I think in some areas we do but in many areas we
do not. And we can provide that information for you.
[The information follows:]
Ships.--The overall condition of NOAA's ships has improved
considerably over the past several years due mostly to the funds
provided through the Fleet Maintenance and Planning account, and
because some ships that were in poor condition were removed from
services. Ships such as the Oregon II, Miller Freeman, and David Starr
Jordan continue to need increased attention and NOAA is planning to
contract additional repairs to these ships over the next few years.
Additionally, there are some items remaining on the other vessels which
should be taken care of to ensure continued vessel reliability.
Historically, NOAA has requested $6 million for routine maintenance
of NOAA's fleet. This amount covers fleet maintenance at a minimal
level and will not cover inflationary costs or emergency repairs in the
future.
Excluding the $4.5 million requested in the fiscal year 1998 budget
for Miller Freeman repairs, there is approximately $13 million in
backlogged repairs for NOAA ships which should be addressed to ensure
vessel reliability stays at high levels for the next several years.
Facilities.--The Capital Improvements Program (CIP) project backlog
is currently estimated to be approximately $28.4 million (215
projects). The nature and scope of projects included in the backlog
vary greatly, from small plumbing or electrical problems, through large
systems replacements such as roofs, heating and air conditioning, and
sanitation, to major renovation projects necessary to maintain a
facility's viability. The cost estimates for the projects vary as well,
with some costing over $2 million, while some of the smaller projects
are expected to cost as little as $3,000 to $5,000. Obviously, in order
to eliminate the CIP project backlog funding would be necessary. In
addition, funds to cover additional projects as they are identified
would be needed. This growth is currently estimated around $3.5 million
per year. Assuming that it would take 4 years, at least, to eliminate
the backlog, we would expect to discover additional projects with an
estimated cost of $10 million to $15 million during that time.
The NOAA staff charged with the responsibility for designing and
overseeing CIP projects are the real property specialists and
facilities engineers in the field. These staff are also responsible for
most major ``special'' facilities projects along with performing a
significant number of facilities tasks directly for the line offices
they serve. At present, NOAA devotes roughly 4 to 5 FTE of this field
staff to the CIP. At this level, it is estimated that staff could
manage approximately $3 million to $5 million of projects annually,
with some variance due to size and complexity of the individual
projects. In order to eliminate the entire backlog in four years,
including new projects that come about in that time frame, the program
would need an infusion of some $8 million to $10 million each year and
8 to 10 new engineering FTE, or 4 to 6 new engineering FTE and
substantial contract Architecture and Engineering support. This assumes
that the ``other-than-CIP'' workload of the field staff remains fairly
constant.
Senator Stevens. I do not mean to spend a lot of money
researching it, but I would like to have at least some general
recognition of how much it is. You do not have jurisdiction
over any facilities like dams or facilities of that type. We
are doing a survey of dams and highway bridges and what not.
Dr. Baker. I do not think we have jurisdiction over dams,
highways, and bridges. We have lots of laboratories and fishing
facilities and satellites.
Senator Stevens. What is the age of your laboratories?
Dr. Baker. Well, as I say, I think we have one that goes
all the way to 1880 and we have a lot of our laboratories that
were built in the 1940's and 1950's. We have a number of
laboratories, you know, some of which we are looking to
consolidate and improve. We have the full range I would say.
Senator Stevens. I just received today what you call the
``National Fisheries Laboratory Consolidation Study Report.'' I
have not seen it before. It was just this minute delivered to
me. I will look through this, but I would appreciate it if you
would just give----
Dr. Baker. There is a lot of that information in there.
Senator Stevens [continuing]. Give us your guidance about
what kind of a backlog you have at NOAA.
Dr. Baker. We will, Senator.
Senator Stevens. Thank you.
Fleet maintenance
Senator Hollings. Let me get right to the point. Here we
have in the supplemental, Mr. Chairman, $10 million for salmon
hatcheries and yet they cut out the ship maintenance. The John
Cobb, one ship you have up in Alaska, is 47 years old. We have
paid billions for satellite and weather stations and equipment
and nothing for the maintenance of the NOAA fleet. How do you
explain that?
Dr. Baker. Well, this is not a good situation----
Senator Hollings. You put $10 million in there just for the
fish, but nothing to really do your job of studying these fish.
And then you have a silly inspector general over there who
tells us to privatize it. Suppose we went over to Maryland and
said, we have a lot of good pharmaceutical companies, let us
just privatize NIH, the pharmaceutical companies can do it,
they have competent people, boom, boom, boom, we can do it much
cheaper that way. You would be out of your mind.
Senator Mikulski. Right. [Laughter.]
Senator Hollings. And that is it exactly. Let us get with
the program here.
Senator Stevens. Would you translate that?
Senator Hollings. Privatization would be much cheaper, that
is what they all say. They say privatize as if it is some kind
of rhythm they have or some political call, in 20 second sound
bites. But that is nonsense. We are here in the real world, and
we have to provide for this program and do a good job, and we
do not have to make a profit in NOAA. We can get the ships from
the Navy, some of them, and beef them up. We can actually do it
more economically at the governmental level. That is why you
are not going to save any on doing away with the NOAA corps.
You have to hedge in your answers and say, well, you know, in
the out-years, et cetera. That is 10 years from now and you
will be gone and I will be gone then. [Laughter.]
I mean come on. We have to get real and start putting the
money in so this Government can operate efficiently and
effectively, and we are not operating this way with the NOAA
fleet.
Dr. Baker. The NOAA fleet is a real crisis for us, Senator.
It is a real problem. If we do not get support for the NOAA
fleet, both in the administration and the Congress, we will not
have a NOAA. And this is a point I have made many times. I am
very concerned about it.
Senator Hollings. You have made this point?
Dr. Baker. I have.
Senator Hollings. And they just do not listen?
This means somebody is making better points on salmon.
[Laughter.]
Senator Stevens. Well, that salmon, Senator Hollings, those
hatcheries on the Columbia River help to meet U.S. treaty
obligations.
Senator Hollings. Well, we ought to have a treaty to build
a NOAA fleet.
Senator Stevens. We ought to have a treaty to make sure if
there are 15 ships operating along one-half of the coastline of
the United States, there ought to be at least one in the other
one-half.
Senator Hollings. Well, the entire ocean is off of South
Carolina's coast. [Laughter.]
We really are concerned but I appreciate the chairman
yielding.
Senator Gregg. Thank you, sir.
Oceanic research
Senator Hollings. Well, thank you very much, Mr. Chairman,
I apologize for being late. I had to be at another meeting. Dr.
Baker, we have to do something about the NOAA fleet and not
listen to this call that really makes you look incompetent and
makes the Government look incompetent.
There is not any question about it, not with respect to the
oceans. You said you were going to emphasize the importance of
the oceans in taking over, and exactly how are you doing this?
Tell the committee how you foresee changing some of the
programs or increasing some of the programs. What do you have
in mind?
National Ocean Service
Dr. Baker. Well, Senator, we have been looking both
internal to NOAA and across the Federal Government for ways in
which we can find some better emphasis on ocean programs in
general. One of the things we are looking at, at the moment, is
trying to enhance the effectiveness of our National Ocean
Service, which is the central oceans function in NOAA. We are
looking at ways that we can improve the organization and
capabilities of that part of NOAA. I have also called together
all of the agencies who are involved in oceans matters, called
the Oceans Principals Group, for the Federal Government, and we
had a meeting last week. We agreed that we would start to meet
quarterly both to address ways to enhance the ocean during the
Year of the Ocean, which was announced for 1998, and also to
find ways that we can better work together to have a better
emphasis on coastal ocean activities, the ocean's role in
climate, the ocean's role in fisheries--all of these areas. I
think that it is an opportunity for us to do a better job than
we have done before.
Senator Hollings. I think so. I think perhaps we have to
get the public involved as well as the Members here in Congress
in reinstituting the Stratton Commission. I have been working
on it and I would appreciate your help too so we can get the
business leadership as well as the scientific leadership
involved.
Dr. Baker. I think private industry is very interested and
I think your idea of a Stratton Commission is right on target
and we are fully supportive of that.
Capital assets acquisition
Senator Hollings. I understand your budget is broken down
in order to show that there is an increase, but the truth of
the matter is we are obligated for all of these things. How do
you feel about this capital budget arrangement under Frank
Raines?
Dr. Baker. Well, Senator, we had been concerned, as you
pointed out to me several years ago, about the cost of big
systems, satellites, and Weather Service systems and so on. And
if we did not account for those with long-term agreements we
had the danger that the costs of the systems would cut into the
ongoing programs. The point of this ``Capital assets
acquisition'' account is to get an agreement from OMB that they
understand about the out-year costs of big systems so that they
know the satellites will go up and will go down. We do not have
to have that cost come out of our programs.
So, the first step is a recognition by OMB that we do, in
fact, have large fluctuating costs for systems and this must be
accounted for rather than simply looking at it year to year,
there is a long-term look.
This, I think, is a very important point. The second one is
to aggregate those into one part of our budget which will be a
fluctuating budget and then have the other part of our budget
be the program budget. But it is a first step for OMB to
recognize this. This is something I think Congress has
recognized for a long time.
Senator Hollings. Does it take away from your flexibility?
In other words, like the hurricane center down in Miami, you
and the chairman had to get together and adjust some moneys and
everything else in order to keep everybody up and running down
there in the Miami Hurricane Center. Does this capital budget
approach take away from your flexibility?
Dr. Baker. No, sir; we still have transfer authority among
the accounts. That is the way we had worked it out.
Advanced weather interactive processing system
Senator Hollings. But my point is, sometimes you have to
transfer from the capital budget. Well, what about AWIPS, the
advanced weather interactive processing system? Last year, NOAA
said that the program was in real trouble--that the contractor
could not produce the software.
status on AWIPS
And since that time, I think it has gone through major
changes. Can you give the committee an update on AWIPS?
Dr. Baker. Yes, sir; I have been following this very
closely and personally because it is both a big software and
hardware acquisition for NOAA. We did go through some changes
last year. We were able to replace some of the planned software
with software which we had built in our own forecast systems
laboratory. We had started this as a risk-reduction effort and
we have been able to use that instead of what had been proposed
by the contractor.
We have a limited deployment of the AWIPS system now that
software and hardware is out around the country and it is
already working very well. In fact, during a big snowstorm last
year in Kansas City, we found that the AWIPS system brings
together all of the data from the satellites, radars, and the
computer systems all on one screen. The forecasters were able
to forecast the total amount of snow during the time that the
snowstorm was taking place because of the AWIPS system. We have
16 of those out there. We are putting out some more in a
limited deployment system this year.
I believe that we understand what this program will cost.
In fact, I have agreed that we will have a total cap on the
program, $550 million, up through the final build of this
system.
Senator Hollings. You are maintaining that $550 million?
Dr. Baker. Absolutely.
Senator Gregg. On that point, why do you keep using this
software company? I mean, they just do not appear to be
producing very well.
Dr. Baker. Well, it is hard to find big companies that can
handle the kind of software development that we have and the
company that we have, PRC, is one of the companies that is
competent in doing this.
What is important, as you work with these systems
development companies, is that you stay very close to the
development and that you have a system; whereby, there is a
build, and there is a test and then there is a build and then
there is a test. If you try to have everything built and then
wait until the end, it does not work. There has to be an
integrated process.
Senator Gregg. Well, is the software performing adequately
now?
Dr. Baker. We believe that it is and we believe that we
have a handle on how this is working.
Aeronautical charting transfer to the FAA
Senator Hollings. With respect to the aeronautical
charting, there was an initiative to transfer that to the
Federal Aviation Administration for a savings, I think, of
$14.5 million. But then, of all things, you come right back
around and cancel it out by saying that you are going to pay
for all the charts you produced for the Department of Defense.
That is the one fat crowd we have in this town, the Department
of Defense. You and I can squeeze money but when I get together
with Senator Stevens and his Defense Subcommittee on the
Defense appropriations, you ought to hear them talking
billions, and everybody is rubbing each other's backs and
everything else. So I just do not get it. Why would you do
that? The Department of Defense can pay for its own maps.
Dr. Baker. Well, Senator, this was not our decision. It was
the decision by the Department of Defense that they did not
want to continue to pay for this activity. I think in the short
term we have an----
Senator Hollings. Well, do not give them any maps. Just do
not give them any maps.
Senator Mikulski. Sell it to them.
Senator Hollings. Yes; you have to. When it comes down to
it, you have to pay for it. I think we ought to look into that
carefully. The Department of Defense cannot start that practice
or all the other departments will come to you asking for the
same.
Turtle excluder devices
With respect to the TEDS, these turtle excluder using the
soft TEDS. Now, I supported a study because my local shrimp
trawler fleet and NOAA found that South Carolina turtle
strandings have accounted for less than 15 percent of the total
strandings from Florida to North Carolina in the past 10 years,
which is the lowest percentage of any Atlantic State. Yet,
North Carolina shrimpers can use soft TEDS and in South
Carolina, I am penalized and I cannot. Why?
Dr. Baker. Let me ask the TEDS expert, Nancy Foster.
Dr. Foster. I know this has been a growing concern on the
part of South Carolina and we have asked our scientists in the
Southeast to give us all of the rationale for the decision to
put South Carolina in and leave Florida and North Carolina out.
In fact, we are having a meeting sometime in the next few days
where we are bringing our scientists together with some of your
South Carolina fishermen and some of your staff to sit down and
go over all the information, so, everybody understands where we
are.
Senator Hollings. Well, I do not know how you got us under
the soft TEDS and kept them out of there. All that getting
together and finding out the accurate information should have
been done ahead of time rather than simply penalize us for the
best record of any of those coastal States, according to your
letter.
Dr. Foster. I understand.
NMFS Charleston laboratory staffing
Senator Hollings. All right, with respect to the National
Marine Fisheries Service Research Laboratories, what is your
current spending in those areas? In other words, I went over to
the regular institution and I was surprised to find that over
at Fort Johnson we cut back some 30 personnel. We have cut back
on the Federal jobs. Now I am wondering if we are putting out
on contract or what is the personnel plan?
Dr. Baker. Nancy, can you answer that? We can also get an
answer for the record.
[The information follows:]
Charleston Laboratory Staffing
Under the Federal Workforce Restructuring Act of 1994
(Public Law 103-226), Full Time Equivalent (FTE) Streamlining
Plans were developed by each operating unit in order to meet
the reduction target established through fiscal year 1999. For
the National Marine Fisheries Service (NMFS), the plan called
for a total reduction of 309 FTE by the end of fiscal year
1999. This reduction is from the fiscal year 1993 baseline of
2,818 FTE and would provide for 2,509 FTE at NMFS at the end of
fiscal year 1999.
In meeting the FTE reduction target through fiscal year
1997, NMFS will have reduced 274 FTE's of which 16 FTE's are
from the Charleston, South Carolina laboratory at Fort Johnson.
The reductions within NMFS and Charleston have been
accomplished without running a disruptive reduction-in-force
accomplished by utilizing earlier buyout programs and reducing
the use of temporary and term-appointed personnel. Barring any
specific budget cuts, there are no planned FTE reductions at
the Charleston facility for fiscal years 1998 and 1999.
Dr. Foster. It is true that there has been a decrease on
permanent employees and temporary employees at Charleston. It
is true for all of our facilities. It is part of the downsizing
part of the streamlining plan. And we have asked our people,
whenever possible, to contract out instead of hiring people.
And we are now looking at how much, if that is more expensive
and how much more expensive it is to contract out instead of
hiring.
Senator Hollings. Generally, from our experience at the
Government level, it is going to cost you more money. I mean
that is how they shield everything again back over to defense.
They just want consultants. Everything is done which you could
have done in the Department with the expertise there, and now
we are starting down that road here in NOAA. I would look at it
very carefully, if you do not mind. I would appreciate it.
I apologize again for being late, Mr. Chairman, I have some
other questions I will submit for Dr. Baker. Thank you.
Portland, ME, data buoys
Senator Gregg. Thank you, Senator Hollings. It is always
nice to have Senator Hollings ask questions because it then
eliminates most of mine.
On the weather buoy issue, if you could tell us a little
bit about how many of them, what percentage of them, are under
the National Weather Service control and what is the status of
the weather buoy situations, specifically the status of the
weather buoy off of Portland Harbor? If you know? Generally,
what is happening with the data buoys?
Dr. Baker. Joe, can you answer that? Joe Friday is the
Director of the Weather Service.
Dr. Friday. Yes, sir; there are about 30 of the buoys in
coastal stations that have been funded by other agencies or
sources of funds that were temporary in nature. And those
agencies, many of the other agencies have discontinued their
programs. I do not know the specific status of yours but I will
get back to you on the record, sir.
Senator Gregg. It is not mine, it is Maine's.
Dr. Friday. We will get back to the record on that one.
[The information follows:]
NOAA operates a network of 89 buoys, of which 17 are paid
for by other agencies or through special project funds on a
reimbursable basis. NOAA's current appropriations only supports
our base network of 72 buoys. In addition, there are 28 buoys
that were previously operated and maintained via special funds
or other Federal agency support, but are unfunded in fiscal
year 1997. The Portland buoy is one of these unfunded stations.
The U.S. Coast Guard established and operated this station
from 1984-94. In 1994, USCG retired their buoy. Using other
funding sources, NOAA installed a replacement buoy in 1994.
Unfortunately, NOAA's alternative funding source (NOAA's
Geostationary Operational Environmental Satellite Contingency
Fund) was exhausted on September 30, 1996, at which time all
maintenance and repairs on these 28 buoys, including the
Portland buoy, ended.
Recently, the wind instruments on station 44007 have
failed. The buoy is still reporting wave heights, air pressure,
and air and water temperature. The NWS will operate the buoy
through the summer unless there is a significant failure
wherein the buoy ceases to provide useful data and/or the hull
itself becomes a threat to navigation. The situation will be
reevaluated in the fall, and it is likely that the buoy will be
removed since the position fixing equipment has also failed.
Once removed, stations cannot be replaced without additional
funding.
NOAA has asked the National Research Council (NRC) to
conduct a short-term study on the buoy system to determine the
required number of stations and associated location to ensure
that essential data is available for coastal and marine
warnings. The NRC plans to complete its study by the end of
1997. Based on this study, NOAA will review our entire base
funded network of buoys to ensure data points in critical
areas. The Portland buoy will be included in this assessment.
Dr. Friday. But this is a situation that we are faced with.
We have approximately, again as I say, about 30 of these
facilities around the coast of the United States that were
funded by other agencies for other programs. We were taking
advantage of the data and using those data. But as their
programs terminated then the funding sources have literally
dried up for that. We are continuing approximately 65 buoys
that are funded by NOAA and we will continue that operation.
Senator Gregg. Well, what is going to happen to the 30 that
were funded by other people? Are they just going to be allowed
to sort of whither out there or be picked up and brought in or
are they going to be left there and the information used?
Dr. Friday. Our process as far as the maintenance of those
buoys are concerned is that there is no funding for
refurbishment and replacement of those buoys. So, what happens
is as soon as those buoys fail the next time the Coast Guard
buoy tenders are in that area they will pull them out so that
they do not become a hazard to navigation.
Senator Gregg. Are these buoys valuable, these 30 buoys, to
your weather prediction capabilities or are they marginal?
Dr. Friday. The data buoys, themselves, are a very valuable
source of information in the immediate ocean areas. We are
looking at the capabilities now of new remote sensing
capabilities such as the NASA scaterometer flying on the
satellite and we are beginning to see good results from that
and some of the near shore areas as well. So, there are other
alternatives for ocean data. But the buoys are the only things
that we have at present time that give us in situ data in the
oceans.
Dr. Baker. We have just agreed to fund a study by the
National Academy to give us some advice on how we could
prioritize the value of the buoys for our weather forecasting.
We are just going to start that process.
Senator Gregg. Is this all the buoys or just your buoys?
Dr. Baker. That is the full set. So, we will be able to
answer that question about the priorities.
Senator Gregg. It would be helpful if we could get a map of
where the buoys are, the 30 buoys that are at risk, and also
some idea of what the transition time is between when these
other technologies become available relative to when the buoys
are going to go out of service.
NOAA-DOD polar orbiting satellite convergence
What is the current status of the polar convergence?
Dr. Baker. I think we are in very good shape on the Polar
Convergence Program at the moment. We have very good agreement
between the Department of Defense and NOAA about how the
satellite program will move ahead and on the timing and the
instruments. We expect to have the first satellite fly in about
the year 2007. As you know, we have to start these programs
very early to make sure that they do fly. This is a program
that would be shared in cost equally between DOD and the
Department of Commerce. And this year the budget that is
requested is, in fact, equally shared between the two.
We do not yet have agreement from the Office of Management
and Budget about the out-years in the Department of Commerce
budget and this is something that we are working with OMB at
the moment. As I say, we do have agreement between the
Department of Commerce and DOD about the program that is the
converged program that saves about $1.7 billion over what would
have flown if we had not done the converged program.
Senator Gregg. So, do you have a carryover that you are
working with here?
Dr. Baker. There is always some carryover in satellites as
they last longer. I do not think there is a carryover in the
convergence program but there is in the polar program which is
the existing program. Once again, this is a question of NASA
setting requirements, telling us what they need. We fund NASA
to do that. If NASA changes its views or does not need the
funding then there is some money available which is then used
for satellites.
Senator Hollings. Well, I was at the State Department and I
heard they held up on the finalization of the full satellite
conversion.
Dr. Baker. We had a disagreement with the Department of
State on a question of the memorandum of understanding that we
wanted to sign between NOAA and the European Meteorological
Satellite Organization on data. Greg Withee, the Deputy
Assistant Administrator for Satellite and Information Services,
can tell us where we are on that memorandum of understanding
with the Europeans.
Mr. Withee. The discussion was on the nontechnical and
restricted data portions which is going on with DOD and the
State Department right now. And, hopefully, they will come to
conclusion in the next few weeks.
Satellite funding requirements
Senator Gregg. How about this GAO report, what is your
reaction to that relative to the GOES program?
Dr. Baker. The GAO report indicated that there was
carryover funding that could be made available, and I think, if
I am referring to the right one, they suggested that NASA was
asking for more carryover than was really needed. We have gone
back and looked at that question. NASA has typically asked us
for 3 months of forward funding so that they can, in fact, have
the money to provide the contractors.
The GAO has suggested to NASA that they could live with
less. We have been in discussions with NASA since that report
has come out, and we have reached an agreement that we could
probably live with 2 months forward funding, not 3. And this
does, in fact, free up some money in the system because it
changes the NASA requirements and we have made those numbers
available to the committee.
Senator Gregg. I think the report also talked about the
managerial issues of the program. Can you comment on that?
Dr. Baker. Let me ask the satellite expert here, Greg?
GOES follow-on program
Mr. Withee. Yes, sir, they reference the major GOES follow-
on program and whether we were ready to start it or not. The
situation is that we are not asking for new money for GOES
follow-on beyond our present GOES program which we call GOES-Q.
The reason is that we are still trying to formulate follow-on
requirements working with the Weather Service and other users.
We are also working with technology with NASA and DOD and other
satellite research agencies who are developing technology and
waiting for a little bit of a signal as to whether we should
design our programs in 2010. We certainly will come back with a
follow-on program in the next few years, but right now, it is
too early.
National ocean survey
Senator Hollings. Mr. Chairman, regarding the national
ocean survey backlog. Last year I think NOAA produced 235 new
editions of the nautical charts and acquired and processed data
from some 50 hydrographic surveys, but we still have some
43,000 miles. How long is this going to take? Are we using up
the date charts or do we have a backlog due to a lack of money
or expertise? How do you explain it? What is your comment?
Dr. Baker. Meeting the critical area needs is really a
question of money. Having money to pay for the surveys that we
do. We received an increase last year, and we were able to
increase the amount of mapping and charting that we did but we
are still very, very far behind in mapping all the critical
areas in the United States. Very far behind.
Senator Hollings. Well, there you go. The money you get
from NASA or whatever this is should be put to these charts or
put to the maintenance of your equipment--your ships. Thank
you, Mr. Chairman.
NOAA fleet
Senator Gregg. On that ship issue, you alluded to the fact
that you think the fleet is critical to the NOAA purpose. Could
you restate that for the record, why you feel that way.
Dr. Baker. Well, Mr. Chairman, NOAA is the National Oceanic
and Atmospheric Administration with the capability of going to
sea, just like the capability of measuring and operating in the
atmosphere is critical for the functioning of our agency from
doing the trawling and measurements of stock assessment for
fisheries. As you know, stock assessment for fisheries is
critically important to measuring toxic substances and status
and trends of pollution in the ocean to looking at the role of
the ocean in climate. NOAA's ability to go to sea and make
measurements in the ocean is the reason that we have El Nino
forecasts today.
These are all critical elements. Senator Hollings just
mentioned mapping and charting. NOAA is the U.S. agency
responsible for the maps and charts of the ocean bottom out in
the exclusive economic zone. The Navy is responsible for other
countries but we are responsible for the United States. And,
so, we must have the capability to go to sea. If we do not,
these critical national functions will simply be lost. We are
in danger of doing that if we do not replace the NOAA fleet.
Right whale rulings
Senator Gregg. Tell me a little bit about the right whale
rulings and the effect it is going to have on the small lobster
fishermen who have been in close. The fact that this new ruling
will change the number of pots on a line and change the type of
line creates a huge equipment expense. We all want to make sure
that we protect this species, but there is some belief that the
proposed regulations not only will not help protect the species
all that much but are going to incur a lot of costs which
probably would not be necessary. So, can we get your thoughts
on that?
Dr. Baker. A couple of things, Mr. Chairman. One is we have
a very, very endangered population of right whales. Right
whales used to be so plentiful that they were one of the major
commercial species that was whaled in the United States. Now,
we have about 300 of these right whales and it is not clear
that even at that level that this population will survive.
We have done a couple of things with these proposed
regulations. One is to expand the State area slightly just
north in Massachusetts and then we have also put out a proposed
ruling asking for public comment about restrictions that would
take place further north in the Gulf of Maine.
We are now looking at the comments that are coming in, and
we will respond to those. But it is a difficult situation on
both sides, I think. We have this very, very endangered
population--really it is difficult to lose even one of the
whales. At the same time we recognize the needs of the small
fishermen and the lobstermen. And, so, that is why we have a
proposed rule. We are looking for comment, and we will,
hopefully, go back and we can try to accommodate everybody's
needs here.
Senator Gregg. Well, if my office is any example, we only
have 18 miles of coastline but we are sure getting a lot of
comment. [Laughter.]
So, hopefully, we can work together. We want to protect the
whale, obviously. We also want to do it in a way that does not
end up putting an industry, which is already under significant
stress because of overfishing and because of the big factory
ships coming in and taking out the stock, under even greater
stress. So, I hope we can work out something there, and we look
forward to trying to find a solution.
Clean water initiative
How about this clean water initiative which is now running
money through the Coastal Zone Management Act? Is that an
effective way to address these issues or is it basically taking
away flexibility from the coastal zone management people?
Dr. Baker. Well, we were big supporters of this program
because it was not something that was laid on us as an
additional or different activity from NOAA programs. This was
an opportunity for us to provide some more resources within the
context of programs that have been very successful. Our coastal
zone management program, I think, has been one of the most
successful State/Federal partnerships that has ever been
developed. You can see that Texas and Georgia just joined.
And, as you know, this is where States decide what they
want to do and NOAA is involved in looking at Federal
consistency providing financial support and expertise to help
States develop their coast but in a way that is consistent with
environmental protection and providing the kind of coastline
that people want to live on.
I think it is a wonderful example of sustainable
development because our population along the coasts is growing
and people who live on the coast want to have clean water and a
nice environment but they also want to live there. So, you want
development, and you want a way that it can be done
sustainably.
The coastal zone management program has done very well and
this provides additional funding for us to do that. So, the
largest part of the funding simply enhances our ability to do
more in our coastal zone management program. When I say, our, I
mean the State/Federal partnership. Then we also have about
$2.9 million that we are adding for additional monitoring of
toxic pollution, sediments, and organisms in coastal areas so
we can address these problems of harmful algae blooms and
change of pollution.
Then we are also providing funding for a cleanup of toxic
waste within existing programs. So, it was an opportunity for
us to take successful, State/Federal partnerships and enhance
them and do what the States want to do.
Senator Gregg. The coastal zone management is a great
program--very strongly supported in New England. But, the
frustration is that it is creating a stream of funding,
targeting it, and not giving it any flexibility as to its
utilization. And, as a result, redirecting the energies of the
coastal zone management initiative when it might be more
appropriate that these funds flow through some other activity
and get the same result--better than drawing off of the
energies of the coastal zone management. Have you heard that
frustration?
Dr. Baker. I have heard a little of that. As we look at the
opportunity for new funds, we wanted to make sure that programs
were done in a way that was consistent with programs we know
are successful. And the thing about the coastal zone management
program is that States decide what they think is important and
then we do it through an existing mechanism. So, it is an
efficient way to address State needs. It is not the Federal
Government saying this is what ought to be done. We ask the
States what they want to do and then we use this mechanism to
get the funding out. NOAA will monitor this to make sure that
we do not have this problem of what might be a separate stream
of funding. We will closely watch that.
Senator Gregg. Do you have any more questions, Senator
Hollings?
Senator Hollings. No; thank you, Mr. Chairman.
Senator Gregg. Did you have anything else you would wish to
add?
Dr. Baker. Just to say that we appreciate this committee's
support of NOAA programs and the opportunity to say something
about the NOAA fleet. I am very concerned about this, it is a
central passion of mine, and I look forward to working with you
to see if we can solve the problem.
Additional committee questions
Senator Gregg. Well, this committee is a strong supporter
of your efforts. Doctor, I think NOAA is one of the premier
agencies we have in the science community and in the world, and
I think you will find strong support throughout this committee
for it. Thank you.
Senator Hollings. Thank you.
Dr. Baker. Thank you, Mr. Chairman.
[The following questions were not asked at the hearing, but
were submitted to the Department for response subsequent to the
hearing:]
Questions Submitted by Senator Kay Bailey Hutchison
endangered species act [esa]
Question. Since 1990, you have been allocated $93.5 million to
carry out your authority under the ESA to protect species. According to
your data, your efforts have focused on 13 species over that period of
time. On average, this amounts to $13.4 million per species. I have
several concerns about these figures.
Why, in spite of the tremendous amount of money spent on species
protection, has a single species not been ``recovered'' and been
delisted?
Answer. In fact, the Gray whale (Eschrichtius robustus) was
declared recovered and was delisted in 1995. With respect to other ESA-
listed species, the National Marine Fisheries Service (NMFS) has made
substantial progress in reversing the declines of some species though
they are not yet ``recovered.'' The species under NMFS' jurisdiction,
with the exception of salmon, are generally long-lived, highly
migratory species that have a late age of reproductive maturity. It is
unlikely that recovery can be achieved within several years when the
species generation time may be 10-30 years. However, NMFS monitors each
species to evaluate its recovery actions and to determine whether its
actions are having a beneficial effect. For example, the Kemp's ridley
sea turtle (Lepidochelys kempii) has benefitted from several years of
increased hatchling production at its nesting beach in Mexico and
protection at sea from shrimp trawl mortality through the use of turtle
excluder devices. This population now appears to be in the early stages
of exponential expansion and experts project that it could reach an
intermediate recovery goal of 10,000 nesters by the Year 2020. NMFS
will continue to evaluate the status of this and other species
annually.
Question. How can an increase in funding for these functions be
justified when the millions spent on this effort so far have not
yielded the result sought or the recovery of the species listed?
Answer. In addition, funding is requested to prevent the extinction
of highly endangered Pacific leatherback sea turtles from the effects
of sustained losses of eggs on Mexican and Costa Rican nesting beaches,
and incidental capture and mortality in high seas commercial fisheries.
As stated, NMFS has made substantial progress in reversing the declines
of some species, though they are not yet ``recovered.''
Question. What do you intend to do to ensure that the millions of
dollars allocated to species recovery actually yield the result
intended by the Act?
Answer. NMFS is committed to strategic planning and performance-
based budgeting for its recovery activities. This process establishes
long and short-term priorities and milestones by which to measure
progress quarterly. Base-funded activities within NMFS are subject to
these planning and review procedures and periodic detailed program
reviews are held to further evaluate performance. NMFS has also
established a national, collaborative process that considers immediate
and long-term species needs and agency priorities in allocating new
resources appropriated by Congress. This process involves all of our
regional offices to help ensure that we are taking the most effective
action to recover species. Actions supported by this process are
evaluated as described earlier.
species recovery
Question. With specific reference to species recovery, this year
you seek an increase of $6.7 million over your fiscal year 1997
allocation for this function alone, increasing that aspect of your
budget from $13.5 million in fiscal year 1997 to $20.2 million in
fiscal year 1998.
Why, in spite of the fact that drafting a recovery plan is the
first step toward actually recovering species, have you never written
final recovery plans for six of the listed species?
Answer. Many recovery plans have been completed. Plan completion
depends on when a species is listed, plan complexity, whether the
species already has a conservation plan, and the benefits that the
species would derive from plan development. Since a recovery team must
be assembled to prepare the plan and draft plans receive at least two
stages of review, recently listed species (e.g. Umpqhua cutthroat trout
and the Central California coho Evolutionary Significant Unit), would
not yet have final plans. Other plans, such as the complex Sacramento
winter-run chinook recovery plan, are currently in the draft stage. The
highest priority for plan development is assigned to plans for species
that will derive the greatest benefit from recovery plan development.
Listed species with conservation plans already developed, such as
whales, are a lower priority. Listed species unlikely to benefit from
recovery plan development, such as foreign species over which the
United States has no management control, are the lowest priority.
Question. For what specific aspects of species recovery do you seek
additional funds?
Answer. As stated earlier, additional funds are being sought
primarily for Pacific salmonid recovery actions to be conducted in
cooperation with states, tribes, and other Federal agencies. New
funding will support conservation planning for state conservation
programs. In addition, support will be used to undertake actions
required to address increased responsibilities and workload associated
with harvest, hatcheries, habitat and hydropower activities in response
to additional salmon and steelhead listings along the west coast.
Additionally, NMFS proposes to complete more habitat conservation plans
in response to landowner interest in cooperatively addressing salmon
conservation, improving state-Federal cooperation through technical and
policy support to states, and assisting Federal interagency efforts to
take an ecosystem approach to multispecies management. Finally, NMFS
proposes to establish cooperative conservation program agreements under
Section 6 of the ESA with additional states, including Alaska,
California and Washington. Actions to recover highly endangered Pacific
leatherback turtles will also involve cooperative conservation measures
with Central American nations and cooperation with U.S. and
international fisheries that interact with these turtles to document
the impacts of incidental take and to develop appropriate mitigation
measures.
______
Questions Submitted by Senator Ernest F. Hollings
noaa corps disestablishment
Question. The National Oceanic and Atmospheric Administration
(NOAA) Corps can trace its roots back to 1807--then President Thomas
Jefferson signed a bill for the ``Survey of the Coast.'' For about two
centuries, members of the NOAA Corps and their predecessor, the Coast
and Geodetic Survey, have ably served our Nation. Last year, you
announced that the Corps would be ``civilianized'' as a cost-cutting
measure eliminating it as a uniformed service. However, a study by
Arthur Andersen and Company suggests that annual costs to the
government associated with NOAA Corps officers are about $29.7 million
annually. By contrast, the study estimates that the annual costs to the
government for an equivalent civilian workforce would be $30.3 million.
In addition, civilian moving costs are about three times higher than
those for NOAA Corps officers.
Dr. Baker, I'm having a hard time understanding how eliminating the
NOAA Corps qualifies as a cost-cutting measure. Please explain.
Answer. The dedicated men and women of the NOAA Corps have a proud
history of service to the Nation. The recommendation of the National
Performance Review to disestablish the Corps should in no way be viewed
as a reflection on the past contributions and fine work of the officers
of the Corps. However, it is difficult to justify a separate uniformed
service with a distinct personnel system to support less than 300
active duty officers, particularly in view of a recent report of the
General Accounting Office that concluded the duties currently performed
by NOAA Corps officers can be performed by civilian employees.
You expressed concern about the longer term savings of the proposal
to disestablish the Corps. NOAA has commissioned a study by an
independent actuary familiar with the NOAA Corps compensation system
and the Federal Employees Retirement System (FERS) to take a hard look
at the comparative costs of continuing the NOAA Corps as a uniformed
service and the cost of a FERS system for officers not eligible to
rehire. That study, contained in the Administration's Disestablishment
Plan transmitted to Congress on May 21, 1997, indicates that
disestablishment would result in retirement systems savings of $2
million per year by reducing the system's unfunded liability. These
costs were not considered by the Arthur Andersen study. Additional
savings--involving salaries and benefits, as well as increased tax
receipts--that would result from disestablishment are identified in the
Disestablishment Plan.
Question. Last year's appropriations conference report called for
submission of a long-term plan for the Corps along with the legislative
changes needed for implementation. I understand that a plan to
disestablish the Corps has been under review at the Office of
Management and Budget for some time but that there is concern over its
cost. At the same time, the fiscal year 1998 NOAA budget request
includes $6 million to cover the costs of disestablishing the Corps.
What is the hold up on the plan and when can we expect to see it?
Answer. The Office of Management and Budget has completed its
review of the draft plan and accompanying legislation to disestablish
the NOAA Corps. The package was transmitted to Congress on May 21.
Under the Administration's plan, officers who are eligible for
retirement would be retired and would be invited to compete for
positions essential for the accomplishment of the NOAA mission. With
respect to those officers who have insufficient service to retire, the
plan contains financial inducements for officers to convert into
civilian employees of NOAA. There is a one-time cost associated with
this payment.
The principal cause of the delay in getting the plan and
legislation has been the complexity associated with this transition, in
particular, from one retirement system to another. We commissioned a
study by an independent actuary familiar with the compensation and
retirement system of the NOAA Corps and the civil service FERS to help
us understand the costs and implications of this change. The report
appears in an appendix to the plan.
Question. The Reserve Officers Association suggests that the actual
cost civilianizing the Corps far exceeds the $6 million requested in
the budget and a better number would be at least $14 million plus
retired pay. Is this assessment accurate? Please explain.
Answer. The one-time costs associated with disestablishment
(including, for example payments in lieu of separation pay to officers
who convert to NOAA civilian positions--approximately $9.1 million) are
estimated to total $13.3 million and are detailed in the
disestablishment plan. These expenses fall within the $14 million
requested in the fiscal year 1998 budget. Upon disestablishment, the
Corps' retirement program (expected to consist of approximately 415
individuals) would be transferred to the Department of the Navy. If
this transfer occurred on October 1 (as proposed by the Department's
legislation), the full $14 million would be available to NOAA to cover
the one-time disestablishment costs. If the disestablishment occurred
after October 1, NOAA would be required to use a portion of the $14
million to pay retirement benefits to retired NOAA officers. The share
of the $14 million to be used for such payments would depend on the
timing of the disestablishment.
Question. If the Corps is to be eliminated, what assurances can you
provide that the current members will be extended the full range of
compensation programs afforded military personnel during a defense draw
down?
Answer. Disestablishment of the NOAA Corps recognizes the need to
continue (through the use of civilian employees) duties performed by
Corps officers. For example, Corps officers ineligible for retirement
would be offered the opportunity to convert to a civilian position
within NOAA and receive a conversion payment, in lieu of separation
pay. Disestablishment, therefore, is not analogous to a defense draw
down and the compensation and other provisions affecting NOAA Corps
officers, while equitable, are not necessarily identical to those
provided in connection with a defense draw down.
Question. Is the $6 million request adequate to provide such
compensation? If not, why not?
Answer. Yes, $6 million is adequate to fund the additional
compensation costs.
fleet modernization
Question. Dr. Baker, we've been talking now about modernizing the
NOAA fleet for about a decade. Over that period, NOAA, the General
Accounting Office, the Inspector General, the National Research Council
and Vice President Gore's reinventing government team have completed
half a dozen plans and studies. Meanwhile, the fleet is aging and the
condition of the ships is deteriorating. In 1989, 23 ships were
operational in the NOAA fleet. Today, the fleet consists of 15 active
ships and several tied to the dock. Now, your budget request for fiscal
year 1998 proposes to spend $3.8 million to design a new class of
acoustically quiet fisheries research vessels. But, while your budget
proposes to spend over $2 billion in the next five years on weather
satellites and equipment, it provides no money to actually procure any
vessels. I'm concerned that we will continue to put off funding
decisions and study the NOAA fleet until it completely rusts away.
Question. What can we do to bring this planning process to a close,
and get on with implementing a modernization plan?
Answer. Over the past several years, NOAA's fleet modernization
planning has evolved from a large in-house fleet to the current
planning which includes a mix of NOAA vessels, charters, university
vessels, and contracts for data. NOAA has revised its plan to reflect
this approach and the plan is currently under review at the Department
of Commerce. Future budgets will consider the cost of financing the new
vessels.
Question. Why is the Administration willing to commit to long-term
investments in satellites and weather equipment but not ships?
Answer. The Administration, cognizant of the desire of Congress to
reduce the deficit, has chosen to commit to long-term investment
programs on a priority basis. Even though ships are critically
important to NOAA's stewardship mission, the satellite and weather
equipment programs, because of their involvement in the safety of human
life, received first priority status for long-term funding. The weather
service modernization has been NOAA's highest priority, assuring that
NOAA has access to a sea going capability is essential. Any future
vessel acquisitions are currently under consideration as a part of the
Administration's fiscal year 1999 budget formulation.
______
Questions Submitted by Senator Daniel K. Inouye
aquaculture
Question. How much is included in the President's fiscal year 1998
budget for aquaculture research, development and implementation? How
does the National Oceanic and Atmospheric Administration (NOAA) plan to
disburse these funds? Which NOAA department(s) will administer these
funds?
Answer. Aquaculture is an emerging area of great importance to
NOAA. NOAA currently administers funding for aquaculture research,
development and implementation primarily through two of its line
offices: the National Marine Fisheries Service (NMFS) and the Office of
Oceanic and Atmospheric Research (OAR). Within the fiscal year 1998
budget request for NMFS, there is no dedicated funding for aquaculture
research, development and implementation. However, through our
Saltonstall-Kennedy grants and the fisheries finance programs, it's
likely that aquaculture projects would be funded in fiscal year 1998.
Our Milford, CT and Manchester, WA labs, as well as others, have vast
aquaculture experience. In the past, NMFS has provided funding to the
Oceanic Institute and a private company in the Gulf of Mexico for
mariculture projects, although none is planned for fiscal year 1998.
NMFS provides approximately $10.3 million to support Mitchell Act
hatchery operations in the Pacific Northwest. In addition, NMFS is in
the process of hiring a full-time aquaculture coordinator to facilitate
the program and promote development in this area.
The President's fiscal year 1998 budget request for OAR does not
explicitly include funds for aquaculture research, development, and
implementation. Funds are provided through the National Sea Grant
College Program competitive research and outreach processes at the Sea
Grant College level. Funds are not set aside specifically for
aquaculture. Aquaculture competes for funds among other high priority
topics supported by the Sea Grant Colleges. In fiscal year 1996, Sea
Grant supported, with Federal and matching funds, $9.7 million of
aquaculture research and outreach programs. We would expect this level
of activity to continue in fiscal year 1997 and beyond.
national undersea research program [nurp]
Question. I understand that during a budget briefing for the Senate
Appropriations staff in February, representatives from the Department
of Commerce indicated that the President's fiscal year 1998 request for
NURP contemplates termination of the regional centers. Is there any
truth to this statement?
Answer. We do not contemplate terminating the regional undersea
research centers. NURP is currently being redesigned to meet both
Congressional and Administration concerns. The new program will
continue to be a national program managed by a network of regional
undersea research centers. While the research centers will have more
autonomy in running their research programs, they will be held
accountable for their performance through a series of review processes
integral to the new program. The research centers will be closely
linked to NOAA's strategic planning process so that their programs can
be more closely tailored to focus on research relevant to NOAA and
national needs. Important to the new program is the addition of a
national level advisory council composed of NOAA and other agency
program leaders, as well as academic representatives, with a stake in
undersea research. We will be looking to this body for advice in
determining future directions for the program.
reorganization of national marine fisheries service regions
Question. What is the status of plans to reorganize the northwest
and southwest regions of the National Marine Fisheries Service? Is
consolidation of the two regions still an option under consideration?
Answer. At this time, NOAA/NMFS are not pursuing the consolidation
of the Northwest and Southwest regions.
pacific area office
Question. Because of the ongoing discussions about reorganization
in the southwest region and recent personnel changes in the region, as
well as the unique issues facing the Western Pacific community, I am
very interested in exploring the idea of establishing a Pacific Area
Office (PAO) headquartered in Hawaii, which will focus on the needs of
the western Pacific. The acting southwest regional director and others
in the NMFS leadership have expressed their support for this idea. I
would appreciate your reviewing this matter and assistance in working
toward the goal of establishing a PAO.
Answer. The establishment of a PAO in Hawaii, as an option for the
best organizational structure, is under review by NOAA. We are
currently scoping the costs and other factors associated with
establishing a PAO. Discussions are ongoing and we will be working with
you and your staff as the concept is being developed.
pacific insular area fisheries agreement
Question. What is the status of NOAA's efforts to implement the
terms of the Pacific Insular Area Fisheries Agreement authorized by the
Sustainable Fisheries Act of 1996?
Answer. NMFS, the Western Pacific Fishery Management Council, and
the Department of State participated in two working group meetings with
key representatives of fishery and economic development agencies from
Guam, Northern Mariana Islands and American Samoa to work toward the
development and implementation of the Pacific Insular Area Fishery
Agreements (PIAFA).
The first workshop on the development and implementation of the
PIAFA was held in Honolulu, Hawaii, in February and discussed (1) a
schedule for the process of implementing a PIAFA, (2) the development
of a marine conservation plan, (3) the content of a PIAFA, (4) the
PIAFA negotiation process, (5) the foreign fishing vessel permit
process, (6) determination of total allowable level of foreign fishing
(TALFF), (7) determination of fishing fees, and (8) reversion of
fishing violation payments to the appropriate insular area.
The second workshop on the development and implementation of the
PIAFA was also held in Honolulu, Hawaii, in April, and discussed (1)
various options for an observer program, (2) consistency with Fishery
Management Plans, (3) model foreign fishing agreements, (4) uses of the
Sustainable Fisheries Fund, (5) the development of foreign fishing
regulations, and (6) further determination of TALFF.
The insular areas continue to work toward the initial preparation
of their marine conservation plans and foreign fishing regulations as
well as establishing options for an observer program. At the second
workshop, the delegate from American Samoa suggested that locally
focused working groups to work through the foreign fishing regulations
in detail would be more efficient in determining what was appropriate
for each particular insular area. This was supported by the
representatives from Guam and the Northern Mariana Islands who said
that these groups should focus on providing assistance in the
development of marine conservation plans as well as other appropriate
issues.
united states-japan common agenda global observation information
network [goin] initiative
Question. What role, if any, does NOAA have in the State
Department's efforts to implement the Common Agenda for Cooperation in
Global Perspective, commonly referred to as the Common Agenda,
negotiated between the United States and Japan in 1993?
Answer. Through the GOIN initiative, the United States and Japan
have gained broad support to make earth observations and environmental
data and information held by their agencies and institutions more
accessible and useable by scientists and researchers via electronic
links across the Pacific. Since the GOIN initiative was launched in
1993, NOAA and Japan's Science and Technology Agency have coordinated
activities of other U.S. and Japanese agencies and institutions in
collaborating on pilot projects during the first and second two-year
phases outlined in the GOIN Implementation Plan. These efforts have
increased network connectivity and computer interoperability between
U.S. and Japanese participants. Through private circuits and the
Internet, the participants are developing a ``virtual GOINnet'' to
support cooperative agency and institution programs and collaboration
among scientists in both countries.
Building on the successful First GOIN Joint Technical Symposium and
Workshop in Tokyo, Japan during June 1996, participants are planning
GOIN97--the Second GOIN Joint Technical Symposium and Workshop at the
National Center for Atmospheric Research Mesa Laboratories in Boulder,
Colorado, June 23-27, 1997. The symposium on major global change issues
for participants at the G-7 Economic Summit in Denver will emphasize
the consensus on data and information exchanges, highlight common
technologies, and demonstrate ongoing and new GOIN pilot projects.
The following is NOAA's International Affairs office participation
and involvement in Common Agenda activities:
--NOAA is advising the Department of State (DOS) on priorities for
joint International Coral Reef Initiative policy development
and implementation. This includes encouraging Japan to follow
the U.S. lead in funding a portion of the GLOBAL cost of the
global coral reef monitoring network. (Japan, like the U.S.,
has provided initial support for an Asian regional monitoring
network.)
--NOAA is developing a Concept Paper for a Caribbean Marine Center
which was originally proposed by the United States Agency for
International Development at a January 1996 Common Agenda
meeting. This center has not yet been agreed to as part of the
joint work plan.
--Under the leadership of DOS, NOAA has provided logistical support
for and participated on a DOS led research and planning team to
Palau to develop a Palau Marine Research Center.
______
Questions Submitted by Senator Frank R. Lautenberg
ecosystem fisheries management
Question. Section 406 of the Magnuson-Stevens Act requires the
Secretary to establish an advisory panel to develop recommendations to
expand the application of ecosystem principles to fishery conservation
and management activities. Could you please provide the status of
NOAA's efforts to fulfill this requirement? How, if at all, did NOAA
consult with the National Academy of Sciences in developing this panel?
Answer. National Marine Fisheries Service (NMFS) finalized the list
of 20 panelists on April 10, 1997 and is in the process of notifying
the individuals of their appointment to the panel. A press release
announcing the panelists is scheduled to be distributed on May 6. In
developing the panel, NMFS solicited nominations from several sources
including the National Academy of Sciences and several of the Academy's
nominees were appointed to the panel.
Question. How is NOAA currently incorporating ecosystem principles
into fishery conservation and management? What research is being
conducted in this area? How is this research being applied to make
fisheries management more effective?
Answer. NOAA incorporates ecosystem principles into fishery
conservation and management through a number of mechanisms. For
example, stock assessments are increasingly incorporating environmental
variability, and habitat protection is recognized as a critical
component in maintenance of healthy fish populations.
Almost all of NMFS research activities make contributions to our
understanding of marine ecosystems. The task now is to determine the
critical gaps in our knowledge of ecosystem structure and function, and
to fill those gaps through a strong research program.
Question. The fiscal year 1998 budget requests more than $160
million for assessing fish stocks using traditional approaches. Only
$12.9 million is requested to advance fisheries predictions through new
research under the Coastal Ocean Program that incorporates multispecies
interactions and environmental variables into fisheries predictions.
Why is NOAA proposing a $1.1 million cut in the Coastal Ocean Program?
Answer. The Coastal Ocean Program is requesting $15.2 million in
fiscal year 1998 which is the same level as appropriated in fiscal year
1997. The $1.1 million reduction in advance fisheries predictions in
fiscal year 1998 is associated with the National Undersea Research
Program not the Coastal Ocean Program. This decrease is addressed in
the answer to a question asked by Senator Inouye during the fiscal year
1998 Senate Appropriations hearing.
highly migratory species
Question. As you know, Atlantic Highly Migratory Species (HMS),
such as tunas, oceanic shark, swordfish, and other billfishes, are
internationally shared resources whose effective conservation and
management must involve the cooperation and compliance of many
harvesting nations. Many fisheries from my state participate in the HMS
fishery. The U.S. participates through the International Commission for
the Conservation of Atlantic Tunas (ICCAT) and the United Nation's Food
and Agricultural Organization. The U.S. has an international commitment
to provide scientific support and to abide by these international
agreements. The management of commercial and recreational fishing for
these species is carried out by the NMFS HMS Division. Because of the
economic value of highly migratory species, this is indeed one of the
most contentious fisheries to manage. However, the budget request for
this division does not appear sufficient to conduct the extensive data
collection and scientific monitoring needed.
For example, recently the U.S. was invited to an international
ICCAT meeting in Madrid to develop a fisheries observer program to
scientifically monitor juvenile Bigeye Tuna and Yellowfin Tuna. The
Southeast Fisheries Science Center was told that no funds were
available to send a U.S. scientist to this important meeting.
How are the HMS Division budget needs determined, and how can
important U.S. priorities such as this be dropped without the necessary
follow-up to actually achieve conservation goals?
Answer. Data collection and scientific monitoring for highly
migratory species (tunas, sharks, swordfish, and billfishes) are
conducted by several NMFS Offices of which the HMS Division is only one
component. The HMS relevant budget concerns are also independently
managed by the Office of Protected Species (observer programs), and the
Northeast and Southeast Regions and Science Centers (assessments,
biology, vessel logbooks, and dealer reports). Fiscal year funds are
allocated to each line office consistent with the goals established by
NOAA's strategic planning process. A portion of HMS Division funds are
further reallocated consistent with the priorities for management and
research determined by discussions and meetings among all concerned
offices within NMFS. Normally, the HMS division allocates direct funds
among HMS division tasks, contracts with universities, states and the
private sector, and by transfers to the regions and centers for
specific HMS research projects. As with any program, limited funds must
be applied on a priority basis to seek solutions for multiple
objectives simultaneously.
The ICCAT meeting referenced in your question was one of many
meetings for which priorities and expenditures had to be evaluated. The
meeting ranked high in terms of priority for representing U.S.
interests in developing the ICCAT observer program. Initially, it was
planned that a center scientist would attend. However, agency budget
constraints precluded authorization of travel for that meeting.
______
Questions Submitted by Senator Lauch Faircloth
summer flounder
Question. Please explain how the National Marine Fisheries Service
(NMFS) determines or defines when summer flounder is fully recovered or
rebuilt.
Answer. In amendment two to the Fishery Management Plan for Summer
Flounder (FMP), the Mid-Atlantic Fishery Management Council (MAFMC) did
not specify a recovered or rebuilt stock level. Instead, the FMP
addressed overfishing by setting a target fishing mortality rate that
would maximize yield per recruit (Fmax) of 0.23. This goal
is a yield-based target that will maximize the landings from the stock
on a per-recruit basis. A recruit is a fish that is available to the
fishery for harvest due to growth to some legal size or through
migration. The FMP goal is attainment of Fmax (a level at
which overfishing is no longer occurring) in 1998 and beyond. Within
several years after fishing has been maintained at this level, spawning
stock abundance will have increased. The sustainable annual yield of
summer flounder will eventually reach about 40 million pounds, slightly
more than double the 1997 coastwide quota (commercial plus recreational
fisheries) of 18.5 million pounds.
The Sustainable Fisheries Act (Public Law 104-297) revised the
Magnuson-Stevens Act to require FMP's to end overfishing and to rebuild
affected stocks. The MAFMC plans, in a future amendment, will define
rebuilding for the summer flounder stock so that the stock will produce
maximum sustainable yield.
Question. Please explain the ``target fishing mortality rate.''
What is the current rate? When was this rate developed? How does it
relate to rebuilding of summer flounder?
Answer. The target fishing mortality rate is the rate of fishing
that the MAFMC has established that would maximize the yield per
recruit.
The target fishing mortality rate of Fmax for summer
flounder was developed using the Thomson-Bell Yield per Recruit Model.
This model is used by NMFS, Northeast Fisheries Science Center (NEFSC)
scientists, and other fishery scientists to calculate yield per recruit
for many fish species. The target Fmax of 0.23 was derived
from an analysis conducted in 1990 by the Stock Assessment Review
Committee (SARC) for the 11th Northeast Regional Stock Assessment
Workshop (SAW-11). This level is periodically reviewed, but because the
input parameters that determine the value of Fmax have
changed very little since the target was established, estimates
calculated in subsequent assessments have varied little from the 0.23
value. As a result, the SARC has not revised the estimate. If the stock
were fished at Fmax, then the annual rate of exploitation
(exploitation rate), or the percentage of the stock removed each year
by fishing, would be about 19 percent. SAW-22 estimated that the 1995
fishing mortality rate was 1.5; this corresponds to an exploitation
rate of 72 percent. This is far above the target level of fishing
mortality (F) and its corresponding exploitation rate.
Reductions in F directly relate to fish survival and stock
rebuilding. Reductions in F on fully recruited summer flounder will (1)
contribute to spawning stock biomass (SSB) which enhances the chances
of strong recruitment, (2) provide protection against the negative
impacts to the fishing industry that would accompany recruitment
failure, and (3) promote an expanded age distribution that will provide
more valuable (larger) summer flounder to the fishery.
Question. NMFS reports that the spawning stock biomass has grown
from 5,247 metric tons in 1989 to 15,235 metric tons in 1995. During
that same period, the commercial quota has shrunk from 15.6 million
pounds to 11.1 million pounds, and there is a proposal to reduce the
quota further to 8.4 million pounds in the 1997 season. Please explain
the apparent inconsistency in these trends.
Answer. The annual commercial quota has been reduced several times
over the past few years, because the target fishing mortality rate that
corresponds to an allowable percent removal from the stock (an
exploitation rate) has been reduced consistent with FMP objectives. The
abundance of summer flounder should increase substantially within
several years after 1998 (the first year that the rate of removal
reaches the long-term annual goal of 19 percent). When stock abundance
increases substantially, the 19 percent removal rate will still result
in larger commercial quotas than have occurred in the summer flounder
fishery in the past few years. In 1989, the summer flounder stock was
heavily exploited. SAW-22 estimated that fishing mortality was 1.75, an
77 percent exploitation rate. At that time, the landings were not
constrained by a quota which was first implemented in 1993. The quota
is set each year to achieve the target fishing mortality rate rather
than being based on SSB. It is true that the stock is increasing but
fishing mortality levels have not approached the goal of 0.23. The
projected reduction in commercial quota to 8.4 million pounds was not
adopted because MAFMC and NMFS determined that an increase in minimum
fish size and a quota of 11,111,298 pounds could attain the FMP
objectives.
Question. What are the problems associated with age and/or year
class? How do these problems impact stock assessment and establishment
of annual quotas? If there are problems, what can be done to resolve
age/year class questions? Has NMFS reviewed the North Carolina landings
data which show a landing percentage of 44 percent of flounder three
pounds or greater?
Answer. SAW-22 noted that there were discrepancies between how NMFS
and North Carolina staff determine what is or is not an age-1 summer
flounder. If the assumptions that North Carolina staff use are
accepted, then some of the age-1 fish used in the assessment would be
considered age-2. These changes would affect both Northeast Regional
commercial fishery and NEFSC survey age-length keys. The potential
magnitude of such changes is likely to be small but pending research on
their effect on the assessment has not been completely evaluated.
NMFS and North Carolina officials have noted that the aging
discrepancies are a problem, and the differences in aging are being
investigated. Participants in recent NEFSC winter and spring trawl
surveys have collected both otoliths (ear bones) and scales from summer
flounder in the size range that is in question. NMFS is hopeful that
examination of both aging structures (scales and otoliths) may help to
resolve aging differences.
NMFS is aware that North Carolina biologists report a higher
percentage of market medium and large summer flounder this year than in
previous years. An examination of the 1996 fall mean-length-at-age data
indicate that, at that time of year, those fish were age-1 and 2
(mostly age-2, market category medium), and age-2 and 3 (market
category large). These fish are the result of relatively strong 1994
and 1995 year classes. If the age structure of the stock were more
robust (i.e., there were more fish of older age classes represented in
the population), there would be a higher percentage of large and jumbo
fish landed in North Carolina and elsewhere. The landings information
provided by North Carolina supports the conclusions of SAW-22 that
biomass is increasing but that the majority of that biomass remains in
the younger age classes. It is important to protect these larger fish
so that the age distribution may expand and contribute to a more stable
stock condition.
Question. Fishermen on the water believe that they are seeing a
record number of fish but this does not appear to be adequately
reflected in the stock assessments? How does NMFS determine whether or
not there is an abundance of large fish farther offshore in North
Carolina and other coastal states? What recommendations do you have
about the increased stock assessment and survey work on summer
flounder?
Answer. SAW-22 in 1996 estimated an increase in spawning stock
biomass (abundance), and fishermen have also noted this increase. SAW-
22 used NEFSC research vessel survey data, state survey data, and state
commercial landings data in the assessment of summer flounder.
NEFSC surveys areas as deep as 150 fathoms. To obtain information
about the stock beyond this depth, NEFSC depends on commercial fishery
landings data. If concentrations of large fish beyond the range of the
survey are exploited by the commercial fishery, they would be reported
as landings in the commercial fishery in the large and jumbo market
categories.
The SAW-22 document specified research recommendations for the
summer flounder fishery. These included the following: (1) support of
ongoing cooperative work between the NEFSC and the North Carolina
Division of Marine Fisheries (NCDMF) to ensure consistent aging of
summer flounder, (2) better domestic sea sampling coverage to include
adequate age and length sampling, continued sampling once quotas are
reached, and better sampling of discards, (3) research to determine
discard mortality rates and length and age frequency in the commercial
and recreational fisheries, and (4) research to better characterize the
spawning potential of younger summer flounder. A copy of the SAW-22
research document, which includes these recommendations, is available
upon request.
Question. NMFS has recently utilized North Carolina landings data
to impose reductions on the North Carolina quota. Please explain the
extent of the NMFS commercial flounder sampling program coastwide. How
does the agency monitor harvest data coastwide? Does the agency receive
and rely upon such data from the other coastal states to take similar
action coastwide? If not, please explain how the quota system is
managed and what safeguards are in the place to ensure that each state
is treated equally.
Answer. NMFS has not been able to utilize data collected by the
NCDMF. During the last year, we have attempted to come to an agreement
on several issues involving the confidentiality of the NCDMF data.
NCDMF and NMFS are currently working on a memorandum of understanding
to develop coordinated and nonduplicative data collection systems in
the State.
In North Carolina, as in other states, NMFS has the responsibility
to collect landings data for all federally-managed species. These
collections are conducted by requiring federally permitted dealers to
report their purchases from fishing vessels. Dealers report these
landings to NMFS on a weekly basis. These are the data NMFS uses to
monitor landings of species managed under a quota system, such as
summer flounder. In accommodating the normal business activities of
dealers and still meet our quota monitoring needs, we allow dealers to
report only summaries of their purchases of quota managed species
within this time schedule. The dealers then follow up these summaries
with complete and detailed reports of all species purchased. This later
data set is used to validate the weekly summaries. The FMP is a joint
plan with the Atlantic States Marine Fisheries Commission (ASMFC), and
states are encouraged to implement systems for coordinating statistical
efforts. The Council and ASMFC are considering making this a
requirement in the draft amendment ten to the FMP for summer flounder,
scup, and black sea bass fisheries.
Some states, such as North Carolina, already have in place detailed
data collection programs. However, none of these programs are able to
collect and process data fast enough to allow for their use in quota
monitoring. Thus, NMFS continues to collect the weekly summaries from
all federally-permitted dealers. For the states that have a detailed
collection system, such as a trip ticket system, the detailed reports
of all species are provided to the state agency instead of NMFS. This
detailed information is later shared between the state and NMFS and is
used to validate the weekly summaries. As noted, this has not been
accomplished with data collected by NCDMF.
Question. Please explain the basis for the quick closures of the
summer flounder fisheries in 1997.
Answer. The 1997 commercial quota was set at 11,111,298 pounds and
the states instituted a variety of management measures to control how
their allocation would be harvested. NMFS has closed Maine and Delaware
to commercial harvest in 1997. In other cases, the states themselves
have established both seasons and trip limits to extend their quota,
distribute catches to various fleet sectors and maximize market values.
When the 1997 fishery opened in January, some states effected seasonal
closures quickly because the trip limits had been set too high to
significantly constrain the fishery. For instance, North Carolina set a
trip limit of 10,000 pounds and closed its initial open season in 10
days. Similarly, Virginia established a 9,000-pound trip limit, which
was reduced to 5,000 pounds, and closed its initial open season in 3
weeks. In contrast, other states have set lower initial trip limits and
have adjusted these limits downward to remain open. For instance, New
York opened with an initial trip limit of 2,000 pounds. This limit was
changed to 700 pounds in mid-January, was increased again to 2,000
pounds for 2 weeks in February, and remained at 700 pounds until early
April, when the trip limit was set at 200 pounds. As a result, New York
State has not yet been closed to summer flounder harvest.
striped bass
Question. Fishermen have informed me that there are a record number
of striped bass off North Carolina. Has this stock been determined
``rebuilt'' and ``recovered.'' If so, when can we expect to see a
larger commercial, coastwide quota? If not, please explain how NMFS
determines when this fishery is fully recovered or rebuilt, and please
provide a time estimate based on current trends in the resource.
Answer. Historically, over 90 percent of striped bass landings have
been taken in state waters; therefore, ASMFC is the lead agency for
striped bass management. NMFS supports the ASMFC Fishery Management
Plan for Striped Bass and has actively participated in the management
process since passage of the Atlantic Striped Bass Conservation Act in
1984.
All striped bass stocks, with the exception of the Roanoke/
Albemarle system stocks, have been treated as ``fully recovered'' by
ASMFC since 1995. The fishing mortality rate (F) at which the recovered
population can be fished and maintained at a healthy level was
determined to be F=0.50. However, as a precaution, ASMFC chose F=0.4 as
the preferred long-term mortality rate and, based on concerns about
accuracy of the measured F, selected an even more conservative
``interim'' rate of F=0.33 for the 1995-1997 fishing seasons.
The ASMFC Striped Bass Stock Assessment and Technical Committees
review the status of striped bass annually based on analyses of
fishery-dependent and fishery-independent data. Beginning in 1997 (for
the 1998 fishery), the basis for the stock assessment and
recommendations to management is scheduled to shift from a spawning
stock biomass model to virtual population analysis (VPA). The VPA will
allow determination of a coastwide quota based on the most recent data
available. This quota will then be allocated among each of the Atlantic
coastal states and then among the respective user groups (commercial,
recreational/charter) within each state. Allocation of each state's
quota between recreational and commercial fishermen is a state
responsibility. Even though the stock is determined to be fully
recovered, annual quotas could rise or fall depending on the abundance
of the component age classes.
Question. There is some evidence that the larger striped bass
population may be having a negative effect on the recovery of North
Carolina shad fishery. What steps has NMFS taken to investigate the
relationship between the growth in striped bass and the slow recovery
of other species?
Answer. There have been suggestions, based on inverse trends in
abundance of striped bass and other species (e.g., shad, river herring,
bluefish), that the recovery of striped bass populations has resulted
in declines in stocks of other species. To date, no scientific studies
have been conducted which definitively demonstrate a cause-and-effect
relationship for these trends (i.e., specific ecological interactions
which account for these apparent relationships). Observations of large
numbers of striped bass feeding on shad at the base of dams have led to
the suggestion that striped bass predation might have contributed to
the decline of the Connecticut River shad population and/or delayed its
recovery. However, studies have not been adequate to validate the
extent to which this interaction may account for observed trends in
abundance.
NMFS is currently funding research, through Rutgers University,
which will address the issue of interactions between striped bass and
bluefish, and their prey species. This effort will include laboratory
and field studies to determine: when and where the species overlap,
what life stage/age/size classes co-occur, the potential for
competition for prey species, and the extent of the predator-prey
relationship between the two species. Results of this research may be
helpful in designing studies to address similar relationships between
striped bass and other stocks, such as North Carolina's shad stocks.
conclusion of hearings
Senator Gregg. If there is nothing further, the
subcommittee is recessed.
[Whereupon, at 3:11 p.m., Thursday, April 24, the hearings
were concluded, and the subcommittee was recessed, to reconvene
subject to the call of the Chair.]
DEPARTMENTS OF COMMERCE, JUSTICE, AND STATE, THE JUDICIARY, AND RELATED
AGENCIES APPROPRIATIONS FOR FISCAL YEAR 1998
----------
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
NONDEPARTMENTAL WITNESSES
The following testimonies were received by the Subcommittee
on Commerce, Justice, and State, the Judiciary, and Related
Agencies for inclusion in the record. The submitted materials
relate to the fiscal year 1998 budget request for programs
within the subcommittee's jurisdiction.
Prepared Statement of Shirley Mount Hufstedler, Chair, U.S. Commission
on Immigration Reform
The Commission on Immigration Reform was created by the Immigration
Act of 1990. We are a fully bipartisan body. There are eight
Commissioners who were appointed by the majority and minority
leadership in each house of Congress. The President appoints the Chair.
When the President asked me to chair this bipartisan Congressional
commission, he emphasized that immigration reform must be based on
principles that are ``pro-family, pro-work, and pro-naturalization.'' I
accepted the task because developing and implementing immigration
policies are of vital importance to the nation and to the many
thousands of human beings who seek to live and work here.
The nation and the Commission itself have been immeasurably
assisted by the outstanding leadership of the late Barbara Jordan, who
was my predecessor as Chair of the Commission. I hope to carry forward
her legacy of principled bipartisanship.
I shall describe briefly the recommendations the Commission has
already made. Then I shall turn to our plans for this fiscal year and
our plans for completing the Commission's work before our authorization
expires at midnight December 31, 1997.
The Commission has issued two reports to Congress. In September
1994, the Commission published ``U.S. Immigration Policy: Restoring
Credibility.'' This report included recommendations for a comprehensive
strategy to deter illegal immigration. In June 1995, the Commission
made a second report to Congress ``Legal Immigration: Setting
Priorities.'' This report focused on reforming our system for legal
admissions to serve our highest national priorities.
Later this spring, the Commission will make recommendations on U.S.
refugee policy for a post-Cold War world. The recommendations in this
report will support a comprehensive and coherent U.S. refugee policy to
permit the U.S. to assert leadership internationally and implement
responsible programs domestically. The Commission will make specific
recommendations to enable the U.S. government to stay attuned to the
causes of refugee movements, including efforts to prevent them early on
through political, diplomatic, and economic initiatives. We will focus
on assistance and protection for the millions of refugees overseas who
are forced to leave their countries. The Commission will recommend
reforms to ensure that the United States will continue to lead by
example not only in resettling refugees, but also in providing sensible
transitional assistance for those few refugees for whom U.S.
resettlement is the only or best option. The Commission will also make
recommendations regarding a viable plan to respond to mass migration
emergencies directed at our own nation. Finally, the Commission will
recommend an effective asylum system that protects the bonafide refugee
while deterring those who would abuse it.
This summer, the Commission will receive the results of two major
research contracts. One study will be issued by the National Academy of
Sciences, from the Panel on Demographic and Economic Impacts of
Immigration of the National Research Council Committee on Population &
Committee on National Statistics. This has been a 30-month study of the
demographic and economic impact of immigration on the United States.
The second report will be the results of the Binational Study on
Migration between the United States and Mexico, for which this
Commission has been the lead U.S. agency. After a meeting of the
Migration and Consular Affairs Group of the Mexican-United States
Binational Commission in March 1995, the governments of Mexico and the
United States decided to undertake a joint study of migration between
the two countries. Research teams in each country are studying aspects
of migration within their country and are collaboratively analyzing the
findings. National coordinators have been designated for each country
with the Commission on Immigration Reform coordinating the work of U.S.
researchers. The main objective of the Binational Study is to
contribute to a better understanding and appreciation of the nature,
dimensions, and consequences of migration from Mexico to the United
States. It also provides an opportunity to identify options to respond
to these movements.
The Commission's Final Report is due September 30, 1997. There will
be four main components for this report, in fulfilling the Commission's
mandate in the Immigration Act of 1990. First, the Commission will
assess the effort to control illegal immigration, paying particular
attention to monitoring the implementation and effects of last year's
legislation. To the extent that the evidence is sufficient to draw
conclusions, the Commission may make recommendations for changes in our
comprehensive approach to deter illegal immigration.
Second, the Commission will also re-assess the need for legal
immigration reforms. In ``Setting Priorities,'' the Commission asserted
that ``Properly regulated, legal immigration serves the national
interest in many ways''; and provided a framework for determining if
our legal immigration system is effectively serving the national
interest. The Commission also urged that U.S. immigration policy be
assessed on a regular basis every few years, and it has been nearly two
years since the recommendations in ``Setting Priorities.'' Accordingly,
there will be such an assessment in the Commission's Final Report,
which will also include new recommendations on the non-immigrant visa
system.
Third, the Commission will make recommendations regarding the
structure, organization and management of the immigration system as a
whole. The Commission is examining systematically the roles and
relationships of the federal agencies responsible for the management
and implementation of immigration policy. Responsibilities are now
dispersed across four principal Cabinet agencies: Departments of
Justice, State, Labor and Health and Human Services. Within each of
these departments, responsibility is further dispersed. Even within a
single agency, such as the Immigration and Naturalization Service,
competing and sometimes conflicting responsibilities (such as service
and enforcement) must be balanced and coordinated. The Commission will
report to Congress on the strengths and weaknesses of the current
system as well as make recommendations to improve management of
immigration-related activities.
Fourth, the Commission will make recommendations regarding
Americanization: the economic and social integration of immigrants. The
Commission argued, in its fiscal year 1995 report to Congress, for the
Americanization of new immigrants, that is, the cultivation of a shared
commitment to the American values of liberty, democracy and equal
opportunity. For its final report, the Commission is examining policies
and programs that may foster or retard such Americanization.
In fiscal 1998, the Commission will complete its work and close
down by the end of calendar 1997. There are two principal functions to
perform. First, the Commission will fulfill its statutory mandate to
testify before the relevant Congressional committees. In addition, we
will disseminate the final report and recommendations to interested
federal agencies, members of Congress, and members of the public.
Second, the Commission will complete its administrative operations,
including archiving records of historical significance, the disposal of
equipment, termination of employment and completion of financial
accounting.
The attached budget justification presents details of this
appropriation request. I thank you again for this opportunity to
discuss the work and recommendations of the Commission on Immigration
Reform. I would also like to state for the record our commitment to
work with this Committee as you address the very challenging issues
arising in the appropriation of funds to improve implementation of
immigration policy. The Commission is the creation of Congress and, as
it completes its work, I offer the Commission to you as a resource to
help you in your work.
______
Prepared Statement of F.A. (Tex) Harris, President, American Foreign
Service Association
Mr. Chairman and Members of the Subcommittee: We appreciate the
opportunity provided the American Foreign Service Association (AFSA) to
provide testimony to the Subcommittee regarding the 1998 fiscal
appropriations for the Department of Commerce, Justice, State and the
Judiciary. AFSA is both the professional organization and the
recognized bargaining agent representing the 23,000 active and retired
members of our Nation's Foreign Service. AFSA and its members have a
particular interest in this legislation because of the direct affect it
has on our professional and personal lives.
We believe there is general agreement that it is in our national
interest for our Nation to continue to be actively engaged in the in
the world, and that in doing so, we should continue to provide
leadership. This consensus is based upon a recognition that so much
that affects our daily lives happens outside of our borders. The growth
of our economy depends as much on our ability to successfully engage in
international trade as it does on what happens domestically.
International crime, terrorism, and the flow of drugs plague our nation
without any recognition of borders. Environmental degradation can take
place in far off our shores still harm our health. Starvation and civil
strife in one area of the world can create huge migration flows that
end up affecting life in the U.S. through illegal immigration or in the
need to fund efforts to help save lives. The spread of weapons of mass
destruction and outbreak of regional wars continue to threaten the
stability of the world.
While there is general agreement that the United States should
maintain its international leadership role, there is disagreement over
the level of resources we have provided in the past and what the
necessary levels should be in the coming years. The recent study by the
special Task Force of the Council on Foreign Relations and the
Brookings Institution found resource problems at two levels that
``disheartens our friends and allies and undermines our effectiveness
abroad * * *.''
At one level of high policy, the severely limited lack of readily
available, flexible resources effect the options available to avert or
respond to foreign crises. We hear this daily from our members around
the world. To stabilize Haiti, the decision had to be made to reduce
economic support for Turkey despite its critical relationship to our
Middle East interests and also transfer funds from other Latin American
AID projects.
Providing our share of the financing package assembled for
Cambodia's first free election required deferring, for more than a
year, support for smaller initiatives in a dozen or so other countries.
Responding to the refugee crisis in Rwanda meant taking funds for
democratic institution-building from the rest of Africa at a moment
when positive trends were emerging elsewhere on the continent. When the
United States needed $2 million to monitor a cease-fire between the
Kurdish factions in northern Iraq, ready money was not immediately
available, the situation deteriorated, and Saddam Hussein was afforded
a pretext to send forces into northern Iraq--a move which culminated in
U.S. military action costing multiples of the originally needed sum.
However, at a second level, evidence of the lowering of the U.S.
flag around the world shows up in reports to us each day in large and
small examples. The scarcity of resources impacts on our ability to
conduct the basics of promoting and protecting our interests around the
world. Perhaps individually some of these examples might be passed
over. However, cumulatively they become clear signs of the decline of
America's diplomatic influence. We get reports everyday underscoring
the deterioration of our Nation's diplomatic infrastructure. For
example:
--In the Consular field, tight budgets over the years have been
steadily eroding the ability of consular sections (and passport
agencies) to deliver the kinds of every-day services to
American and foreign publics that most people had come to take
for granted. Consular officers have done more with less for so
long that we have forgotten that this used to be a business
with some civility and humanity built into it. Now, its like
operating a meat-packing plant. In 1962, consular officers
overseas handled about 2,000,000 consular services in the major
categories. There were 536 officers overseas to do it. By 1972,
494 officers did over 4,000,000 services. By 1977, 603 officers
did 7,000,000. And in 1993, 634 officers did 10,000,000
services in the same major categories of non-immigrant visas,
immigrant visas, passport and citizenship, and protection and
services for American citizens. Further, we hear concerns from
our members that travel funds are insufficient to do necessary
American citizen protection work or anti-fraud field
investigations. Immigrant visa cases of questionable pedigree
just get stacked up for months until sufficient time and
resources are available to examine them. These examples
underscore the importance of the Department of State fee
retention initiative which our dedicated consular staffs
urgently need. This initiative is also compatible with the
``Consular Strategies for the Future'' initiative which AFSA
developed and approved late last year.
--Our members do not have funds for international business phone
calls in many posts. They must send faxes and ask American
businesses to call them back the next day to pursue business
leads. Other nations' embassies speed dial their business
calls. One of our members could not get full funding to attend
an important conference. So in order to attend, he stayed with
a foreign diplomat with whom he was friends as his embassy
could not provide funds for a hotel. The air conditioning in
our Embassy in Seoul shuts down at six p.m. each work day.
People cannot stay late in the sweltering heat to finish their
work on their own time. Others posts cannot afford to provide
heating. In Tbilisi, Georgia the heat in Embassy homes is shut
off at ten PM each night to save fuel. In Paris, the Embassy
can no longer afford to provide light bulbs to employees living
in apartments wired for 110 volts and the bulbs are not
available on the local market.
--The list goes on. We are aware of the lack of funding to support
the ``Summit of the Americas'' initiative that is especially
important for our export and trade relations. Because of the
overwhelming diversion of personnel resources to Bosnia and the
other areas involved in the former Yugoslavia conflicts, we do
not have the personnel sufficient to do all the important
preparatory work to support the Organization for Security and
Cooperation initiatives and fulfill our convention arms control
agreements. There is a great unmet need to buildup our
facilities and expertise for the proposed ``China 2000''
initiative to improve the resources available to strengthen our
relationship with that great nation as we move toward the 21st
Century. An AFSA member has started a web page in Beijing
showing the substandard living conditions that Foreign Service
employees endure there.
--We have failed to take in sufficient numbers of Junior Officers and
specialists to meet the future needs of American diplomacy. The
Foreign Service Exam in 1995 was canceled to save funds. Our
officers state that professionally they live in an age of
triage. The hard job is deciding what cannot be done. The signs
of the decline of American diplomacy goes on and on. We do not
have enough funds to do needed jobs throughout the world.
Mr. Chairman, the Administration has requested a 4 percent increase
in the Administration of Foreign Affairs account of the State
Department's appropriations request--a request that is barely above the
inflation rate and a large portion of which will go for communications
and information hardware improvements. This Presidential request is
understandable in the context of balancing the budget and what OMB
views as the competing claims for resources.
But from our ``front line perspectives,'' this funding is not
enough. The real need is much greater than just communication and
information improvements, though that need is very real. We need more
than just our facilities in Beijing improved. We need more than the
planned 150 new general officers per year, and the Foreign Service exam
should be given every year to assure an adequate number of potential
candidates. Adequate intake is also needed for security in the form of
Diplomatic Security agents, and other special functions. More funds for
representation and travel for the smaller posts is needed, as well as
greater funding for all types of training, but especially increases in
management training and to increase the talent pool of officers skilled
in the very hard languages such as Chinese.
Mr. Chairman, AFSA understands the constraints on available
resources in the current budget climate. However, it must be realized
that there are real world consequences when sufficient resources are
not available for the advancement and protection of American interests
around the world. We would never accept this decline in our military
readiness; yet our diplomats stand at the very front lines around the
world. We are in decline. We cannot succeed if we continue to try to do
things ``on the cheap.''
Beyond funding, however, AFSA believes that certain management
steps are necessary. As the Subcommittee supported and encouraged the
Department to develop the ICASS system in lieu of the failed FAAS
support method, and to develop an overseas staffing model, AFSA
believes that more needs to be done to improve the management
structure.
The foreign affairs agencies management should be encouraged to
develop a needs based work force planning system. There is concern that
the Foreign Service Act's Sec. 6091 personnel report provided to the
Congress by the Department of State is both static and backward-
looking. The report does not reflect either current or future staffing
needs of the Department. Furthermore, AFSA believes that anomalies in
the statistical data and their underlying assumptions have perpetuated
a system whereby, unrelated to actual skills needs, experienced and
effective Senior and middle grade officers are being involuntarily
separated from the Service solely for having reached time-in-class
(TIC) limits. The need for work force planning in all foreign affairs
agencies is indicated by this case study from the Agency for
International Development, Ninety-one Foreign Service Officers were
separated from the Service through a reduction in force (RIF) in fiscal
year 1996 because their skills were allegedly in surplus to USAID's
workforce demands. Within five months, 30 of these RIFed employees were
hired back as personal service contractors because USAID still needed
the skills and the experience these people had. The dollar costs to the
Agency and the human costs to all USAID's employees were very high and
could have been avoided by good management.
AFSA believes that in an increasingly constrained resource
environment, the Department should move to establish a true needs-based
system of strategic personnel planning. Work force management in the
agencies has been heavily concentrated on important, but narrow,
personnel issues--assignments, promotions, recruiting--rather than
fundamental needs, priorities and a systematic allocation of scarce
personnel resources. Further, the State Department has moved too slowly
to establish performance goals. Currently there is no system in place
to quantify performance--to measure the success or failure to achieve
goals. Without such objectives, adequate resource and personnel
planning cannot be reasonably accomplished. USIA and USAID have at
least attempted to install such systems.
Mr. Chairman and Members of the Subcommittee, in earlier testimony,
Secretary of State Albright provided an eloquent litany of the work of
the Foreign Service. She said that:
``We depend upon our diplomats to negotiate and verify the
agreements that keep us safe from the spread of nuclear weapons. We
rely on them to maintain day-to-day support for the peacemakers over
the bomb-throwers in strategic areas of the world. We turn to them to
build relationships with other nations that will enable us to protect
our citizens from the scourge of drugs, the plague of crime, and the
threat of terror.
``We ask them to help open new markets and assure fair treatment
for American goods and services in a fiercely competitive global
marketplace * * *.
``We expect them to look behind the claims of dictators and despots
and to report the truth about abuses of civil liberties and violations
of human rights.
``We count on them to help Americans who are hurt or fall seriously
ill or who are otherwise in need of a friendly voice in faraway lands.
``And we require them to provide support for other federal agencies
* * *.''
There is a most important job to be done in advancing and
protecting U.S. interests abroad. It requires Foreign Service
professionals with adequate resources and training to do the job. While
they are exposed to exotic illnesses, personal security threats, family
separation, the lack of decent education for their children, and other
hardships for their families, they are there because America needs them
and because they want to serve the country they love. As the Congress
makes its decisions regarding this legislation, I trust that it will
provide the necessary resources and support the Foreign Service needs
and deserves.
Thank you for taking our views into consideration.
______
Prepared Statement of the Center for Marine Conservation
The Center for Marine Conservation appreciates this opportunity to
share our views regarding the President's fiscal year 1998 budget
request for the marine conservation programs of the National Oceanic
and Atmospheric Administration (NOAA).
The Center for Marine Conservation is committed to protecting ocean
environments and conserving the global abundance and diversity of
marine life. Through science-based advocacy, research and public
education, CMC promotes informed citizen participation to reverse the
degradation of our oceans. CMC is a nonprofit conservation organization
with 120,000 contributing members, headquartered in Washington DC, with
field and regional offices in California, Washington State, Florida and
Virginia.
In general, we support the Administration's request for the marine
conservation programs of NOAA as described under the agency's strategic
plan goals: Build Sustainable Fisheries, $332 million; Recover
Protected Species, $69.7 million; and, Sustain Healthy Coasts, $212.2
million. Of particular interest are the marine conservation programs of
the National Ocean Service (NOS) and National Marine Fisheries Service
(NMFS). We urge the Senate Appropriations Committee to also support
these funding levels and provide for the additional needs described
below.
We also strongly urge the Appropriations Committee to allow the
NMFS Office of Protected Resources to do its job in protecting
threatened and endangered sea turtles from shrimp trawls. We ask the
Committee to cease requiring the agency to waste precious resources by
engaging in unnecessary activities as Congress has done in the last two
fiscal years.
Just as the Interior Appropriations Subcommittee has jurisdiction
over funding of stewardship of the nation's public lands, this
Subcommittee has jurisdiction over funding for the stewardship of the
Nation's public oceans. We refer to coastal waters and the Nation's
exclusive economic zone (EEZ), those waters out to 200 miles off our
shores. This is an area of approximately 3.4 million square miles, more
than the area of the entire contiguous United States. Attached to this
statement is a map of this area. Within this vast realm NOS and NMFS
have responsibilities for natural resource management, pollution
control and protection of threatened and endangered species and marine
mammals.
The living marine resources of our pubic oceans are of extreme
importance to our Nation. It is estimated that in 1994 the commercial
fishing industry contributed a total $20.2 billion to the U.S. Gross
National Product. Limited analysis by NFMS estimates that almost 15
million people made over 66 million marine recreational fishing trips
in 1994. It is estimated that marine recreational fishing contributes
$7 billion to the economy. The conservation of marine mammals and
endangered marine species provide abundant recreational opportunities
to millions of Americans annually. In the United States, more than 3
million people annually participate in whale-watching, generating more
than $230 million in direct and indirect revenue. Consequently,
providing adequate funds today for the conservation and management of
living marine resources will have both immediate and long-term benefits
for the American people.
national ocean service
National Marine Sanctuary Program
We urge the committee to provide $15 million for this important
program. This is an increase of $1.8 million over the President's
request and is the level authorized in last year's reauthorization
legislation for the program. While we appreciate the President has
requested an increase of more that $1.5 million over the current year,
we note that NOAA's justification document states the increase will
only ``* * * partially fund the highest priority for the National
Marine Sanctuary Program, which is to ensure that all designated
sanctuaries achieve the basic operational level.'' We interpret this to
mean that the program is not now meeting its basic operational
requirements and that it will not, even with the proposed increase.
Often referred to as our marine parks, the 14 sanctuaries around
the country encompass almost 19,000 square miles of the Nation's most
significant marine resources. NOAA's justification document goes on to
state that with current funding resource protection, supporting
research and education efforts are inadequate and that without
additional funding research shortfalls will hamper the agency's ability
to manage these areas. An independent National Marine Sanctuary Program
review panel recommended annual funding of $30 million in 1990, a
recommendation that was endorsed by NOAA's public advisory committee in
1992.
We also note that in 1997 and 1998 NOAA will begin implementing
recently finalized management plans for the Florida Keys and Humpback
Whale Sanctuaries, adding to the need for increased funding.
South Florida Interagency Ecosystem Restoration Initiative
We recommend that the Committee fully fund NOAA's portion of this
vital initiative for the coming fiscal year. The $3.8 million requested
by NOAA, a small portion of the overall request for the Initiative, and
split between NOS and the NOAA's Coastal Ocean Program, will allow NOAA
to fully implement its integrated ecosystem monitoring program, in
partnership with state and local agencies and academic institutions, in
Florida Bay and the Florida Keys National Marine Sanctuary. These
waters are the downstream end of the South Florida ecosystem and thus
are affected by the activities of other agencies working to restore and
protect the Everglades. The monitoring program will help the agency
model and assess changes to the marine resources of Florida Bay and the
Florida Keys coral reef system.
The Control of Polluted Runoff to Coastal Waters
We urge the Committee to provide $4 million for the polluted runoff
control program for coastal waters, section 6217 of the Coastal Zone
Act Reauthorization Amendments of 1990 (CZARA). This program has been
unfunded for the last two fiscal years and the President has requested
only $1 million for fiscal year 1998. Polluted runoff is the largest
source of coastal pollution to the Nation's coastal waters and is
responsible for beach closures and shell fish bed closures.
Section 6217 promotes reducing polluted runoff to coastal waters
through better government coordination. There are few enforceable
controls on this massive source of coastal pollution. Section 6217 is
the only nation program to ensure that if voluntary measures taken to
reduce polluted runoff are ineffective, the State has enforceable
backup authority to protect coastal waters.
States are making significant progress under CZARA and are
uncovering important opportunities and authorities to address coastal
runoff not previously identified or used. They have identified measures
to reduce coastal pollution and restore critical coastal habitats vital
to commercial and recreational fisheries, threatened and endangered
species, wildlife and public health.
The Nation's 6217 program has now reached a critical stage where
adequate funding is absolutely necessary to ensure states and
territories have resources to finalize their programs. Twenty-nine
coastal states and territories have submitted programs to NOAA and the
Environmental Protection Agency for final review and approval. Fourteen
of these programs have already been conditionally approved, but there
remains a great deal of work to be done. Additional funds are essential
so that states and territories can finalize programs and measures
necessary to satisfy federal guidelines and conditions.
national marine fisheries service
Resource Information
For the Resource Information line item we applaud the
Administration's request for an additional $1.67 million in funding to
conduct research and develop technologies to deal with the critical
issue of bycatch. However, we are concerned that this line item is
underfunded in the budget request in light of the tremendous need for
more timely stock assessments for marine fisheries and other living
marine resources.
NOAA's justification shows the agency anticipates little or no
progress on stock assessments for fiscal year 1998 when the recently
reauthorized Fisheries Conservation and Management Act requires the
agency to make annual reports on what stocks are overfished. The agency
currently classifies the utilization of 31 percent of fish stocks as
unknown. It is also behind in updating assessments of other important
stocks. For example, NMFS is woefully behind in conducting a stock
assessment on the spiny dogfish along in the Atlantic. This is a small
shark that lacks a management plan and for which fishing pressure has
increased dramatically as fishers seek alternatives to other depleted
fisheries. Many scientists and fishermen think it is likely overfished
at this time. The stock, however, is currently considered near full
exploitation from a 1994 stock assessment, based upon 1993 data.
NOAA also reports that for 1995 the status of 65 percent of marine
mammal and sea turtle populations is unknown. Given the problems of
high mortalities of endangered right whales off the east coast in 1996
we recommend that the Committee retain the current level of funding for
Right Whale Research as opposed to cutting it by $50,000 as the
President has proposed. Similarly, given the uncertainty as to the
cause of decline of Steller sea lions off Alaska, and need to determine
whether the fishery is the reason, we think it is unwise to cut this
research by $330,000 or 19 percent as the President has proposed. We do
however credit the Administration for maintaining funding for New
England stock depletion research and the Gulf of Maine groundfish
survey.
Fisheries Management Activities
We support the Administration's requested increase of $8.9 million
for this line item. For the first time our Nation's principle federal
fisheries management legislation--reauthorized last fall as the
Magnuson-Stevens Fisheries Conservation and Management Act (FCMA),
enacted as the Sustainable Fisheries Act--directly addresses the issues
of overfishing, bycatch and essential fish habitat. Under the FCMA, the
regional fishery management councils and NMFS are required to adopt or
amend fishery management plans that: (1) identify overfished stocks and
stocks approaching an over fished condition, and prevent or eliminate
overfishing and rebuild overfished stocks; (2) avoid bycatch and
minimize the mortality of unavoidable bycatch; and (3) identify,
designate and protect essential fish habitat, including minimizing
adverse effects on essential fish habitat caused by fishing and
consulting with federal agencies proposing activities that may
adversely affect such habitat.
For the fishery management councils to carry out their duties under
the FCMA the Administration has requested an increase of $1.5 million.
While this figure may not be adequate for the revision of 39 fishery
management plans to bring them into compliance with the FCMA, it is a
significant step in the right direction. The remaining $7.3 million
increase will be used by NMFS to fulfill its new responsibilities under
the Act including the extremely important Essential Fish Habitat
provisions.
While we support the increases, we do question the decreases of
$550,000 proposed for International Fisheries Commissions and $400,000
proposed for Pacific Tuna Management and urge the Committee to maintain
funding at current levels. In the Pacific, longline fleets from other
nations are increasing their fishing power exponentially. In order to
conserve this resource we must be able to meet in fishery management
forums to discuss conservation measures.
We would like to highlight another issue that is not dealt with in
the President's request and one we urge the Committee to take no action
on. The issue is bycatch in the Gulf of Mexico shrimp trawl fishery and
the need for this fishery to abide by the requirements of the FCMA just
as all other fisheries must do. There is also an urgent need to protect
the ecosystem of the Gulf and restore its depleted finfish fisheries.
At its March meeting of this year the Gulf Fishery Management Council
folded to political pressure from the shrimp industry and its political
allies in Congress to back off on its previously approved requirement
for shrimp trawls to use bycatch reduction devices (BRD's). The Council
asked NMFS to delay implementation of this requirement by one year,
effectively reversing its action of November of last year in voting to
require the use of BRD's. The Council took this action reluctantly, in
response to threats from Congress to impose a moratorium on the ability
of NMFS to require BRD's in the Gulf and/or eliminate all funding
related to this requirement unless implementation of BRD rules is
delayed.
The causal relationship between shrimp trawl bycatch and the
decline of red snapper, which are overfished, has been clearly
established. Over many years $7.5 million of taxpayer money has been
spent on bycatch characterization, BRD development, and social and
economic research. Research done in cooperation with the shrimp
industry shows clearly that BRD's can reduce shrimp trawl bycatch of
red snapper by 66 percent while retaining 97 percent of shrimp on
average.
CMC is currently urging NMFS to implement the BRD's requirements as
required by the FCMA and urges the Appropriations Committee take no
action to block the agency from carrying out its duty.
Protected Species Management
CMC appreciates the Administration's requested increase of $7.7
million and 45 additional staff positions for Protected Species
Management, but we feel this increase is inadequate. We recommend an
additional $8.5 million for the Marine Mammal Protection Act and $4
million for Endangered Species Act recovery plans.
NOAA's justification document clearly spells out the need for
additional funds. The agency states that for 80 percent of marine
mammal populations it currently has insufficient information for which
to make a negligible impact determination. Thus NOAA has to set more
conservative take levels than may otherwise be necessary and which
place additional restrictions on commercial activities. NOAA states
clearly that it needs funds to gather the data necessary to make
conservation decisions. In 1994 testimony before Congress NMFS stated
that an annual appropriation of $18 million was required to implement
the Marine Mammal Protection Act (MMPA). We recommend that the
Committee provide $18 million for implementation of MMPA to ensure
adequate stock assessment and take reduction plan implementation.
Most of the additional funds, $6.7 million, in the Administration's
request are slated for actions needed to develop and implement recovery
plans for Pacific salmon populations. While CMC does not oppose this
increase, we are concerned that for the last several years this issue
has drawn off the bulk of resources available within NMFS for
Endangered Species Act plans and that the additional increase slated
for whales and sea turtles is not adequate. We support NMFS's intention
to direct funds to protect the critically endangered right whale from
ship strikes and gear entanglement and to implement the Pacific sea
turtle recovery plan. The need for these additional funds is made clear
when NOAA states clearly that current funding is inadequate to respond
to the Endangered Species Act requirements to protect marine species
while minimizing economic impacts of conservation actions.
Unfortunately NMFS's ability to carry out protected species
responsibilities has been hampered by Congressional attempts to further
delay the protection of threatened and endangered sea turtles from the
shrimp trawl fishery in the Gulf of Mexico. For the last two years
Congress has included report language that required NMFS to conduct
redundant activities to justify the need for Turtle Excluder Devices
and divert needed funding from other protected species activities. One
activity potentially affected is the badly needed Hawaii longline
observer program. Pacific leatherback sea turtle populations are
critically endangered and this program is essential to identifying ways
to reduce takes to avoid the development of an ESA crisis.
We are providing the Subcommittee with numerous copies of CMC's
report Delay and Denial: A Political History of Sea Turtles and Shrimp
Fishing, which documents the long and tortured process by which TED's
were required to protect threatened and endangered sea turtles. Nearly
24 years passed from the time that the Kemp's ridley sea turtle was
listed as endangered and the time that TED's were required in all
shrimp trawls. When Congress last inserted itself in this issue, in
1988, the National Academy of Sciences report Congress mandated
strongly endorsed TED requirements to reduce sea turtle mortality in
shrimp trawls.
Despite pressure from Congress not to do so NMFS has recently
issued revised rules under the Endangered Species Act decertifying less
effective soft TED's to protect threatened and endangered sea turtles
in light of increased mortality over the last few years.
We strongly urge the Appropriations Committee and Congress to cease
their interference and to allow the agency to do its job in protecting
sea turtles in a manner that allows the shrimp fishery to continue
operation.
Habitat Conservation
CMC supports the Administration's requested $1.8 million increase
in Habitat Conservation in light of new authority granted NMFS and the
regional fishery management councils to influence federal decisions
affecting fisheries habitats. CMC also supports the agency's efforts at
completing Habitat Conservation Plans to protect salmon spawning
habitat on the west coast.
Enforcement and Surveillance
CMC supports the Administration's proposed $1.7 million increase
for enforcement. The enactment of the new provisions of the FCMA will
require greater enforcement effort from NMFS. In addition, the agency
has recently finalized regulations to conserve Atlantic sharks and sea
turtles in the Gulf of Mexico and South Atlantic. Also the recovery of
New England groundfish stocks will require increased enforcement to
ensure compliance with the requirements of Amendment 7 to the
multispecies management plan. Of great interest in New England is NMFS'
work to implement the use of advanced vessel monitoring systems to both
make enforcement more efficient as well as less burdensome on
fishermen.
Acquisition of Data
CMC is very concerned about the Administration's proposed 6 percent
cut in the acquisition of data. We urge the Committee to reject this
cut of $1.74 million. It makes no sense to reduce days-at-sea of NOAA's
fisheries research vessels when the agency is severely lacking data
essential to the sound management of the Nation's living marine
resources. Data are required for assessments of fish and marine mammal
populations. The increased reporting on the status of fish stocks
required to update 39 fishery management plans only increases the need
for a greater number of days-at-sea to conduct assessments.
NMFS estimates that it needs a total of more than 4,400 days-at-sea
and is currently able to support only 3,600 days at sea. These days-at-
sea are provided by combination of NOAA vessels, charters and through
state and foreign cooperation.
Fleet Maintenance and Planning
CMC supports the Administration request of $11.8 million. We note
that while NOAA is seeking no funds for the new vessel construction in
fiscal year 1998 the agency is planning to begin design work for a new
class of acoustically quiet fisheries research vessels. NOAA's
dedicated fishery research fleet is aging and inefficient to operate.
We recommend that replacement of the current fleet move forward in a
manner that will allow the agency to utilize properly designed and
equipped ships to complete its mission. It matters not whether these
new vessels be owned and operated by NOAA. That determination can be
made on the basis of cost to the taxpayer.
marine mammal commission
In addition to the marine conservation programs of NOAA, we urge
the Committee to increase funding for the independent Marine Mammal
Commission. We urge the Committee to provide $1.35 million in fiscal
year 1998. A fully funded Commission is a source of rational and
constructive scientific advice on marine mammal protection issues. Many
of these issues could become contentious absent the Commission's
analysis. The President has requested $1.24 million which is an
increase of $51,000 over current funding. For the last two years the
Commission has only been able to function at a minimal level, unable to
carry out an independent research program. The funding level we are
recommending would boost funding to a level approaching the
Commission's fiscal year 1995 budget and enable it to conduct needed
research.
This concludes our statement.
[GRAPHIC] [TIFF OMITTED] T11AP24.000
______
Prepared Statement of Lloyd Q. Dowdell, President, Advanced Telecomm.
Tech., Inc.
Mr. Chairman, I respectfully submit testimony on behalf of ATTI, a
small R&D Telecommunications Company located in Belleville, New Jersey.
ATTI has for the last six years committed its resources toward its
mission to help address a top concern of Americans--the incidence of
crime and violence in our society. In the company's effort to combat
violence, ATTI has worked with members of Congress and prison officials
to provide cost-effective learning systems and programs to aid
Corrections officials in reducing recidivism.
This testimony requests your support for the formation of a nine-
state youth violence prevention network. Using the latest and most
innovative computer and technology infrastructure, ATTI's network will
connect nine or more of the largest cities in Ohio, Illinois, New
Jersey, New York, Pennsylvania, Connecticut, Florida, California and
Kentucky. ATTI's network will collaborate with state universities,
colleges, teaching hospitals, libraries, churches, community centers,
municipalities, YMCA's and YWCA's and other community organizations.
ATTI will offer network links to Youth Correctional Facilities to
provide training to incarcerated youth and provide access to aftercare
in conjunction with churches and other community based organizations.
Much of the company's training efforts will be directed towards at-risk
youth. ATTI's network will focus on foundation skills for these youth,
especially dropouts. Working with community colleges and the local
school districts, ATTI's Basic Skills component will cover reading,
writing, arithmetic and mathematics, listening, and speaking. Our
Thinking Skills component involves various decision-making and problem-
solving strategies through authentic tasks. ATTI's Personal Qualities
component involves students learning responsibility, self-esteem, self-
management, integrity, sociability and behavioral modification skills.
ATTI's program will be delivered to housing facilities in the targeted
areas.
As Americans, ATTI and its collaborative partners' mission, is to
intervene in the lives of at-risk youth; delinquents and youths
involved in the criminal justice system--to help provide this targeted
population with the skills competency that students need for success in
the modern workplace and to become productive citizens.
Mission Statement.--ATTI's mission is to save lives, reduce crime,
violence, and save prison costs to taxpayers and to use human and
capital resources to enhance and empower individuals with the
essentials to take care of their families and to be good citizens.
Vision.--To help eliminate poverty and to participate meaningfully
in revitalizing urban areas and those in need.
Goal.--To empower individuals seeking to improve their life with
assistance to become self-sufficient.
Objective.--To work in partnership with the private, public and
religious sectors to strengthen America and its inner cities.
Hence, we have identified several areas of intervention consistent
with the May, 1996 Rand Study: Diverting Children From A Life Of Crime.
ATTI's initiative, at an intervention of 2,000 individuals, can save
each state approximately $330 million in crime and violence related
costs over a period of 5 years.
According to a study released in April, 1995 by the Department of
Justice (DOJ), 1.6 million individuals are incarcerated in the United
States and another 1 million is involved in the criminal justice
system. In terms of violence, a separate DOJ study estimates that the
price of violence and crime cost Americans some $460 billion annually.
The Rand research brief, Diverting Children From A Life Of Crime:
What Are The Costs And Benefits, states that although headlines show
crime rates falling, in 1996, there was still likely one violent crime
committed for every 130 U.S. citizens--a rate several times that in
other industrialized democracies. The report goes on to say that
despite the seriousness of America's crime problem, most of the money
and effort devoted to solving it are restricted to one approach--
incarcerating persons who have already committed crimes. Much less
attention has been paid to diverting youths that have not yet committed
crimes from doing so.
This is what makes ATTI's comprehensive collaborative project so
unique in helping to reduce crime among youth and to help make
Americans safe. First, ATTI will not only deploy the most advanced
cost-effective technology (through distance learning) initiatives and
on-site training, but also, ATTI's network will tie-in to state
operated youth facilities and at-risk youth sites in neighborhoods. In
other words, ATTI's initiative will cover both the youths in and
outside youth facilities.
The United States now leads the industrialized world in prison
population. The prison buildup has not come cheaply. According to a
February 7, 1994 Time Magazine report, the average annual cost per
inmate is $23,500 and the average cost per bed in maximum-security
facilities is $74,862. Ohio leads the pack with its prisons operating
at 182 percent of capacity. This demonstration project is aimed at
reducing costs, recidivism, and violence as previously mentioned.
As Founder of ATTI, I have committed over $600,000 to research and
evaluation in over 20 states, to assess the problem and discover what
works. The company's research reveals that almost all of the prisons
lack mandatory education programs that lead to a GED in spite of clear
statistics that show a direct correlation between illiteracy and crime.
We also discovered that almost 90 percent of incarcerated individuals
lack a high school diploma or a GED certificate, and it was indeed this
group that was causing most of the crime and violence (illiterate
repeat offenders).
The statistics on violence, as you know Mr. Chairman, points to an
emergency that threatens the future of this generation, our state, and
our nation. The loss of human potential, the pain and suffering of
families and acquaintances is enormous; and the spiraling, negative
impact on the educational and health care systems, as well as
businesses, demands our attention.
Teenagers commit almost a fifth of violent crimes. Consistent with
this reality, a significant number of ATTI's programs, services, and
research pertains to the youth population. This project will further
address this issue by offering youth detention centers ATTI's
comprehensive programs.
Violence prevention research is very much in its infancy. An
overwhelming proportion of violence prevention efforts ongoing have not
been evaluated nor has there been attention to what works best for
whom. There is a need to attain a better understanding of risk and
protective factors across populations, empirically establish the
efficacy of preventive interventions, explore the individual,
community, organizational, and cultural characteristics that moderate
risk and intervention outcomes, and evolve guidelines and strategies
for successful implementation and dissemination.
ATTI, in collaboration with Harvard University Medical School, the
University of Medicine and Dentistry of New Jersey and other prominent
universities, proposes to develop, implement, and evaluate a
multifaceted program designed to reduce crime, violence and
delinquency. The collaboration will also address health and behavioral
problems, enhance social skill competence, foster safer and healthier
minds, increase education and create a renewed sense of hope and
empowerment on the part of our targeted population from inner cities,
especially youths at-risk.
ATTI's initiative, with hospitals/academic partners, will also
provide in-service teacher training to enable teachers to better deal
with the epidemic of school-based violence and its associated causes.
ATTI's connection to community policing initiatives disseminated to
local school districts will help bring better cooperation between kids
and law enforcement. A comprehensive system of school-based, school-
linked and community based services (including health professionals)
will be put together based on an organizational assessment involving
the collection of data from all levels of the community, including
parents and teens located in high rise apartment complexes and crime
riddled neighborhoods.
Funding for this demonstration program will accomplish and fulfill
two very important needs. First, it will lead to the abatement of crime
in targeted areas. It will also position this collaborative effort for
private funding if Congress cannot appropriate for this initiative
beyond the first year. ATTI's activities will involve a primary, but
not exclusive, focus on violence prevention and control, given the fact
that overall well-being impacts risk for violence. The interrelated
services will emphasize the cognitive, effective, skills building and
environmental elements of violence prevention, emphasizing the
development of competencies essential not only to violence prevention
but to the promotion of personal academic success as well. All
components will be designed with the intent of strengthening the
organizations' internal resources and linkages with existing and new
community resources.
The Department of Education reports that approximately 200,000 high
school students drop out each year. Research shows that large
proportions of dropouts become juvenile delinquents and eventually
invade our criminal justice system. Without effective countermeasures,
like ATTI's proposal, this problem will exacerbate in light of Senator
Hatch and Daschle's youth crime bills introduced early this year.
States spend an estimated $10,000 per year to educate a student in
ATTI's targeted areas. When incarcerated, states spend approximately
$23,000 to $30,000 annually to care for these individuals, our program
will save states about $26,000 per individual. Teacher and
administrative salaries account for 90 percent of the educational cost
among prison schools. Due to the acute rise in the prison population,
educational programs are available to a limited number of inmates for
budgetary reasons. The few that are enrolled in educational programs
often have to delay completing their education due to funding cuts.
There are several other factors that may contribute to the lack of
meaningful education programs in jails and prisons nationwide.
Nevertheless, it would be disingenuous for one to believe that we can
reduce recidivism and crime by rehabilitating the inmates when
educational programs are unfunded. I have worked with members of
Congress to gain support for an amendment to the recent crime bill.
This amendment mandates that federal prisoners acquire at least a high
school equivalency diploma (GED) before they can qualify for early
release. This will fall on deaf ears unless we utilize innovative
approaches as described above.
Studies by Colombia University and other institutions of higher
education provide critical research that shows recidivism decreases
with increased levels of education obtained by individuals in the
criminal justice system and conversely, the lack of education by these
individuals increases in the level of recidivism which translates into
increased rates of crime and cost. Indeed, Congress itself has found
that 90 percent (70 percent among youth) of the incarcerated
individuals are without basic skills and that obtaining a GED while
incarcerated would reduce their chances of becoming a recidivist.
A recent survey of Americans said that crime is a number one
problem facing this country. Studies show that the industrialized world
in prison population increased about 10 percent in 1995, but the U.S.
prison population increased twice as much.
The goals and objectives of ATTI's comprehensive interactive
distance learning project will help address some of these problems and
provide individuals with much needed education and training programs.
ATTI's network will reduce the normal cost associated with educating
the company's targeted individuals by more than half and at the same
time provide 2 to 3 months of full scale comprehensive training. This
approach will substantially reduce the cost to taxpayers, save lives
and eventually cut into violence and crime in the targeted areas by
assisting the criminal justice system in equipping targeted
individuals, where appropriate, with marketable skills prior to and
after release. Research shows with a GED and other skills, these
individuals will become more productive and make positive contributions
to their communities and society as a whole.
Each of ATTI's training sites (except in youth detention centers)
will be equipped with state-of-the-art computers linked to the Internet
and the information highway. Trainers and course content will be
provided through a combination of on-site, distance learning and
computer based applications from colleges, universities, and where
possible, from local school districts. Candidates that complete
training will receive a certificate from a university, college or
training organization. Training will include ABE, GED, employability
and job-hunting skills, motivational programs, and various technical-
training skills mentioned before. Key to the success of this project,
is government's involvement as a collaborative partner. The results of
this project will lay the groundwork to help attract new businesses to
cities due to the increased number of trained individuals, an increased
skilled workforce, and the reduction of crime.
ATTI needs funding to accomplish the following:
--Train and educate our targeted population, in the nine above
states, as a five-year demonstration project.
--Reduce the cost to both federal and state governments (taxpayers)
by up to $330 million per 2,000 individuals, in crime and
violence related expenses.
--Increase the amount of targeted individuals' enrollment in training
and educational programs by over 100 percent and at 100 percent
less cost.
--Furnish a ``Gateway'' for academic institutions and hospitals to
assist ATTI's effort and provide access to ATTI's courses,
training and skills enhancement programs on demand.
--Provide a full days menu of numerous educational and skills
enhancement programs.
--Offer health related programs.
--Provide basic skills and other preparatory programs.
We request that the Senate Appropriations Subcommittee on Commerce,
Justice, State, The Judiciary and Related Agencies designate funding in
the amount of $16 million to implement this important national
demonstration project. We also request that this appropriation be
established on a multi-year basis to extend over a period of five years
so that continued research and evaluation can be provided to the
Congress and shared with other crime prevention organizations and
agencies.
In closing, I would like to thank the Chairman and the Committee
for considering this important funding requests.
______
Prepared Statement of Judy Clarke, President, National Association of
Criminal Defense Lawyers
Mr. Chairman and Members of the Subcommittee: The National
Association of Criminal Defense Lawyers (NACDL),\1\ appreciates this
opportunity to offer our views concerning the Defender Services
Appropriation for fiscal year 1998. This account has been badly
underfunded for many years. During that same period, funding for law
enforcement, prosecution and prison construction has grown
dramatically. And, at the same time, criminal law and procedure have
become more complex; death penalty litigation has expanded and
accelerated, while funding for capital representation has been
eviscerated; and the costs of legal practice have escalated.
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\1\ NACDL is the preeminent organization in the United States
advancing the mission of the nation's criminal defense lawyers to
ensure justice and due process for persons accused of crime. A
professional bar association formed in 1958, NACDL's 9,000 direct
members--and 78 state and local affiliates with another 25,000
members--include private criminal defense lawyers, public defenders and
law professors committed to preserving fairness within America's
criminal justice system.
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We believe it is essential to recognize the defense function as an
integral part of America's criminal justice system if it is to ensure
the Constitution's guarantee of fairness and due process to persons
accused. To preserve and protect the integrity of that system, we
strongly urge Congress to appropriate $400,000,000 for Defender
Services an amount necessary to begin the recovery from too many years
of inadequate funding.
introduction
The Defender Services Appropriation funds the Federal government's
Sixth Amendment obligation to provide counsel to represent defendants
unable to hire their own attorney.\2\ In addition, the appropriation
enables the government to fulfill its Fifth Amendment duty to provide
such defendants with the ``basic tools,'' \3\ and the ``raw materials''
\4\ necessary to contest the prosecution's case within our country's
adversary system of justice. These services are mandated by the United
States Constitution; they are not ``discretionary.''
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\2\ Gideon v. Wainwright, 372 U.S. 335 (1963); Johnson v. Zerbst,
304 U.S. 458 (1938).
\3\ Britt v. North Carolina, 404 U.S. 226, 227 (1971).
\4\ Ake v. Oklahomak, 470 U.S. 68, 77 (1985).
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Four years ago, the Judicial Conference of the United States
reported to Congress the results of its extensive review of the
Criminal Justice Act (CJA):
There is no question that the single most important problem
to confront the CJA program in recent years is that sufficient
funding has not been appropriated to meet the increasing costs
of providing the Constitutionally mandated services that the
program was created to provide.\5\
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\5\ Report on the Federal Defender Program 11 (March 1993). The
result of an extensive study of the effectiveness of the Criminal
Justice Act, as required by Section 318 of the Judicial Improvements
Act of 1990, the Report is reprinted at 53 CrL (BNA) 2003 (April 14,
1993).
Years of insufficient funding have resulted in federal criminal
justice system with a number of shortcomings,\6\ including: Failure to
fund federal defender organizations in all districts; failure to fund
cost-effective death penalty representation; unreasonably low
compensation for CJA ``panel'' attorneys; and inadequate qualification
standards for panel attorneys.
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\6\ Report on the Federal Defender Program, at 12.
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NACDL strongly agrees with those findings of the Judicial
Conference Report. Without adequate and long overdue Defender Services
funding, the constitutional mandates of Due Process and Effective
Assistance of Counsel cannot be fulfilled.
public defenders
NACDL agrees with the Judicial Conference that each judicial
district should have an adequately funded federal defender organization
(Federal Defender or non-profit Community Defender).\7\ Defender
offices provide consistently high quality representation because they
specialize in federal criminal law, receive regular training through
the Administrative Office and the Federal Judicial Center, and maintain
ongoing professional relationships with the court and the other
agencies involved in the criminal justice system. In many districts,
defenders also provide training, legal advice, and administrative
support to CJA panel attorneys.
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\7\ Report on the Federal Defender Program, at 20-21.
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Congress should appropriate funds sufficient to open defender
offices in the districts now without such offices; to enable existing
offices to continue to keep up with the caseloads added by accelerating
law enforcement and prosecution budgets; and to accommodate the
increase in complexity driven by recent and expected substantive
criminal legislation.
post-conviction defender organizations
The poor quality of much of America's death penalty representation
is a well-documented national disgrace and international
embarrassment.\8\ Exacerbating that crisis, Congress, in 1996, excluded
funding for the Post-Conviction Defender Organizations (PCDO's) non-
profit community defender organizations which served 20 of the 38 death
penalty states (50 federal judicial districts). That precipitous act
(repeated for fiscal year 1997) together with the accelerated
scheduling mandated by the Antiterrorism and Effective Death Penalty
Act of 1996, leaves hundreds of death row inmates without counsel,
greatly increases the cost of representation for the rest, and has
contributed to delay in the processing of capital cases.\9\ The
Subcommittee should recommend omission of that funding prohibition for
fiscal year 1998.
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\8\ See, e.g., ABA, Resolution of the House of Delegates, Feb. 1997
(calling for a moratorium on imposition of the death penalty because of
widespread defects, notably a failure to provide qualified and
compensated defense counsel, investigators and experts); Int'l Comm'n
of Jurists, Administration of the Death Penalty in the United States
(June 1996).
\9\ See, e.g., Davis v. Thomas, 266 Ga. 835, 471 S.E.2d 202 (1996)
(describing the scramble to replace PCDO representation following de-
funding, and ordering a continuance in the state habeas case).
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Established as a cost-effective means of providing counsel, PCDO's
specialized in state and federal death penalty representation the law's
most complex, burdensome and emotionally taxing specialty. In addition
to direct representation in some cases, PCDO's performed a number of
functions which help to ensure that fair and complete capital habeas
corpus petitions were promptly filed and competently processed by
trained counsel. Those organizations assisted the courts by recruiting
counsel willing and able to provide representation in such complicated
and demanding cases, thus relieving the courts of the need to perform
this difficult and often time-consuming task. In many states, PCDO
assistance enabled private attorneys to provide representation pro bono
without charge to the government. And where pro bono attorneys were not
able to satisfy the need for counsel services, PCDO staff attorneys
provided cost-effective representation in these most critical cases.
Finally, where a PCDO did not have funds to hire enough staff to
represent all of a state's death row population, the PCDO provided
support services that greatly reduced the cost of assigning private
attorneys.
In short, by providing competent, well-trained counsel, PCDO's
reduced delay and, ultimately, the cost of processing capital cases in
accordance with the constitutional requirements and procedures
established by the Supreme Court. As the Judicial Conference Report put
it:
The Death Penalty Resource Centers have provided invaluable
services in an appropriate and cost effective manner. They have
facilitated the appointment of competent attorneys in capital
cases and have brought a higher quality of representation to
these cases. They have, moreover, streamlined the capital
litigation process by expediting cases and avoiding costly
repetitive legal proceedings. The resource centers demonstrate
how the current flexible structure of the CJA program has
allowed for the development of innovative uses of limited
resources that facilitate the attorneys working within the
program in delivering the kind of representation required to
ensure the continued vitality of the Sixth Amendment in even
the most complex and demanding cases.\10\
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\10\ Report on the Federal Defender Program, at 26. See also, U.S.
General Accounting Office, Defender Services Program, 5 (July 1990)
(finding that the PCDO's' average ``cost per representation'' was 46
percent of the cost of panel attorney death penalty representations).
Funding for PCDO's came from the Defender Services Appropriation
and from non-CJA (state or private) resources sufficient to support the
PCDO's work related to state court proceedings. The federal component
of that funding should be restored in order to fill the growing capital
caseload needs, consistent with legislative demands for more federal
capital prosecutions and for faster processing of capital habeas cases.
cja panel attorney compensation
1986 amendments to the CJA authorized the Judicial Conference to
adjust the 1984 panel attorney hourly rates, up to $75 per hour:
Any attorney appointed * * * shall be compensated at a rate
not exceeding $60 per hour for time expended in court * * * and
$40 per hour for time expended out of court, unless the
Judicial Conference determines that a higher rate of not in
excess of $75 per hour is justified for a circuit or for
particular districts within a circuit. * * * The Judicial
Conference shall develop guidelines for determining the maximum
hourly rates for each circuit in accordance with the preceding
sentence, with variations by district, where appropriate,
taking into account such factors as the minimum range of the
prevailing hourly rates for qualified attorneys in the district
in which the representation is provided and the recommendations
of the judicial councils of the circuits.
That adjustment mechanism now 11 years old replaced a similar
procedure adopted by Congress in 1970 authorizing hourly rate
adjustments ``not to exceed the minimum hourly scale established by a
bar association for similar services rendered in the district.''
This goal was subsequently frustrated by the abolishment of
minimum bar fee schedules following the decision of the Supreme
Court in Goldfarb v. Virginia State Bar, 421 U.S. 773 (1975),
which held that a minimum fee schedule promulgated and enforced
by a bar association constitutes unlawful price-fixing in
violation of the Sherman Act. The Goldfarb decision thus
resulted in a collateral deactivation of the adjustment
authority conferred by Congress in the Circuit Councils. * * *
While the CJA Revision of 1984 removed the 1970 language
authorizing judicial councils to set alternate hourly rates, it
made no provision to replace this mechanism for affording
flexibility to the CJA compensation scheme.\11\
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\11\ House Report 99-417, 99th Cong., 1st Sess., (December 5, 1985)
(Statement of Congressional Budget Office, appended to Report). See
Cong. Record Vol. 131 (1985); 1986 USCCAN 61654; 1985 WL 25927
(Leg.Hist.).
The 1970 mechanism Congress revised in 1986 was intended to ensure
that panel payments are ``neither a bonanza for some lawyers to get
more than the going rate in that town, nor an empty shell which will
not be used because the rates are below the going charge in those
towns. * * * [A]nd it is hoped it will reflect what the private
practitioner charges in those jurisdictions.'' United States v. Mills,
713 F.2d 1249, at 1259, 1261 (7th Cir. 1983) (Swygert, J., dissenting,
quoting Representative Abner Mikva).\12\
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\12\ See House Report 91-1546, 91st Cong., 2d Sess., (September 30,
1970); 116 Cong. Rec. 34,812, 34812 (1970); 1970 USCCAN 3982; 1970 WL
5700 (Leg.Hist.).
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Despite that legislative intention to adjust the rates to avoid
impoverishing panel attorneys and despite the fact that overhead costs
have risen to exceed the base rates established over a decade ago
except for a token $5 raise in January, 1996, the Judicial Conference
has postponed implementing higher rates in all but the first 16
districts to be approved, in 1988.\13\
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\13\ In 1988, the $75 rate was established--and implemented--in the
following districts and court locations: Alaska, California (Central,
Eastern (Sacramento and Fresno), Northern and Southern), District of
Columbia, Detroit, Michigan, New Jersey, Las Cruces, New Mexico, New
York (Eastern and Southern), and Seattle, Washington; $70 rates were
approved for Phoenix and Tucson, Arizona and for Hawaii; and $60 rates
for Oregon and Las Vegas and Reno, Nevada. Proceedings of the Judicial
Conference (JCUS) 16, 46, 75, 111 (1988).
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Seventy-five dollar rates (generally less than half the market
rate, but more than the average cost of overhead) have been approved
but postponed for lack of funding for the remaining judicial districts:
--In 1990, the $75 rate was approved for all the districts in the
Seventh Circuit (Wisconsin, Illinois and Indiana) and extended
to entire districts where previously limited to specific court
locations.\14\ Due to inadequate funding, those approved rates
have not been implemented.
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\14\ JCUS 79, 108 (1990).
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--In 1991, $75 per hour was approved for the Southern District of
Alabama, Arizona, Connecticut, Florida, the Northern District
of Georgia, Guam, Idaho, Kentucky, Louisiana, Maryland,
Massachusetts, the Western District of Michigan, Mississippi,
Missouri, Nevada, the Western District of North Carolina, Ohio,
Oregon, the Middle and Western Districts of Pennsylvania, South
Carolina, Tennessee, Texas, the Western District of Virginia
and West Virginia.\15\ Due to inadequate funding, those
approved rates have not been implemented.
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\15\ JCUS 18, 47, 56-57, 73 (1991).
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--The $75 rate was approved in 1992 for the Northern and Middle
Districts of Alabama, the Eastern District of Arkansas,
Colorado, Delaware, the Middle and Southern Districts of
Georgia, Iowa, Kansas, Minnesota, Montana, New Hampshire, the
Western District of New York, the Eastern and Middle Districts
of North Carolina, North Dakota, Northern Mariana Islands,
Oklahoma, the Eastern District of Pennsylvania, Puerto Rico,
Utah, Vermont, Virgin Islands, the Eastern District of
Washington, Wyoming, and Hawaii.\16\ Due to inadequate funding,
those approved rates have not been implemented.
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\16\ JCUS 21-22, 39 (1992).
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--And in 1995 the $75 rate was approved for the Western District of
Arkansas, Maine, Nebraska, South Dakota, and the Eastern
District of Virginia.\17\ Due to inadequate funding, those
approved rates have not been implemented.
---------------------------------------------------------------------------
\17\ JCUS ---- (1995).
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Except for the token $5 increase to $45 per hour for work out-of-
court (generally two-thirds of the average billing) and $65 for work in
court, the rates established after 1988 for those 77 districts have
been repeatedly postponed. However, the cost of maintaining a law
practice has not been postponed, but has steadily increased.
In the District of South Dakota, one of the least expensive
locations, surveys conducted by the Defender Services Division show
that the average overhead cost of a law office in 1994 was $38 per
hour.\18\ In most locations, the costs are notably higher. Average law
office overhead in New Hampshire, for example, was $53 per hour back in
1992.\19\ In Vermont, the overhead cost was $47 per hour in 1993.\20\ A
1994 survey by the Tennessee Bar Association showed the average cost of
office overhead of $46.81 per billable hour.\21\ In Texas, the average
office overhead back in 1991 was $64.25 per hour.\22\ In Colorado, in
1992, $46 per hour.\23\ In Kentucky, in 1991, $37 per hour.\24\ In
South Carolina, in 1991, $50 per hour.\25\ In Arkansas, $47 per hour in
1992.\26\ And in Maryland, in 1991, an average overhead cost of $70 per
hour.\27\
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\18\ Records of surveys conducted by the Administrative Office of
the United States Courts.
\19\ Id.
\20\ State of Vermont v. Bacon, 163 Vt. 279, 315 (1995).
\21\ State of Tennessee v. Mathews, Criminal Court of Montgomery
County, No. 33791, (March 18, 1995), at 1 (order setting a court-
appointed hourly rate, in a capital case, at $100 per hour).
\22\ Records of surveys conducted by the Administrative Office of
the United States Courts.
\23\ Id.
\24\ Id.
\25\ Id.
\26\ Id.
\27\ Id.
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Since those surveys were conducted, overhead costs have continued
to rise. But the compensations rates have not, effectively turning
panel attorney service, at $45/$65 per hour in most states, into a
direct subsidy of the government's constitutional obligation to provide
assistance of counsel to the indigent accused of crime.\28\ The
Judicial Conference has long recognized this problem:
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\28\ The Judicial Conference's CJA Guidelines, para. 2.28 A.,
excludes office overhead from those expenses reimbursed to panel
attorneys: ``The statutory fee is intended to include compensation for
these general office expenses.'' Compare, e.g., State of Louisiana v.
Green, 631 So.2d 11, 13 (La. App. 1993) (setting an overhead expense
rate of $30 per hour in addition to fees of $45 per hour).
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The $40 and $60 hourly rates paid to CJA panel attorneys are
seriously deficient. In many locations, they do not even cover the
basic office overhead costs of law offices. Thus, many lawyers accept
assignments of cases from the federal courts at a financial sacrifice
to their livelihood.\29\
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\29\ Report on the Federal Defender Program, at 30.
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Of course, the problem is most acute in districts without a federal
defender organization, where panel attorneys are often conscripted to
fulfill the government's constitutional obligations, losing their
livelihood, and risking bankruptcy in the process.\30\
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\30\ See, e.g., Bey v. United States, No. 93-8442, cert. denied,
114 S.Ct. 2714 (1994) (question presented: does conscription of panel
attorneys to serve at a financial sacrifice violate the Constitution?).
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The crux of the panel attorney payment problem is this: The CJA,
unlike the 1931 Davis-Bacon Act, does not require panel attorney
payments reflecting, or even reasonably approximating, the prevailing
private market wage. In fact, the $75 maximum rate is substantially
less than fifty percent of the value set by the private market in most
locations. Continued payments at a fraction of that statutory rate and
below the out-of-pocket cost of keeping an office open continually
violates the basic constitutional property rights of those panel
attorneys who, after all, have the same rights and responsibilities of
any other small business owner.\31\
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\31\ In FTC v. Superior Court Trial Lawyers Assn., 493 U.S. 411
(1990), for example, the Supreme Court held (unanimously) that panel
attorneys are small businesses covered by the Anti-Trust laws.
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qualification standards for panel attorneys
As the costs of living generally and practicing law in particular
have risen, and as federal criminal law has become more complex, time-
consuming and specialized, the pool of qualified CJA panel attorneys
has decreased because the rates in most areas have been virtually
frozen for over a decade. Some of the resulting problems are explained
by the Judicial Conference Report:
Federal criminal law, including its sentencing aspects, has
become exceedingly complex. It is no longer feasible for a
state criminal defense lawyer to appear occasionally in a
federal court and be expected to perform competently. Lack of
knowledge of federal law and procedure can create very serious
adverse consequences for criminal defendants.
In order to be an effective advocate in a federal criminal
case today, it is essential that an attorney be knowledgeable
in the federal sentencing guidelines. Unfortunately, however,
information elicited by the Review Committee indicates that it
is not uncommon for attorneys with little or no criminal
experience to be appointed in federal cases, and a lack of
training for panel attorneys was a common complaint cited in
hearings before and correspondence to the review committee.\32\
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\32\ Report on the Federal Defender Program, at 28. The Report of
the Committee to Review the Criminal Justice Act is reprinted at 52 CrL
(BNA) 2265 (March 10, 1993).
Given the well-recognized, increasingly serious difficulty in
recruiting qualified panel attorneys, the Judicial Conference proposed
``only minimal qualification standards.'' \33\ Even though quality
control is essential, because most districts are stuck at barely above
the $40/$60 rates established in 1984, the Conference was forced to
recognize that ``specific requirements might render it difficult or
impossible to find a sufficient number of attorneys to serve on the
panel.'' \34\
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\33\ Report on the Federal Defender Program, at 28.
\34\ Report on the Federal Defender Program, at 27.
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However, the 1995 Long Range Plan for the Federal Courts recommends
against further delay in qualification standards: ``The CJA does not
establish qualification standards for attorneys serving on CJA panels.
The practice of federal criminal law has become highly specialized.
Defendants face increasingly lengthy prison terms. It is time for panel
attorneys to be held to certain minimum qualifications.'' \35\ But with
compensation at or below the cost of merely maintaining a law office,
the continuing education necessary to meet minimum standards is an
expense many lawyers cannot afford.
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\35\ Long Range Plan for the Federal Courts, 120 (1995).
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The clear solution is simply the market system: panel attorneys
paid at a fair rate (even though substantially less than the market
rate) can purchase from the private market the training necessary to
competently fulfill the government's constitutional mandates. The
Judicial Conference should set high standards; Congress should
appropriate funding sufficient to enable panel attorneys to purchase
the training necessary to obtain (and maintain) the skills necessary to
do the job. The whole criminal justice system will work efficiently
then, to the benefit, including tax savings, of us all and it will be a
justice system worthy of its name.
conclusion the future of the cja
The Criminal Justice Act requires a ``substantial proportion'' of
appointments to the private bar.\36\ ``'Substantial' shall usually be
defined as approximately 25 percent of the appointments under the CJA
annually throughout the district.'' \37\ The American Bar Association
also recommends ``substantial participation by the private bar,'' \38\
in order to provide a broad-based constituency for improvement of the
criminal justice system:
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\36\ 18 U.S.C. Sec. 3006A(a)(3).
\37\ Administrative Office of the United States Courts, ``Model
Criminal Justice Act Plan,'' Sec. VI.C (1991).
\38\ ABA Standards for Criminal Justice, Providing Defense Services
(ABA Standard) 5-1.2 (3d ed. 1992).
All lawyers, whether criminal practitioners or not, share in
the responsibility of ensuring that the most visible legal
institution in the Nation, the criminal justice system, is of
the highest attainable quality. Increasingly, however, indigent
defense in many cities is almost the exclusive responsibility
of public defenders and a very small private bar. The remainder
of the trial bar is not fulfilling its obligation to
participate through the representation of indigent defendants,
and as a result, the shunning of criminal defense practice
deprives the criminal justice system of a powerful voice for
criminal justice reform, because the influential lawyers are
unfamiliar with the working of the criminal justice system.\39\
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\39\ ABA Standard 5-2.2 (Commentary).
The private bar's participation in the federal criminal justice
system is also necessary to counter the inherent trend, in any closed
bureaucracy,\40\ of ignoring or rejecting alternative, even critical,
points of view; in other words, to provide for a healthy and efficient
system of checks and balances.\41\
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\40\ The Judicial branch, in its administrative role, is exempt
from most laws covering open meetings, public records, or freedom of
information.
\41\ The institutional benefit of private bar participation is
illustrated by In re Snyder, 472 U.S. 634 (1985), where the unanimous
Supreme Court held that a private CJA panel attorney was not
contemptuous for criticizing the administration of the CJA. ``Officers
of the court may appropriately express criticism on such matters.''
Government employees, however, may not be so protected. See Waters v.
Churchill, 114 S.Ct. 1878 (1994) (public employees can be summarily
fired for criticism that could disrupt efficiency).
---------------------------------------------------------------------------
The combination contemplated by the CJA--approximately 25 percent
private panel attorneys; 75 percent public defenders--is readily
attainable. Defender offices can and should be opened in all federal
districts, and should receive the lion's share of the appointments. The
remaining cases should be assigned to panel attorneys who are willing
(not conscripted), who are qualified (meeting high competency
standards) and who are reasonably compensated (in order to maintain
qualifications, pay necessary office overhead, and avoid destitution).
But still, the only way to obtain these goals--and to fulfill the
government's constitutional mandate--is to fully fund the Criminal
Justice Act. Because past appropriations have been grossly underfunded,
and because the pending appropriation proposed by the Administration is
demonstrably inadequate to redress the dire need, NACDL urges this
Committee to recommend--and the Congress to enact--an adequate Defender
Services Appropriation of $400,000,000. This appropriation cannot be
viewed in a vacuum. The Constitution of the United States mandates a
fair and efficient criminal justice system for all Americans. Full and
fair funding to accomplish that is a pittance to pay. On the other
hand, the consequences of not doing so are dire.
On behalf of the National Association of Criminal Defense Lawyers,
I want to thank the subcommittee again for affording us this
opportunity to be heard on this very important subject, and for
considering our concerns and requests for congressional action.
______
Prepared Statement of Eldon Hout, Chairman, Coastal States
Organization, Inc.
introduction
My name is Eldon Hout, and I am the Coastal Program Manager for the
State of Oregon and the current Chairman of the Coastal States
Organization (CSO). Since 1970, CSO has served as the Governors'
representative for ocean, coastal and Great Lakes issues. Delegates to
CSO are appointed by the Governors from each of the 35 States,
Commonwealths and Territories bordering the Atlantic and Pacific
Oceans, the Gulf of Mexico or the Great Lakes.
On behalf of CSO, I want to thank you for the opportunity to submit
testimony on fiscal year 1998 appropriations. This testimony focuses
primarily on the ocean, coastal and Great Lakes programs administered
by the National Oceanic and Atmospheric Administration (NOAA) under the
Coastal Zone Management Act (CZMA).
coastal and great lakes programs
At the outset I want to stress two points. First, although the
programs outlined below are generally described as ``coastal and ocean
programs,'' they include the Great Lakes, islands and territories and
they provide substantial benefits to the entire nation. Second, these
programs administered largely under the authorities of the CZMA,
represent a model partnership between State, Federal and private
interests allowing the States to set locally based priorities and
leveraging public and private resources in order to achieve a
responsible use of land and water resources.
The economic and social value to the nation of prudent coastal
resource management cannot be overstated.
--Thirty-two percent, or $1.3 trillion, of the Gross National Product
is generated from activities in coastal areas.
--Fifty percent of the U.S. population currently lives on 11 percent
of the land that is designated as coastal; and that is expected
to increase to 60 percent by 2010.
--40 percent of new commercial development and 46 percent of
residential development is in coastal areas.
--Travel and tourism is the nation's largest industry and 85 percent
of that is focused on the coast.
--The coast supports 70 percent of the commercial and recreational
fishing harvests.
Acre for acre, America's coastal zone is one of the Nation's most
valuable resources.
Coastal waters are linked ecologically and economically directly to
the nation's heartland by the network of navigable waterways. These
waterways provide substantial recreational and economic benefits to the
nation. Coastal ports handle over 95 percent of the volume of imports
moving in international trade. Only with effective coastal resources
management programs will we be able to accommodate these ever expanding
and essential uses of our waterways.
The CZMA was reauthorized last year with broad bipartisan support,
and this year is celebrating its 25th anniversary. Thirty-four of 35
eligible States and Territories are voluntarily participating in this
program. The most important feature of the CZMA is that it is State
driven, placing management decisions at the State and local level. In
addition, the CZM program puts the States on an level playing field
with the federal government in the area of coastal resource management.
Once State coastal management programs are federally approved, federal
agency activities affecting the resources of the coastal zone must be
consistent with the State's program.
It is more important than ever that funding levels for these
programs be sustained in order to ensure that we are prepared to meet
the growing challenges and can continue to reap the substantial
benefits that result from coastal management activities. We recognize
that this Committee faces very difficult budget choices again this
year. Therefore, we are requesting only a modest increase from last
year's funding levels so that the States, in partnership with the
Federal government, can sustain an essential level of services through
NOAA's core coastal programs.
requested fiscal year 1998 funding levels for national czm programs
State Coastal Program Grants (Section 306).--Funding for the
national CZM program over the past few years has been essentially
level. While relatively speaking in the current budget environment this
is good news, funding for State coastal programs in real terms has
declined due to inflation and the increasing number of States
participating in the program. In addition, ``level funding'' in the
face of the increased program needs and more competing demands on
coastal resources is an effective decrease in support for State
programs.
With the addition of Ohio and Texas to the CZM program, the other
29 States and territories with approved programs are faced this fiscal
year with projected funding decreases of 4.8 percent--6.8 percent as
compared with fiscal year 1996 levels. Similarly, Georgia and Minnesota
are scheduled to come into the program this year and, although the
Administration's proposed budget recommends an additional $1.5 million
in spending, it will only partially cover actual costs thereby
resulting in still further reductions in State funding allocations in
fiscal year 1998.
The Coastal States Organization recommends that no less than $49
million be provided in fiscal year 1998 to fund CZMA Sec. 306 grants
for State coastal zone management programs. This request would provide
adequate funding to incorporate the four new States into the CZM
program without significantly reducing existing commitments to the
other States. The $49 million request is also consistent with the
authorization level provided by Congress last year in reauthorizing the
CZMA. This request reflects a $2.8 million increase above the $46.2
million provided in the fiscal year 1997 appropriation. In light of the
growing demands on these coastal resource programs and the substantial
economic return, this is a very modest request.
Clean Water Initiative (Sections 306/310).--The Administration's
budget proposes an additional $18 million in new funding for a Clean
Water Initiative: Protecting Health in Coastal Communities. The funds
would be expended on priorities identified by States and local
communities to eliminate specific sources of pollution and clean up
degraded sites. Six million dollars would be distributed to States
under Section 306 to specifically address coastal water quality
problems that directly affect human health such as shellfish
contamination and beach closures. Twelve million dollars would be
provided in grants under Section 310 to clean up priority sites
degraded by pollution.
This Initiative would greatly assist coastal communities in
protecting public health where chronic pollution sources result in
shellfish contamination and beach closures. This $18 million would fill
an important gap in existing programs thereby enabling states to target
a discreet category of chronic pollution problems and protect public
health particularly in smaller communities which do not have the
resources to address these problems.
CSO is encouraged by the recognition that there is a need for
increased funding for the implementation of the 306 and 310 programs,
based on State priorities. There is a backlog of worthy projects in the
States that will not receive funds under the base funding level for 306
programs. CSO supports this additional funding which will provide the
tangible benefits directly to communities across the country.
Coastal Nonpoint Source Pollution.--NOAA and EPA have begun issuing
findings for the approval of State coastal nonpoint source control
programs developed under CZARA Sec. 6217. All States are expected to
receive conditional approval of their programs. NOAA, EPA and the
States have agreed upon a process for resolving the obstacles to full
program approval. CSO is optimistic that EPA and NOAA are committed to
working with the States to address our concerns related to
implementation of this program. CSO supports the President's request of
$1 million for funding CZARA Sec. 6217 program development activities.
The National Estuarine Research Reserve System (Section 315).--
Section 315 of the CZMA established the National Estuarine Research
Reserve System (NERRS) to serve the national interest by providing a
network of sites for research, education, and long-term monitoring.
NERRS researchers are helping to control the invasion of exotic
species; working with the agricultural community and forest industry to
minimize the impacts on coastal resources; and, developing sustainable
management strategies for shellfish beds and commercial fishery
habitat.
Currently there are 22 sites comprising over 500,000 acres of
varied estuarine environments. Six more sites are in the pipeline for
federal designation. Yet, funding levels have been static over the past
several years. Indeed, Congress directly appropriated only $1 million
in fiscal year 1997 with the balance of funding being provided by NOAA
under its Coastal Zone Management Fund (see discussion below). The
NERRS managers have identified $7 million in basic funding which is
necessary to maintain existing operations at the Reserves. CSO supports
funding at the maximum level Congress can provide.
Further, we request that the funding be provided through the
Section 315 line item, in contrast to funding this program out of the
CZM Fund. In fiscal year 1997, the lion's share of funding for the
NERRS program ($3.3 million) came out of the CZM Fund. The President's
fiscal year 1998 budget request also recommends funding the NERRS
system through its line item authorization. It is important to restore
full line funding for this program because revenue in the CZM Fund are
projected to decrease in the coming years and will not be available to
offset any funding shortfalls.
CSO also requests that the Subcommittee provide $6 million from the
NOAA Construction Account for the NERRS system, an increase of $1
million over levels provided in fiscal year 1994 and 1995. Bearing in
mind that we are not requesting any increase in the President's request
for the NOAA construction account, we are requesting that Congress make
available $6 million of these funds for land acquisition and facility
construction of the NERRS system.
The Coastal Zone Management Fund: CZMA Section 308.--The Coastal
Zone Management Fund is designed to provide funding for projects that
address a broad array of coastal resource management issues. The
Coastal States Organization requests that $7.8 million be appropriated
to the CZM Fund for fiscal year 1998. This fund is financed through
loan repayments of the retired Coastal Energy Impact Fund, and NOAA has
projected that $7.8 million in loan repayments will be received in
fiscal year 1997. Thus, we support the President's request of $7.8
million to be appropriated to the CZM Fund. The funds in the CZM Fund
should be available solely for Sec. 308 purposes not to offset other
budget line programs.
National Marine Sanctuary Program.--There are 14 designated
National Marine Sanctuary sites in the United States. Two major sites--
the Florida Keys and Hawaii--will become fully operational in late 1997
and early 1998. The program has substantial new responsibilities, as
evidenced by the greatly expanded size of the system. Marine
Sanctuaries cover 19,000 square nautical miles. These are invaluable
resources that are being preserved for future generations. Congress
provided $11.7 million in funding in fiscal year 1997 for the National
Marine Sanctuary Program, essentially level funding compared to fiscal
year 1996. We recognize the tight budgetary constraints this year, but
also realize that level funding for a greatly expanding National Marine
Sanctuary will actually result in significant cuts for several
individual Marine Sanctuaries. Recognizing the importance of the
National Marine Sanctuary program to coastal resources and State
economies, CSO supports $15 million in appropriations for fiscal year
1998.
NOAA Coastal Services Center and Coastal Ocean Program.--Both of
these programs have provided state coastal programs with services which
have made for tangible improvements to state coastal management
programs. Both deserve at least level funding which is $12 million and
$15.2 million respectively.
National Sea Grant College Program.--The National Sea Grant College
Program was established by Congress in 1966, with the mission of
employing a broad range of physical and social marine sciences to
address the multitude of problems affecting America's coastal, ocean
and Great Lakes waters. For thirty years this program has served the
needs of coastal, ocean and Great Lakes resource managers in the fields
of fisheries, aquatic nuisance control, aquaculture, coastal zone
management, marine biotechnology and seafood safety, to name a few. CSO
recommends providing continued funding for this important, long-
standing and successful program.
conclusion
The Coastal States Organization supports funding in the following
amounts--$49 million for State coastal zone management program
(Sec. 306) grants; $18 million for coastal clean up initiatives ($6
million through Sec. 306, and $12 million through Sec. 310); $7 million
as requested for grants for management and research (Sec. 315) of the
22 National Estuarine Research Reserve sites, and $6 million for the
NERRS system from the NOAA construction account; $7.8 million in
appropriations from CZMA Coastal Zone Management Fund (Sec. 308); and
$15 million for the National Marine Sanctuary Program;
These programs are justified by the national interest, financial
need and program merit. The Coastal States Organization recognizes the
tight fiscal constraints upon the Subcommittee in fiscal year 1998. It
is for this reason that priority must be given to existing, proven,
operating programs that truly do stimulate economic growth and
development. We respectfully urge this Subcommittee to establish the
CZMA as its priority environmental/economic development program, and
fund the CZMA programs at the levels requested herein.
We greatly appreciate the opportunity to submit our recommendations
to this Subcommittee. The Coastal States Organization stands ready to
assist you in any way we can. Thank you for your consideration.
______
Prepared Statement of Charles G. Scalet, President, National
Association of University Fisheries and Wildlife Programs
The National Association of University Fisheries and Wildlife
Programs (NAUFWP) submits this statement in support of more adequate
appropriations in fiscal year 1998 for important practical research and
outreach to citizens through the National Sea Grant Program carried in
proposals for the National Oceanic and Atmospheric Administration, U.S.
Department of Commerce.
Members of the NAUFWP include 55 Universities. We seek to enhance
public understanding of the needs for improving natural resource
management and to advance the science and practice of sustainable uses
and management of the resource base. Our efforts focus on cooperative
work with partners and customers to advance research, education,
outreach and management to benefit people and communities throughout
the country.
Results from the Roper Starch fifth annual survey of adult
Americans, prepared for the National Environmental Education and
Training Foundation and released in December 1996, illustrates pressing
needs for Sea Grant's research and outreach programs. Key findings of
adult views on natural resources provide an overall context in which to
consider the specific figures in the President's proposed fiscal year
1998 budget. Adult Americans believe: Environmental resources should be
conserved in ways that balance economic growth while protecting the
environment and human health; natural resources can be managed in ways
that protect wildlife and ecosystems while people benefit from their
planned uses; Federal government spending should be shifted to
environmental programs from other areas; and concerns for the
environment and management of natural resources can be responded to by
expanding education programs designed to raise current low levels of
knowledge about the environment, such as to maintain and improve water
quality.
Within this context of public views and needs for research,
education, outreach and management, the NAUFWP supports continuing and
strengthening the Sea Grant Program. Stronger programs are required to
be more responsive to needs of the public and resource managers.
The National Sea Grant Program has been acclaimed a model for
organizing research and providing practical, useful information for
specific geographic areas. Universities with Sea Grant Programs bring
together federal, state, business and other private interests to
provide extraordinary returns on a small federal investment. Results
from studies show that each federal dollar is leveraged tenfold or more
in private sector development, often in small businesses.
Importance of the National Sea Grant Program in maintaining and
enhancing the nation's marine, coastal and Great Lakes' resources is
paramount to continuing a strong economy and quality of life enhanced
by the values, products and services flowing from these aquatic areas.
With more than half of the U.S. human population living in coastal
counties, and expanding at a faster rate than the nation as a whole,
there is great need for information and guidelines to plan human
activities carefully.
To respond to pressing needs for research, information, and
advisory services in various geographic areas the NAUFWP provides two
recommendations:
--Ensure that the U.S. continues to invest in its future through the
soundly-based Sea Grant program:
Information from Sea Grant research, education and advisory
services is important to a broad spectrum of people in using
coastal resources responsibly and sustainably, without
enlarging costly restoration efforts. With more than three
decades (1966-1997) of valuable experiences in meeting real-
world situations and resolving pressing problems, Sea Grant is
unique in generating and translating science into information
used by businesses, agencies at all levels and the general
public.
--Provide $56 million for the Sea Grant Program in fiscal year 1998
rather than $50,182,000 carried in the President's proposed
budget.
This larger amount is consistent with the overall thrust of the
Sea Grant reauthorization (H.R. 437) being processed now. The
President's proposed reduction of $4.1 million from fiscal year
1997 would terminate the National Coastal Resources and
Development Institute, as well as essential research on oyster
diseases and the zebra mussel. These important activities
should be continued, not eliminated.
Please include this statement in the official record on the fiscal
year 1998 appropriations.
______
Prepared Statement of Cyrus M. Jollivette, Vice President for
Government Relations, University of Miami
Mr. Chairman and Members of the Subcommittee: I am pleased to
submit testimony on behalf of the University of Miami and Florida State
University. Both of the institutions have long enjoyed your support,
and my colleagues in Florida are deeply appreciative of your
leadership, Mr. Chairman, and the Subcommittee's confidence. At no time
in the past have you and your colleagues on the Committee on
Appropriations faced more difficult constraints. Yet, I am certain that
you will continue to make the difficult choices with the best interests
of the nation guiding your decisions. My colleagues and I hope that you
will find it possible to fund the important initiatives detailed below
in the fiscal year 1998 appropriations cycle.
On behalf of the University of Miami and Florida State University
jointly I commend you, Mr. Chairman, for your affirmative response to
the Florida Delegation's fiscal year 1997 request concerning The
Florida Consortium for Climatic Research, a project involving the
University of Miami, Florida State University, the University of
Florida, and the University of South Florida.
The importance of El Nino Southern Oscillation (ENSO) events as a
major source of climate fluctuations, together with advances in ENSO
predictability, suggest that forecasts have significant potential for
benefiting agricultural productivity and economic decision-making.
However, until last year, no significant attempts had been made to
develop a system which would take advantage of climate forecasts. For
fiscal year 1998, we seek $2 million for the Florida Regional
Application Centers, one for the southeastern U.S. and one for a multi-
national area.
The geographic focus of this project will include the southeastern
U.S.; southeastern South America including portions of Brazil, the
entire territory of Uruguay, and the province of Buenos Aires in
Argentina; northern Mexico; and Costa Rica. Each of these regions are
large food producers whose productivity is significantly impacted by
weather conditions generated by the ENSO phenomenon. Decisions made by
well-informed participants from farm to policy level, made several
months or seasons in advance, can significantly benefit productivity.
This project presents an end-to-end approach that will provide the
bridge between climate forecast producers, such as the recently formed
International Research Institute for Climate Prediction (IRICP), and
agricultural decision makers. Specific objectives for the project are
to: (1) adapt, develop, and evaluate a generic, flexible set of tools
and methodologies for assessing regional agricultural consequences of
El Nino events and for applying forecasts to improve agricultural
decision-making; (2) demonstrate the successful applications of
forecasts to agriculture and other sectors which would benefit best in
the southeastern United States and South America that began in 1996;
(3) assess the value of climate predictions to different agricultural
sectors in these southeastern regions; and (4) extend methods and tools
to northern Mexico and Costa Rica, working with cooperating agencies in
demonstrating the effectiveness of the proto-regional application
center concept.
Again, for the University of Miami and Florida State University and
approximately 80 other entities we seek your continuing support for a
major environmental initiative within your purview, the South Florida
Coastal Ecosystems and Florida Bay Multi-Agency Plan.
Florida Bay is a triangularly shaped body of water about 600 square
miles in area. Over 80 percent of the Bay lies within Everglades
National Park. The Bay is bounded by the Florida Everglades on the
north and the Florida Keys on the southeast. In the Bay over 200 small
islands or ``keys'' occur, many of which are rimmed with mangroves and
have interior, irregularly flooded, ``flats'' with calcareous algal
mats. The Bay is shallow, often hyper-saline, and, until recently, was
characterized by clear waters, and lush sea grass meadows covering a
mosaic of shallow water banks and numerous relatively deeper water
basins or ``lakes''. Deep narrow channels connect neighboring basins.
Hard bottom habitats in southwestern Florida Bay support sponge and
hard and soft coral communities.
Florida Bay is known as the principal inshore nursery for the
offshore Tortugas pink shrimp fishery, for providing critical habitat
for juvenile spiny lobster, stone crab, and many important finfish
species. While the Bay is the site of an extensive sport fishery, it is
also important as a nursery area for many recreationally important
finfish in the Florida Keys National Marine Sanctuary. Moreover, the
Bay supports numerous protected species including the bottle nosed
dolphin, several species of sea turtles, manatees, and the American
crocodile.
There are many indications that the environmental health of Florida
Bay has deteriorated. Fishing success has declined for many of the
species that depend upon the Bay as a juvenile nursery habitat.
Atypical algal blooms, attributing to sponge and manatee dieoffs, are
occurring in the Bay and Florida Keys. Mangroves appear to be in
decline. While the causes of the various problems and the relationships
between them are not well understood, there is no question that, like
the sawgrass habitat of the Everglades, the coastal marine ecosystem of
Florida Bay is in jeopardy.
The objective of the South Florida Coastal Ecosystem and Florida
Bay Multi-Agency Plan is to provide decision-makers who are working to
restore and maintain a healthy South Florida coastal ecosystem with
reliable scientific information. At present there is insufficient
knowledge to predict with confidence the consequences of alterations in
freshwater input to Florida Bay.
Since no one can turn back the clock and South Florida's rapid
development will almost certainly continue, a series of compromises and
tradeoffs will have to be made in restoring and maintaining a healthy
South Florida coastal ecosystem including Florida Bay. It is essential
that decisions be made based on reliable scientific information. That
is the objective of the South Florida Coastal Ecosystem and Florida Bay
Multi-Agency Plan which is collaboratively managed and conducted by the
National Oceanographic and Atmospheric Administration's Atlantic
Oceanographic and Meteorological Laboratory, the National Marine
Fisheries Service Miami Laboratory, and the Rosenstiel School of Marine
and Atmospheric Science.
We urge you, Mr. Chairman, to provide $6 million in dedicated
National Oceanographic and Atmospheric Administration funding for this
project, a multi-agency activity in which more than 80 Florida entities
are at work seeking solutions to very critical Florida Environmental
issues.
The Rosenstiel School of Marine and Atmospheric Science at the
University of Miami is one of the premier academic, oceanographic
research facilities in the world. Located on a 16-acre facility on
Miami's Virginia Key in Biscayne Bay, the Rosenstiel School offers the
only subtropical marine research base in the continental United States.
With the Gulf Stream off shore, a vast expanse of living coral reefs
just to the south, and the Florida-Bahamas Carbonate Platform to the
east, the campus is surrounded by a unique marine laboratory.
My colleagues at the Rosenstiel School, 90 well-published and
broadly talented Ph.D. scientists are who work in close collaboration
with other scientists--in Florida and across our region--are uniquely
qualified to conduct valuable research in their fields. On their behalf
I bring the following five projects to the attention of and
respectfully request the endorsement of the Subcommittee for these
projects through the National Oceanographic and Atmospheric
Administration.
south florida ocean measurements laboratory, university of miami (um)/
florida atlantic university (fau), south florida test facility (sftf)
A partnership is currently being defined between UM, FAU, and SFTF
for the purpose of developing a unique Ocean Measurements Laboratory to
expedite ocean research and testing by direct access to the sea with
high speed fiber optic cables that are connected to the Port Everglades
(Fort Lauderdale), Florida facility operated by the SFTF and the new
FAU facility in Dania, Florida.
The partnership would afford the participants equal input for state
and federal infrastructure proposals, and on the working level,
individual investigators from each organization would compete within
the peer review process for specific research projects. Natural spheres
of interest among the participants are: FAU has program in autonomous
underwater vehicles and the applications of high frequency underwater
acoustics to problems in sub-bottom profiling, underwater
communication, and mine warfare; SFTF is involved with the at sea tests
and trial for U.S. Navy ships, submarines, sonars, and other systems;
and UM has nearly a 40-year history of research in the Florida Straits
on low frequency long range acoustic propagation in shallow water, bio-
acoustics, and the development of underwater signal processing methods.
UM can successfully contribute to the design of the general purpose
instrumentation suite for defining the oceanic and atmospheric
environments at the FAU and SFTF sites.
university of miami ocean surface current radar (oscr)
The University of Miami's OSCR system is a shore-based, dual-
frequency Doppler radar which transmits short pulses of electromagnetic
radiation in the radio frequency band. The signal is scattered back
from the moving ocean surface and received by a linear phased-array
antenna system erected along the shore. The radar measures the Doppler
shift of resonant surface waves by the underlying flow. The measuring
principle is identical to that used by police to clock speeding cars.
The result is a map of surface vector currents over a large domain (30
km 45 km) at high spatial (1 km) and temporal (20 min)
resolution. With increasing interest in the coastal ocean there is also
a requirement to acquire high-quality surface current data for long-
term monitoring of the surface circulation to study their effect on a
broad spectrum of societal and environmental issues such as coastal
pollution, oil spills, beach erosion and sediment transport. A wide
variety of management decisions would be enhanced with the ``real-
time'' knowledge of the circulation patterns in a body of water.
The OSCR system operated by the University of Miami has been
rigorously tested and used in numerous applications over the past
several years, such as experiments to study the transport of reef fish
larvae, the detection of eddies and fronts, the evolution of fresh
water plumes in the coastal ocean and validation of airborne and
satellite-based remote sensors. Recently, we have expanded the
measurement capability of OSCR to extract sea state information. Other
studies are also underway to specify the wind speed and direction from
OSCR measurements.
southeast consortium for oceanographic research (secor) operation of
fisheries oceanographic vessel
The three universities comprising SECOR are the University of
Miami, Texas A&M University, and the University of Texas. Additionally,
the NOAA Atlantic Oceanographic and Meteorological Laboratory has
joined SECOR as an associate member. The three universities seek
funding for and propose to operate a new regionally-based fisheries-
oceanography ship in cooperation with the National Marine Fisheries
Service (NMFS) of NOAA. Research trends over the past few years, as
well as national needs, make the Gulf coast and the Caribbean an area
of great opportunity and international coordination. Such a vessel
could fill the need for a sub-intermediate class ship, capable of
working on fishery-oceanographic projects on the continental shelf, as
well as conducting NMFS fishery stock assessment surveys.
SECOR has already implemented joint operations. The combined
strengths of the universities and NOAA laboratories can create an
efficient use of existing facilities and can lead to enhanced regional
multidisciplinary research programs. SECOR anticipates that there would
be scientific and cost-saving benefits in coordinating the operation of
a regionally-based ship.
the recent discovery of a sand channel and its implications for the
supply of phosphate to florida bay
Scientists at the University of Miami Rosenstiel School have
discovered a possible connection between the occurrence of algal blooms
in Florida Bay and the underlying rocks. Based upon a series of core
borings taken throughout South Florida, it appears that a confined bed
composed of coarse quartz sand runs from areas close to Lake Okeechobee
south underneath the Everglades and close to the surface in Florida Bay
and the Keys. Rosenstiel School scientists have suggested that
phosphate rich waters could be transporting this sand into Florida Bay,
providing this essential nutrient to algal and plant life in the area.
Excess supply of phosphate result in algal blooms which are detrimental
to water clarity and life in the Bay.
It is important that this discovery be investigated as soon as
possible. Funds are being expended in attempts to find solutions for
excess phosphates, such as restrictions on agricultural sources.
Results from this study could have significant impact on decisions now
being discussed by various agencies for remedying the perceived decline
in Florida Bay.
intra-american sea regional control global ocean observing system (ifs-
goos)--the linkage of fisheries oceanography and ocean pollution
research and management
The worldwide oceanographic community is working to develop the
Global Ocean Observing System (GOOS) as a vehicle for providing regular
observations to document climate variability and global change in
support of the Rio Treaty; and to support marine operations, such as
safe navigation, fisheries management, ocean pollution control, and
search and rescue. GOOS already has begun to implement these activities
in Europe and Asia. Now is the time for the U.S. to move ahead in
cooperation with Mexico and other Latin American and Caribbean nations,
with the initiation of a regional GOOS named IFS-GOOS.
Modern marine operations have a common need for a regular program
of remote oceanographic and atmospheric observations. These
observations must be synthesized with computer models to provide
predictions and products that can be applied to fisheries management
and ocean pollution control. The Rosenstiel School's proposed plan
includes a five-year research and demonstration phase, and includes
partnering activities with regional NOAA laboratories.
developing a fishery-independent index of giant bluefin tuna abundance
Bluefin tuna are the prized target of important fisheries in the
Atlantic Ocean. Assessment of the two distinct tuna stocks indicates
that there was a dramatic decline in its abundance in the western
Atlantic during the 1970's and 1980's. However, recent trends are not
estimated precisely enough to determine if the population decline has
been halted. Of particular concern to managers and fishermen is the
population size of mature bluefin tuna (ages 8 and older) which are
needed in order to renew the resource. The estimation of this
population via Virtual Population Analysis method is imprecise and
logistically difficult.
We are proposing to evaluate the feasibility of an alternative
fishery-independent index of relative giant bluefin abundance. These
fish are thought to carry out a predictable seasonal migration that
takes them into the Gulf of Mexico for spawning around May, and then
out into the Florida Straits, passing the Great Bahamas Bank sometime
in June. An ideal index would be one that would capture an accurate
view of this spawning stock as it moves out of the Gulf every year. We
are proposing to use state-of-the-art acoustic techniques that can
count individual fish in the water column over a relative wide area. We
are seeking $1 million in funding from NMFS for this proposed research.
The research would be conducted jointly with a Canadian acoustician at
the Institute of Ocean Sciences in Sidney, British Columbia. This joint
partnership is opportune because Canada recently initiated a 5-year
National Hydro acoustics program to develop improved approaches to
acoustic stock assessment.
______
Prepared Statement of John D. Bossler, Rear Admiral (Retired),
Director, Center for Mapping, Ohio State University
Mr. Chairman and members of the subcommittee: My name is John D.
Bossler, Rear Admiral, NOAA (Ret.) and I am a former Director of the
Coast and Geodetic Survey, which produces the nautical and aeronautical
charts vital to our nation's safe, efficient marine and air
transportation. Currently I am the Director of The Center for Mapping
at The Ohio State University, Director of the NASA Commercial Space
Center in Real-Time Satellite Mapping, and a full professor in the
Department of Civil and Environmental Engineering and Geodetic Science
of The Ohio State University. I have been president and chairman of
numerous professional societies including the American Congress of
Surveying and Mapping, National Academy of Science Advisory Committee
on Mapping Science, and the University Consortium for Geographic
Information Science. It is my pleasure to provide my views on the
future of the Commissioned Officer Corps of the National Oceanic and
Atmospheric Administration (NOAA).
noaa corps
The Administration has included in its fiscal year 1998 budget a
``place-maker'' of $14 million to civilianize the NOAA Commissioned
Corps. If this proposal is adopted, a uniformed service that plays a
key role in our Nation's charting program will be dissolved. This would
mark the first elimination of a uniformed service in our nation's
history.
A full inquiry into the facts and circumstances surrounding the
proposal will reflect that the Administration's intended proposal is
simply not supportable. In this respect, three major areas must be
carefully considered and fully examined--service history, national
interests, to include potential environmental and national security
issues, and cost savings.
service history
First, background on the history of the Commissioned Corps. The
Commissioned Corps has been integral to our nation's development for
the past 190 years. The Corps traces its lineage to 1807 when President
Thomas Jefferson signed a bill for the ``Survey of the Coast.'' Today's
Commissioned Corps is the direct descendant of the commissioned service
of the United States Coast and Geodetic Survey (C&GS). It has served
the American people on many occasions over the decades, providing
valuable scientific and engineering skills to the armed services and
the nation.
The Commissioned Corps is unique in that it provides an
organization of uniformed professionals to conduct NOAA's operational
activities such as managing ships, aircraft, and field assignments with
great flexibility and rapid response. The NOAA Corps is the only
uniformed service that requires every officer to have a college degree
in science or engineering prior to being commissioned. The Commissioned
Corps selects its personnel from the strength of the country's premier
colleges and universities. NOAA line managers are very supportive of
the Commissioned Corps because these officers bring not only key
technical skills, but heightened skills in operations, program needs,
and management.
The Commissioned Corps is distinctively designed to meet the
operational needs of NOAA (ships, aircraft and mobile duty) and to
respond quickly to the emergent needs of the nation. Officers enter the
Corps with the expectation that they will be separated from their
families for long periods of time and will have to move their families
often as a part of the Commissioned Corps' rotational assignment
system. This continual rotation of officers provides for transfer of
ideas throughout NOAA components. It has served NOAA and the nation
very well, and should continue to do so into the 21st century. This
rotational system, which has many of the positive attributes of the
Senior Executive Service, is not limited to the executive level, but
spans the entire breadth of NOAA--from an officer in charge of a field
hydrographic survey launch, to a commander of a hurricane research
aircraft, to the director of the National Geodetic Survey.
The Director of the NOAA Corps, a flag officer, has the capability
to immediately direct transfers as required to meet national
emergencies. A civilian, or privatized system would be more expensive
and not as responsive to emergent requirements. Therefore, with the
disestablishment of the Commissioned Corps, the nation would lose an
important capability.
The Commissioned Corps' composition of scientists and engineers
also provides a cadre of talented and technically competent officers
who are intimately familiar with the operational needs of the
organization. Many officers pursue advanced degrees, some attaining the
doctorate level. Academic advancement is a factor in the Corps' ``up or
out'' promotion system, i.e., as the percentage of officers becomes
fewer at each senior grade, only the most talented advance, ensuring
the highest quality support.
The Commissioned Corps also provides NOAA with officers who are
multifaceted. In this respect, officers typically serve within multiple
line components, similar to the Department of Defense's joint service
commands. The multiplicity of assignments, therefore, engenders
officers that are multifaceted, as well as extremely dedicated and
loyal to NOAA and the nation. This talent pool has contributed
significantly, not only to NOAA but to other agencies, as well as the
international community. Examples are numerous, but include the current
president of the International Hydrographic Office in Monaco, fellows
in the American Geophysical Union, past presidents of various sections
of prestigious scientific and professional societies, and acknowledged
world experts in the areas of geodesy, photogrammetry, and hydrography.
national interests
There are significant national interests, to include environmental
safety and potential national security implications that must also be
carefully examined and considered in evaluating any proposal to disband
NOAA.
First, Commissioned Corps officers are subject to a legislative
transfer provision similar to that of the United States Coast Guard and
Public Health Service, whereby the Corps' officers, ships, and
equipment can be transferred immediately to the armed services in time
of war and or national emergency. This legislative transfer provision
was enacted to ensure that the nation could rapidly and efficiently tap
the technical expertise of C&GS officers for the purpose of national
defense. During World War II, officers served under assignment to the
Army, Navy, and Marine Corps in all theaters of the war, often in the
front lines or in enemy-held territory as artillery surveyors,
amphibious engineers, hydrographers, geophysicists, reconnaissance
specialists, and cartographers.
This contingent of officers received four Silver Star medals for
gallantry under fire, seven Legion of Merit medals for exceptional
technical contributions to the war effort, and numerous Bronze Star
medals with Combat ``V'' for conducting surveys in enemy-held territory
or while under fire. C&GS ships also received commendations for their
role in charting the unknown waters of the western Pacific, often in
advance of, and therefore unprotected by, fleet units.
Within the Navy, C&GS officers served as hydrographers throughout
the western Pacific and were present at all major landings subsequent
to Tarawa. As a direct result of difficulties encountered during the
Tarawa landings, in which these officers had not been employed, Admiral
Richmond Kelly Turner, chief of Naval amphibious forces in the Pacific,
placed a C&GS officer in charge of all hydrographic operations
associated with naval amphibious forces. A C&GS officer served as Force
Hydrographer for the remainder of the war and directed the hydrographic
efforts at Kwajalein, Peleliu, Saipan, Guam, Tinian, Iwo Jima, and
Okinawa.
C&GS officers attached to the Marine Corps served primarily in two
capacities, as either artillery surveyors or as intelligence officers,
and they served in all major actions of the Pacific war. As artillery
surveyors they often landed with the first wave to orient Marine
artillery amidst the initial assault firestorm, and then carried their
surveys forward--often beyond the front lines. After providing survey
control for Marine artillery, they aided in locating enemy artillery.
On Iwo Jima, for example, a C&GS officer determined the position of 16
Japanese guns that were subsequently destroyed. Because of the nature
of the work, these officers were readily exposed to hostile fire and
often referred to as ``sniper bait.''
The nation has since been fortunate to not have seen another
conflict on the scale of World War II and the need to directly transfer
NOAA Corps officers to one of their sister services has, therefore, not
arisen. Nevertheless, the NOAA Corps has continued to make vital
contributions during national emergencies.
Today's threat includes not only military, but environmental
threats as recently announced by the State Department. When the Exxon
Valdez oil spill occurred, NOAA Corps officers, working with the Coast
Guard, were heavily involved both ashore and at sea by operating NOAA
ships that conducted environmental surveys of the area around the
spill.
During Operation Desert Storm, Iraq created some of the worst oil-
field fires and oil spills in history. The Commissioned Corps served
with the armed forces during both Operation Desert Shield and Operation
Desert Storm. NOAA provided ship and technical expertise for
environmental appraisal, and the first comprehensive study of the
Persian Gulf. NOAA Corps officers ashore provided scientific expertise
in hazardous-materials management, leading shore parties and conducting
surveys of oil-related damage to beaches and tidal areas.
The NOAA Ship MT Mitchell carried a contingent of world-class
scientists to the Persian Gulf to evaluate and determine the extent of
the environmental damage. Prior to sailing, the uniformed service
status of the officers allowed for immediate access to critical and
classified information such as mine threat, and other military risk
assessments. As a U.S. Government vessel commissioned in the public
service, commanded by uniformed service members, and with sovereign
status, MT Mitchell easily bypassed the routine restrictions placed
upon commercial and civilian research vessels. This status provided
instant credibility in dealing with the on-site commanders of several
Persian Gulf nations, where port security and logistics are controlled
by military services. Research operations around several critical
islands, controlled by these countries' military services, required
negotiations between NOAA Corps officers and the local commanders.
While operating in the Persian Gulf, MT Mitchell maintained close
communications with other U.S. forces, both as a safety measure and to
ensure smooth logistics through the military. The MT Mitchell was the
first U.S. Government ship to operate in Iranian waters in over 13
years. Although subject to occasional challenges by Iranian warships,
the warship status and uniformed service command ensured recognition of
MT Mitchell's sovereign status and prompt acknowledgment of support for
the mission. Both the Iranian scientists and Iranian naval observers on
board MT Mitchell commented that such operations would have never been
possible on a civilian research ship, and provided anecdotal
information on the earlier failure of such efforts involving civilians
and non-government ships. The NOAA Corps uniform was also accorded
instant credibility by Saudi Arabian, Kuwaiti, and Iranian authorities
and observers. Most importantly, the skills and knowledge of the NOAA
Corps officers maximized the productivity of this scientific expedition
by providing a safe, effective research platform, and a means to
collect critical data. The captain and crew of this expedition received
a Commerce Gold and Silver Medals, respectively, for their service.
A more recent example of the continued vital importance of the NOAA
commissioned corps is the NOAA Ship Rude, which located the wreckage of
TWA Flight 800 within 24 hours of the crash. The Rude and a shore
component, composed of NOAA Corps officers, created highly detailed map
products that greatly facilitated the retrieval of wreckage by Navy
divers. The efforts of these Commissioned Corps officers was recently
recognized by Secretary Pena of the Department of Transportation at a
United States Coast Guard Awards Ceremony with a Public Service
Commendation and by NOAA's parent bureau, the Department of Commerce,
with the Department's highest award--the Commerce Gold Medal.
In summary, the Commissioned Corps continues to be recognized for
technical competence, leadership, and devotion to duty--even under the
most difficult conditions. The Corps provides ``instant government
recognition'' and excellent interface to their fellow uniformed
services. In addition, the Corps has a code of dress/appearance,
readily gaining trust and respect, and providing NOAA and the nation
with a needed ``service to service'' interface. The Corps is subject to
transfer to the military services on immediate notice and has served,
or is serving, in interface assignments with the Coast Guard, Defense
Mapping Agency, Oceanographer of the Navy, Naval Meteorology and
Oceanography Command, and occasionally with foreign offices. In my
opinion, the nation would lose an extremely valuable asset if the
Commissioned Corps were eliminated. As Vice President Gore stated in a
letter to the Commissioned Corps on its 1994 anniversary:
``The NOAA Corps has provided valuable support to the other
uniformed services in times of war and will continue to play an
important role in supporting safe navigation, sustaining the health and
harvests of our oceans, and providing advance warnings of hazardous
weather conditions. As the Corps looks to the future, there will be
many opportunities to utilize advanced technologies and alternative
platforms and to develop new and innovative ways of operating. I am
sure that the flexibility and adaptability that the Corps has
demonstrated in the past will serve it well in the years to come.''
cost savings
The last point is the projected cost savings from eliminating the
NOAA Corps--the cost savings are minimal or non-existent. The asserted
basis for dissolution is the mistaken belief that savings can be
garnered through the privatization and civilianization of the
Commissioned Corps. Simply stated, the original proposal to eliminate
the Commissioned Corps was, unfortunately, not based on a thorough
economic analysis.
When the NOAA administrator announced his intentions to eliminate
the NOAA Corps, a General Accounting Office study requested by
Representative Kasich was underway and nearing completion. The only
cost study available at that time, in fact, showed that the NOAA Corps
was actually less costly than an equivalent civil service work force.
This study, prepared by Arthur Andersen & Co. under a contract
initiated by the administrator's office, showed that the NOAA Corps was
about $500,000 less expensive than its civilian counterparts. Clearly,
NOAA'S decision to eliminate the NOAA Corps was not based on economics,
but simply politics, i.e., to comply with the Vice President's National
Performance Review recommendation to eliminate the NOAA Corps with a
projected cost savings of $35 million.
The subsequent GAO report (GAO-GGD-97-10, ``Federal Personnel
Issues: Issues on the Need for NOAA's Commissioned Corps'') found only
a 2 percent or about $600,000 cost differential between the Corps and
an equivalent cadre of civil servants. The GAO's cost comparison did
not, however, include either the overtime costs of using civilian
aircraft pilots versus NOAA Corps pilots who do not earn overtime or
the increased cost of moving a civilian as noted in the study conducted
by Arthur Andersen. In particular, moving a member of the uniformed
services entails less than one-third the cost of moving a civilian.
Therefore, when moving costs are considered, the cost benefit tilts in
favor of the NOAA commissioned officer.
There are also environmental issues. NOAA Corps officers are the
only group of uniformed federal hygrographers in the nation. NOAA's
nautical charts are highly regarded by the maritime community. The loss
of the hydrographic expertise at NOAA could, therefore, jeopardize the
nation's ability to conduct overseas military operations from the sea,
as previously discussed. In addition, the loss of this hydrographic
expertise could jeopardize the environment and safety of our coastal
waterways through which most of our international trade is conducted.
Any purported savings realized through eliminating the Commissioned
Corps would potentially be more than offset by the loss of the
Commissioned Corps' capacity for rapid response to prevent catastrophic
environmental accidents, such as the grounding of an oil tanker on an
uncharted rock. Mobility and rapid response--attributes displayed
during Operation Desert Shield/Desert Storm, the Exxon Valdez disaster
and the crash of TWA flight 800--reflect the value of uniformed-service
status to the nation.
As NOAA looks to increase reliance on private contractors and
outsource hydrographic surveys, there is the issue of tort liability
for any private civilian organization providing hydrographic surveys
for use in creating U.S. government nautical charts. In particular, it
is extremely doubtful that a private entity could obtain catastrophic
insurance from another commercial entity for liability against a suit
arising from the grounding of a cruise ship on an uncharted rock or an
environmental catastrophe such as Exxon Valdez that resulted from
deficiencies in nautical charts. As a result, the federal government
would in all probability have to assume such liability. Given the
foregoing, privatization of the national charting program must be
carefully considered and explored in-depth to ensure that increased
costs are not incurred as a result of privatization.
As currently presented in the proposed fiscal year 1998 budget, the
apparent ``cost'' of eliminating the NOAA Corps is only $6 million more
than the fiscal year 1997 retired pay line item of $8 million, or a
total cost of $14 million. However, in reality, the total cost is much
higher. In addition to the $14 million currently budgeted for
elimination, are the retirement pay for current retirees and the
retirement pay for those officers who would be forced to retire if the
Corps is eliminated. These additional retirement pay costs are
estimated to be in excess of $10 million annually; this is an unfunded
liability that does not appear in the proposed fiscal year 1998 NOAA
budget.
Simply stated, for no increase in costs, the Commissioned Corps
provides the nation with a cadre of highly professional and dedicated
women and men who serve in a multitude of ways. Without the Corps, the
nation will suffer over the long run. Furthermore, when we again find
we need the Corps, it will take years to get it back, at an even higher
cost, perhaps at the cost of lives.
If all the costs of elimination are fairly considered, there is a
significant savings in keeping the NOAA Corps that has served the
nation faithfully for decades. Clearly, the potential cost savings from
eliminating the NOAA Corps is nonexistent. The short-sighted reasoning
of the Administration in eliminating the NOAA Corps could have an
adverse impact on the environment and potentially impair our national
security in time of crisis.
summary
In closing, any proposal to eliminate the Commissioned Corps must
carefully examine the potential risks to the nation from the loss of
the Corps and its technical expertise. Dissolution should not be
permitted to proceed without a verifiable plan for how NOAA plans to
continue providing services to the nation, such as nautical charting,
without added cost to the taxpayer. This plan should be especially
specific in the area of hydrographic surveys, where private contractors
may not accept tort liability for their surveys or agree to conduct
surveys in remote areas such as Alaska or in times of national
emergency with the other uniformed services. In short, the outstanding
service the NOAA Corps provides to the nation and the fact that there
will be virtually no savings in its dissolution must lead to the
retention of the Commissioned Corps.
______
Prepared Statement of Beth Marks Clark, Director, The Antarctica
Project
introduction
Thank you for the opportunity to submit testimony today on the
fiscal year 1998 budget for the Department of Commerce, and
specifically, the Antarctic Marine Living Resources (AMLR) Program of
the National Oceanic and Atmospheric Administration (NOAA). I am Beth
Marks Clark,\1\ Director of The Antarctica Project. The following
organizations join with me in supporting an appropriation of at least
$1.2 million to support the Antarctic Marine Living Resources Program
(AMLR), NOAA's directed research program in Antarctica: Center for
Marine Conservation, Defenders of Wildlife, Environmental Defense Fund,
Friends of the Earth, Greenpeace, The Humane Society of the U.S.,
Humane Society International, National Audubon Society, National Parks
and Conservation Association, National Wildlife Federation, Natural
Resources Defense Council, Sierra Club, and World Wildlife Fund. An
appropriation of $1.2 million is the level at which AMLR has been
funded for the past five fiscal years.
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\1\ Public sector representative on the U.S. delegation to the
meetings of the Convention on the Conservation of Antarctic Marine
Living Resources, 1990-present.
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AMLR has always enjoyed bipartisan Congressional support. In fact,
it was due to the efforts of Congress that funding for AMLR has been
available since its inception in 1986. Our organizations urge your
Committee to ensure that continued funding is available.\2\
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\2\ From fiscal year 1987 through fiscal year 1993, funding for
AMLR was not included in the President's annual budget request. Funding
was provided by Congressional add-ons to NOAA's budget. Fortunately,
due to the foresight of Congress, AMLR remained a viable program
despite attempts to cut it. I am sure that this allowed it to be
included in the President's budget request, starting with the fiscal
year 1994 budget.
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Until it was taken off line in 1995, the AMLR Program was supported
by the NOAA ship, R.V. Surveyor. Two years ago, NOAA contracted a
Russian ship to support AMLR. NOAA will again need to charter a ship to
support AMLR for the coming season, and will require up to $2 million
for this charter. We urge your Committee to ensure that funds are
available for this charter.
Thus, a $1.2 million appropriation is sufficient if there is
funding within the National Marine Fisheries Service budget to charter
a ship to support AMLR. However, if there are insufficient funds, then
additional funds would be needed to charter a vessel. Obviously,
without a vessel, AMLR cannot continue its research program.
The Antarctic Marine Living Resources Program is vital to
longstanding U.S. economic, environmental and political interests in
Antarctica, and supports our international obligations to the
Convention on the Conservation of Antarctic Marine Living Resources
(CCAMLR).
background on ccamlr
CCAMLR was established under the Antarctic Treaty System to provide
a management system that would both protect the ecosystem and allow
fishing activities in the Southern Ocean. It is unique among fisheries
agreements in that measures must be agreed which consider the impact of
a fishery on the entire ecosystem, rather than on just the harvested
species. CCAMLR is thus the first international convention to address
ecosystem management goals.
The Convention entered into force in 1982, and established an
advisory Scientific Committee and a regulatory Commission with
authority to impose restrictions on commercial fishing operations. To
date 22 nations and the European Community \3\ have agreed to subject
their fishing activities to regulation under the Convention. The
Convention requires consensus decision-making, which means that all
nations must approve each measure agreed on to prevent overharvesting.
Barring consensus, fisheries could proceed without regulation.
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\3\ The following nations are members of CCAMLR: Argentina,
Australia, Belgium, Brazil, Chile, European Community, France, Germany,
India, Italy, Japan, Republic of Korea, New Zealand, Norway, Poland,
Russian Federation, South Africa, Spain, Sweden, Ukraine, United
Kingdom, United States and Uruguay.
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The only way that the fishing nations will agree to and comply with
conservation measures that limit fisheries to ecologically sustainable
levels is if they are presented with scientific proof of a fishery's
status. Thus, for CCAMLR to remain effective, nations need to continue
funding research programs that generate the data to support these
measures.
Research results from the Antarctic Marine Living Resources Program
have provided this information. Since its inception, this U.S. program
has been critical to CCAMLR's success because it has provided the
scientific foundation for the adoption of ecologically-sound
conservation measures by CCAMLR member governments. The U.S. is
therefore able to be proactive in promoting measures aimed at
safeguarding the ecosystem.
the antarctic marine living resources program
Through AMLR, the U.S. has played a leading role in identifying and
brokering internationally acceptable approaches to conservation
problems in the Southern Ocean. The ability of the U.S. to influence
long-term international conservation efforts stems from our leading by
example--both in Southern Ocean conservation and in the larger
framework of the Antarctic Treaty System. A U.S. presence is especially
important now that U.S. fishers have initiated Southern Ocean
fisheries. Decreasing the U.S. research effort while increasing U.S.
fishing in the region could undermine U.S. leadership in Antarctica,
and could jeopardize the continuing success of CCAMLR.
During the last two years, nations have begun to bow to domestic
economic pressures at the expense of conservation, and have attempted
to gain consensus for catch levels which were economically beneficial,
without regard to the state of the fishery. At present, the principal
fishing nations are Argentina, Chile, Japan, Russia and the Ukraine.
During the last year, new fisheries have been proposed by Australia,
Korea, New Zealand, Norway, South Africa, and the UK.
Research results from AMLR have allowed the U.S. delegation to
argue persuasively that conservation measures be based on science
rather than economics. Without a strong U.S. research presence,
Southern Ocean fisheries will be regulated by nations with a strong
economic interest and presence in the region. Under such circumstances
we fear that implementation of conservation measures will be difficult,
overfishing will persist, and the region's marine living resources will
be exploited beyond sustainable levels.
By helping to effectively implement CCAMLR, AMLR also provides a
model for ecosystem management of domestic and international fisheries.
CCAMLR was launched as an experiment to determine if nations could
design new ways to govern fisheries that would avoid ecological and
subsequent economic catastrophe. The Large Marine Ecosystem experiments
carried out by the National Marine Fisheries Service stemmed directly
from the CCAMLR experience in the Southern Ocean.
The U.N. Food and Agriculture Organization has warned that ``fish
production from most of the world's fisheries has reached or exceeded
the levels at which fish stocks can regenerate themselves.\4\ As we see
fisheries around the world continuing to collapse, with consequent
economic and diplomatic implications, it is clear that the ``ecosystem
as a whole'' model initiated by Antarctic research needs to be
extrapolated to all fisheries.
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\4\ Committee on Fisheries, U.N. Food and Agriculture Organization,
March 1993 meeting.
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background on antarctic fisheries
Commercial harvesting of Antarctic fish began in the early 1970's.
By 1976, several nations had launched commercial harvesting operations
for krill, the one- to two-inch long shrimp-like crustacean that forms
the basis of the Antarctic food chain. CCAMLR was negotiated in
response to the collapse of several species of fish from unregulated
fisheries, and the concern that a rapid escalation of a krill fishery
could precipitate the demise of the Southern Ocean marine ecosystem.
Because of krill's pivotal role in the food chain, an unregulated
fishery could also impede the recovery of whale populations.
Krill fishing peaked in the early 1980's, and is currently at its
lowest level.\5\ The decrease in recent years is primarily due to the
break up of the Soviet Union, and the decline in Russia's krill
fishery. Even in the 1980's, krill catches remained relatively low.
This was primarily attributed to palatability problems caused by high
fluoride concentrations in the exoskeleton. Technology is currently
available to overcome this problem, and recently there has been renewed
interest in this fishery.
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\5\ In the 1981/82 season, 528,201 tonnes were caught; in 1994/95,
118,714 tonnes were caught; in 1995/96 95,040 tonnes were caught.
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In addition to krill, in recent years three species have been
targeted by commercial fisheries: Patagonian toothfish or black hake,
Mackerel icefish, and crabs. In the 1996/97 season, a new fishery on
squid was opened. Fisheries have been open on several additional
species (lanternfish and grey notothens); however, economic factors
have not permitted commercial ventures to proceed. Southern fisheries
have been primarily concentrated in the Atlantic sector of the Southern
Ocean; however, the last CCAMLR meeting opened most of the remainder of
the Southern Ocean to toothfish fisheries.
importance of ccamlr and the u.s. antarctic marine living resources
program
Proper implementation of CCAMLR is necessary to ensure the wise and
sustainable use of Southern Ocean fisheries. The Antarctic Marine
Living Resources Program is essential for the proper implementation of
CCAMLR because research results have provided the foundation for the
adoption of ecologically sound conservation measures by CCAMLR.
To give effect to the Convention domestically, and to ensure the
acquisition of the requisite scientific information, Congress enacted
the Antarctic Marine Living Resources Convention Act of 1984.\6\ This
act directed NOAA to develop and implement a research program to
support and facilitate implementation of CCAMLR. This program, the U.S.
AMLR Program, has been implemented by NOAA's National Marine Fisheries
Service since 1987, when Congress approved the Program Development
Plan.\7\
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\6\ The Antarctic Marine Living Resources Conservation Act of 1984
(Public Law 98-623).
\7\ The Program Development Plan recommended annual funding of AMLR
at the $4 million level, including $1.8 million for the charter of a
dedicated research vessel.
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The U.S. AMLR Program was the first national research program to
investigate the state of the fish stocks in the Southern Ocean. The
first AMLR cruise confirmed that fishing operations were having adverse
impacts on marine life, and indicated that several fish stocks were
being exploited at rates above those levels which allow replacement of
the stock. Several species had been so heavily fished that their
populations were less than 10 percent of their size in 1982.\8\
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\8\ Because these early studies confirmed low standing stocks of
fish, the traditional harvesting areas surrounding the South Shetland
and South Orkney Islands in the Southern Atlantic Ocean were closed to
finfishing. Attempts to reopen these areas have not been successful.
However, unless fish stock surveys are completed in the future, we
could lose the agreement to keep these areas closed. It will only be
due to the consistent and vigilant application of the results of the
research cruises that consensus will be maintained to prohibit or limit
fishing in these and other areas.
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The importance of CCAMLR and the U.S. AMLR Program is in their
ability, over a decade's time, to monitor changes in the Southern Ocean
ecosystem. Whether fluctuations in the marine environment, including
changes in marine populations, can be attributed to human or natural
events, can only be determined by research which continues over a long
period of time.
Results from the past few years are illustrative.
One, the survival of krill predators (seals and penguins) is a good
indication of the availability of krill. Since 1990, the survival of
young penguins and seals has fluctuated. Although the krill harvest is
at its lowest level, the availability of krill to its predators has
fluctuated, as evidenced by the annual survival rate of penguin
chicks.\9\
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\9\ Anderson, Ian. Penguins move out after chicks starve to death.
New Scientist. Vol. 145, no. 1962, p. 9. January 28, 1995.
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Whether these changes are the result of natural fluctuations or due
to the location and timing of the krill fishery is still not fully
understood. An article in Nature \10\ reports that juvenile Emperor
penguins forage further north than previously believed. This appears to
bring these penguins into commercial fishing areas, raising the
potential for competition.
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\10\ Kooyman, G.L., et al. Penguin dispersal after fledging.
Nature, vol. 383, 3 October 1996.
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However, these results highlight the challenges facing CCAMLR, and
the need for continued research: to establish a relation between
changes in the marine ecosystem and external (human-induced) vs.
natural impacts, and to determine what is overfishing.
Two, a healthy krill population is also essential for the recovery
of some depleted fish stocks. The AMLR Program initiated the first
ecosystem monitoring program which studied the relationships between
krill, their predators, and their environment. Research results led
CCAMLR to adopt a precautionary catch limit on krill fishing. The U.S.
is the only nation which is consistently conducting these studies.\11\
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\11\ Review of the United States Antarctic Marine Living Resources
(AMLR) Research Program, 27-29 May 1992, La Jolla, CA (Dr. Robert J.
Hofman, Marine Mammal Commission, Chairman). This interagency review
panel noted that ``AMLR is focussed on tasks that are essential to
meeting the ecosystem-oriented objectives of CCAMLR, * * * and are not
being done by other Parties.''
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Three, there is much uncertainty over the status of krill stocks in
some sectors in the Southern Ocean, and some evidence that krill
recruitment might actually be decreasing. Based on a U.S. proposal,
CCAMLR placed a high priority on undertaking a new synoptic krill
survey. The U.S. is organizing this effort.
Four, in response to a U.S. fisherman applying for a permit to
initiate a crab fishery in the Southern Ocean, the U.S. took the lead
in ensuring that the fishery was developed using a conservative
approach by developing a model research and development plan. In
developing this plan, the fisherman was consulted, along with
biologists and fishery management specialists. The crab fishery was
used as an example of how to manage a new fishery, and set a precedent
for other new and developing fisheries.
Based on the U.S. example, measures were adopted which defined
``new'' and ``exploratory'' fisheries and articulated procedures for
conducting them. At the last CCAMLR meeting, the U.S. secured agreement
for the need for a measure which articulates the procedure to be
followed when resuming a fishery for which there is no data upon which
to base a sustainable catch limit. These measures are necessary to
assure that fisheries develop slowly and in concert with the
acquisition of biological and demographic data. Prior to this,
fisheries were allowed to develop until the resource was depleted.
Five, one of the biggest obstacles to the adoption of conservation
measures is lack of data submission. Without this data, the Scientific
Committee is unable to provide the best scientific advice on the state
of a fishery or fish stock. Without data to back up claims of
overfishing, fishing nations can attempt to increase allowable catches,
and open previously-closed areas to fishing.
To help overcome this, personnel from the U.S. AMLR Program
implemented the CCAMLR Scientific Observer program by placing an
observer on board a Russian vessel. Observers enable compliance
monitoring with the conservation measures adopted by the CCAMLR
Commission. They provide verification of the fish species caught,
fishing methods used, catch data, and accurate and timely reporting to
the CCAMLR Secretariat.
Six, U.S. AMLR personnel also initiated the CCAMLR Inspection
Program of commercial boats in the 1990/1991 season with the boarding
of a Japanese vessel, and have carried out additional inspections
during the past seasons. This set a precedent for other countries.\12\
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\12\ The CCAMLR Inspection Program seeks to measure compliance with
CCAMLR conservation measures by allowing for unannounced checks of
commercial boats which are engaged in harvesting activities.
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Seven, during the past two years, there has been a significant
illegal fishery occurring on the Patagonian toothfish. Prior to last
year, nations were unable to censure those flag states because of the
narrow definition of fishing which specified that a boat had to be
observed actually fishing on a closed fishery for an inspector to
report a violation. The U.S. was successful in getting nations to agree
to broaden this definition to give inspectors greater latitude in
determining whether an infringement of a conservation measure has
occurred when inspecting a research or fishing vessel. The U.S. had
hoped that nations would agree to placing satellite-linked vessel
monitoring systems (VMS) on their boats. These systems have proved
successful in ensuring compliance with conservation measures in
domestic fisheries, because a boat's location is automatically conveyed
to a central computer. Nations agreed to voluntary placement of VMS on
board their vessels, and have agreed to discuss mandatory placement at
this year's meeting.
u.s. economic interests
As fisheries around the world have become depleted, over the past
two years there has been a hugh resurgence in interest in Southern
Ocean fisheries. It is believed that the Southern Ocean is the ``last
remaining major source of marine protein, [and this will lead to]
considerable harvesting activity in the Southern Ocean, which will
require, if it is to have a chance of being sustainable, a massive
extension of current ecological research * * *.'' \13\
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\13\ Drewry, D.J. 1993. The future of Antarctic scientific
research, Polar Record 29:37-44.
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As mentioned above, the U.S., through AMLR, has been successful in
achieving agreement on conservation measures designed to ensure the
long-term sustainability of the marine resources of the Southern Ocean,
and has taken the lead in developing monitoring programs, primarily
through the CCAMLR Ecosystem Monitoring Program. For example, the
measure designed to ensure that new fisheries did not develop ahead of
the collection of biological and demographic data was instigated by the
U.S.
However, it is clear that for the underdeveloped marine resources,
it is in the best interest of U.S. fishers to understand as clearly as
possible what the status of that resource might be, so that the
resource can be managed sustainably over the long term. In this way
U.S. fishers can make informed decisions about the potential for future
participation in Southern Ocean fisheries. Thus, a continued U.S.
presence in Antarctic marine resources research will ensure both an
ecological and economic benefit to U.S. fishers.
This has already been demonstrated by the initiation of the crab
fishery by an Alaskan fisherman. The presence of the U.S. at the
meetings of CCAMLR were critical to ensuring that the interests of this
fisherman were properly represented.
As noted above, the research conducted through AMLR could generate
valuable lessons for managing U.S. domestic fisheries. Viewed from this
perspective, the very small investments being made in Antarctic
research can pay handsome dividends.
u.s. political interests
In the U.S. view, Antarctica is owned by no one. It is governed by
the Antarctic Treaty System, a collection of international treaties
which set policy and articulate permitted activities in the Antarctic
region for those governments that are members. Central to the Antarctic
Treaty System is the Antarctic Treaty, which entered into force in
1961. Its primary purpose is to ensure that Antarctica will be used
exclusively for peaceful purposes. To this end, the Treaty provides for
the freedom of scientific research, promotes international cooperation
towards this goal, and, most importantly for CCAMLR, freezes all
territorial claims.
Seven nations claim sovereignty over territory in Antarctica
(Argentina, Australia, Chile, France, New Zealand, Norway and the
United Kingdom; the claims of Argentina, Chile and the UK overlap). The
U.S. and Russia reserve their rights to assert claims in the continent.
By freezing these claims, the Antarctic Treaty ensured that scientific
research could proceed anywhere on the continent.
With the break up of the Soviet Union, and the reduction in the
Russian Antarctic Program, the U.S. has become the principal non-
claimant nation with a substantial presence in Antarctica. Thus, if a
claimant nation tried to act on its claim, the U.S. might be the only
country which could effectively challenge this action. This is
especially true in the waters surrounding Antarctica. As long as claims
are frozen, these waters are open to all fishers (provided they abide
by CCAMLR's regulations).
A decreased U.S. presence and involvement could alter this fragile
balance and open up the possibility of claimant nations declaring 200
mile exclusive economic zones (EEZ's) in these waters, thus limiting
access to the viable fisheries to fishers from the U.S. and other
nations.
fiscal year 1998 appropriation request
Although the AMLR Program is vital to U.S. interests in Antarctica,
and to the sustainable management and geopolitical stability of
Southern Ocean fisheries, it had been constrained by funding
limitations since its inception. Congress originally recommended
funding the Program at $4 million annually; this included $1.8 million
to charter a research vessel. AMLR has never been funded near this
level.
AMLR Funding Levels
In millions
Fiscal year:
1987......................................................\1\ $1.8
1988.......................................................\1\ 1.5
1989.......................................................\2\ 1.3
1990.......................................................\2\ 1.3
1991.......................................................\2\ 1.3
1992.......................................................\2\ 1.275
1993.......................................................\2\ 1.2
1994.......................................................\2\ 1.2
1995.......................................................\2\ 1.2
1996.......................................................\3\ 1.2
1997.......................................................\3\ 1.2
1998.......................................................\4\ 1.2
\1\ Included contracting the Polish vessel, Professor Svedlecki.
\2\ Use of NOAA's ship Surveyor.
\3\ Charter of Russian vessel.
\4\ Requested; assumes availability of charter funds.
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Fiscal Year 1998 Appropriation Request
For fiscal year 1998, level funding of $1.2 million will be needed
to continue the principle research components of the U.S. AMLR Program.
Funding will allow the continuation of both the land-based and ship-
based research programs. The land-based ecosystem monitoring program
monitors the reproduction and foraging behavior of the primary
mammalian and avian krill predators, while the ship-based studies
monitor the physical oceanography and spatial distribution and
abundance of krill in the Southern Ocean contiguous with, and extending
beyond, the land-based site.
As indicated above, when the R.V. Surveyor was taken off line, NOAA
chartered a Russian ship to support the AMLR Program. NOAA will again
be contracting for a ship to support AMLR for the coming season, and
will require up to $2 million for this charter. If these funds are not
available within the National Marine Fisheries Service budget, then
additional funds would be needed to charter a vessel. We urge you to
ensure that money is available for this charter.
conclusion
CCAMLR was launched as an experiment to determine if nations could
govern fisheries to avoid ecological and subsequent economic
catastrophe. By helping to effectively implement CCAMLR, AMLR provides
a model for ecosystem management of domestic and international
fisheries.
As fish stocks have decreased globally, economic pressures have
begun to compel nations to increase fishing in the Southern Ocean.
Without continued scientific effort to judge proposals for fishing, the
same problems could emerge in the Southern Ocean that are occurring in
other regions of the world.
The results of the research undertaken through NOAA's Antarctic
Marine Living Resources Program have enabled the U.S. to argue
persuasively for the adoption of conservation measures aimed at
limiting the harvesting of exploited species. Without a strong U.S.
research presence, Southern Ocean fisheries will be regulated by
nations with a strong economic interest and presence in the region.
Further, implementation of conservation measures will be difficult,
overfishing will persist, and the marine living resources will be
exploited beyond sustainable levels.
Continued funding of the Antarctic Marine Living Resources Program
will protect the lead role that the U.S. has played over the past
thirty-five years, in the Antarctic Treaty and in the Antarctic Treaty
System, in developing ecologically sound and internationally acceptable
approaches to Antarctic issues.
Continuing to fulfill our obligations under CCAMLR will send a
strong message about our desire to maintain the Antarctic as a region
dedicated to science and other peaceful uses, and to minimize harm to
the environment. It will allow the continued stability with regard to
claims in the region. It will reflect positively on our commitment to
the Antarctic Treaty System, and will preserve the leadership role of
the United States in marine living resources research. In addition, now
that the United States has become a fishing nation, it is especially
important for us to maintain credibility. This is not the time for the
U.S. to decrease its research efforts.
The AMLR Program has encouraged collaboration with scientists of
many nations. Politically, this cooperation enhances U.S. interactions
in other international fora, in addition to CCAMLR and the Antarctic
Treaty System.
While we recognize that Congress must make difficult budget
decisions, it is important not to underestimate the value of the U.S.
AMLR Program. The modest allocation of funds that is being requested
for investment in Antarctic marine research will go a long way toward
addressing critical environmental and political issues that the United
States faces in Antarctica. For future generations, investing in this
cost-effective program will be more important than the modest savings
gained through its elimination.
For these reasons, we respectfully request this Subcommittee to
approve an appropriation of $1.2 million to support NOAA's Antarctic
Marine Living Resources Program.
______
Prepared Statement of the Indigenous People's Council for Marine
Mammals
Mr. Chairman, Members of Commerce, Justice, State, Judiciary, and
Related Agencies, and the Senate Subcommittee on the Appropriations. On
behalf of the Alaska Native Community, the Indigenous People's Council
for Marine Mammals (IPCoMM) is requesting the Senate Subcommittee of
the Appropriations Committee to appropriate, for fiscal year 1998, the
authorized levels of: $1.5 million to the Secretary of Commerce to
implement Section 119 of Public Law 103-238, 1994 Amendments to the
Marine Mammal Protection Act (MMPA). Section 119 authorizes the
Secretary of Commerce to ``* * * enter into cooperative agreements with
Alaska Native Organizations to conserve marine mammals and provide co-
management of subsistence use by Alaska Natives.'' It also authorizes
Congress to appropriate funds to implement Section 119. Unfortunately,
no funds have been appropriated to the Department of Commerce since
Section 119 was added to the MMPA in 1994. In fact the only funding
provided since 1994 was a $250,000 congressional add-on to the
Department of the Interior's fiscal year 1997 budget which allowed U.S.
Fish and Wildlife Service (USFWS) to enter into co-management
agreements with Alaska Native Organizations for conservation and
subsistence use of walrus, polar bears and sea otters.
Despite the lack of funding, significant progress has been made in
Alaska in terms of implementing Section 119 of the MMPA. The Alaska
Native Community, represented by IPCoMM, the Alaska Federation of
Natives (AFN), and the Alaska Inter-Tribal Council (AI-TC) recently
completed negotiations on an umbrella ``Memorandum of Agreement for
Negotiation of Marine Mammal Protection Act Section 119 Agreements'' to
conserve marine mammals and provide co-management of subsistence use
with the Department of the Interior--Fish and Wildlife Service. Final
negotiations with the Department of Commerce--National Marine Fisheries
Service (NMFS) are expected to be completed on March 20, 1997. This
umbrella agreement between IPCoMM and NMFS will provide the foundation
and direction for how individual co-management agreements will be
negotiated between the federal agencies and Alaska Native Organizations
for the nine (9) species under NMFS jurisdiction. The parties are in
the process of planning a formal signing ceremony to commemorate the
historic agreement which will enhance the conservation and
utilization's of the marine mammal resources for subsistence uses
consistent with the public policy embodied in Section 119 of MMPA. In
addition to the successful negotiations with NMFS and USFWS on the
umbrella agreement, three marine mammal Commissions (Eskimo Walrus
Commission, the Alaska Nanuuq Commission and the Alaska Sea Otter
Commission) recently signed individual co-management agreements with
USFWS for specific co-management agreement activities involving three
species used for subsistence purposes in Alaska (walrus, polar bear and
sea otters). These Agreements were made possible due to the $250,000
appropriation to the Department of the Interior for fiscal year 1997.
Although significant progress has been made in implementing Section
119 of the MMPA, it is imperative that Congress fully fund Section 119
of the MMPA if this progress is to continue for the twelve (12) marine
mammal species used by Alaska Natives. Congress has recognized that the
best way to conserve and wisely utilize marine mammal resources used
for subsistence purposes is to allow the full and equal participation
by Alaska Natives in decisions affecting the management of marine
mammals taken for subsistence. That can only happen if Congress
provides adequate funding for co-management activities.
Background.--Early in the discussions leading to the 1994
reauthorization of the MMPA, a number of Alaska Native marine mammal
groups banded together and formed IPCoMM to insure a united Native
voice during the reauthorization process. As a result, the Native
exemption for taking of marine mammals for subsistence uses was
retained, and language was added in Section 119 to authorize the
Secretaries of the Department of Commerce and Interior to enter into
co-management agreements with Alaska Natives Organizations for the
conservation and co-management of subsistence uses of marine mammals.
In the spring of 1994, Congress enacted Public Law 103-238, the
1994 amendments to the MMPA. In doing so, Congress expressed its intent
that the Secretary of Commerce and the Secretary of the Interior extend
full cooperation as partners to Alaska Native Organizations in the
development and implementation of marine mammal management plans. In
order to insure proper implementation of Section 119, the Alaska Native
Community requested that NMFS and USFWS work with IPCoMM in the
development of an ``Umbrella'' Agreement with specific language that
the federal agencies would consider when developing individual co-
management agreements with Alaska Native Tribes and organizations
pursuant to Section 119. The purpose of the umbrella agreement is to
provide the direction and foundation for individual co-management
Agreements. It will serve as a guide to USFWS, NMFS and Biological
Resources Division, Geological Survey when these federal agencies enter
into individual agreements with Alaska Native Organizations or Alaska
Native Tribes for the co-management of subsistence use of marine
mammals.
At this time, IPCoMM is concerned about all marine mammals which
are utilized by Alaska Natives; however, harvest limitations are
allowed and discussions have taken place concerning three listed
species for which we have grave concern: bowhead whale (endangered);
North Pacific Fur Seal (threatened); Steller Sea Lion (threatened).
The Alaska Native Community stands ready to work with NMFS and
USFWS in implementing Section 119 of Public Law 103-238 to its fullest
extent. It has already made significant progress toward that end. While
Section 119 provides an effective way for Alaska Natives to participate
in decisions affecting the management of marine mammals taken for
subsistence, full realization of that goal will not be possible unless
Congress provides adequate funding for co-management agreements. For
that reason, we urge this Committee to appropriate the full $1.5
million to the Department of Commerce to enable it to enter into
individual co-management agreements pursuant to Section 119 of the
MMPA. We trust that our request will be given due consideration during
the deliberations of the Committee.
LIST OF WITNESSES, COMMUNICATIONS, AND PREPARED STATEMENTS
----------
Page
Albright, Hon. Madeleine K., Secretary of State, Department of
State.......................................................... 1
Prepared statement........................................... 7
Alvarez, Aida, Administrator, Small Business Administration...... 57
Biographical sketch.......................................... 68
Prepared statement........................................... 57
Archer, Glenn L., Jr., Chief Judge, U.S. Court of Appeals for the
Federal Circuit, U.S. courts, the judiciary, prepared statement 407
Baker, D. James, Under Secretary, Oceans and Atmosphere, National
Oceanic and Atmospheric Administration, Department of Commerce. 417
Biographical sketch.......................................... 429
Prepared statement........................................... 420
Bosley, Dale, Marshal, Supreme Court of the United States, the
judiciary...................................................... 383
Bossler, John D., Rear Admiral (retired), director, Center for
Mapping, Ohio State University, prepared statement............. 490
Brown, Mark E., Director, Office of Budget, Secretary of
Commerce, Department of Commerce............................... 151
Burns, Hon. Conrad, U.S. Senator from Montana, questions
submitted by...................................................
139, 378.......................................................
Campbell, Hon. Ben Nighthorse, U.S. Senator from Colorado,
questions submitted by.........................................
43, 133, 221, 330..............................................
Carman, Gregory W., Chief Judge, U.S. Court of International
Trade, U.S. courts, the judiciary, prepared statement.......... 407
Center for Marine Conservation, prepared statement............... 469
Clark, Beth Marks, director, The Antarctica Project, prepared
statement...................................................... 494
Clarke, Judy, president, National Association of Criminal Defense
Lawyers, prepared statement.................................... 477
Colgate, Stephen R., Assistant Attorney General for
Administration, Office of the Attorney General, Department of
Justice........................................................ 91
Constantine, Thomas A., Administrator, Drug Enforcement
Administration, Department of Justice.......................... 247
Prepared statement........................................... 258
Curtis, Adrian A., Director, Budget Staff, Office of the Attorney
General, Department of Justice................................. 91
Daley, Hon. William M., Secretary of Commerce, Department of
Commerce....................................................... 151
Biographical sketch.......................................... 162
Prepared statement........................................... 154
Domenici, Hon. Pete V., U.S. Senator from New Mexico, questions
submitted by...................................................
35, 75, 125, 178, 219, 322, 362................................
Donnelly, Tony, Director of Budget and Personnel, Supreme Court
of the United States, the judiciary............................ 383
Dowdell, Lloyd Q., president, Advanced Telecomm. Tech., Inc.,
prepared statement............................................. 474
Duff, James C., Administrative Assistant to the Chief Justice,
Supreme Court of the United States, the judiciary.............. 383
Faircloth, Hon. Lauch, U.S. Senator from North Carolina,
questions submitted by......................................... 459
Fishel, Andrew S., Managing Director, Federal Communications
Commis- sion................................................... 347
Freeh, Louis J., Director, Federal Bureau of Investigation,
Department of Justice.......................................... 247
Prepared statement........................................... 252
Gregg, Hon. Judd, U.S. Senator from New Hampshire, questions
submitted by................................................... 303
Harris, F.A. (Tex), president, American Foreign Service
Association, prepared statement................................ 467
Heyburn, Hon. John G., II, Chairman, Committee on the Budget,
Judicial Conference of the United States, U.S. courts, the
judiciary...................................................... 389
Biographical sketch.......................................... 389
Prepared statement........................................... 392
Hollings, Hon. Ernest F., U.S. Senator from South Carlina,
questions submitted by.........................................
51, 86, 139, 190, 222, 331, 369, 454...........................
Hout, Eldon, chairman, Coastal States Organization, Inc.,
prepared statement............................................. 483
Hufstedler, Shirley Mount, chair, U.S. Commission on Immigration
Reform, prepared statement..................................... 465
Hundt, Hon. Reed E., Chairman, Federal Communications Commission. 347
Prepared statement........................................... 349
Hutchison, Hon. Kay Bailey, U.S. Senator from Texas, questions
submitted by...................................................
41, 327, 453...................................................
Indigenous People's Council for Marine Mammals, prepared
statement...................................................... 500
Inouye, Hon. Daniel K., U.S. Senator from Hawaii, questions
submitted by...................................................
374, 456.......................................................
Jollivette, Cyrus M., vice president for Government relations,
University of Miami, prepared statement........................ 487
Kammer, Raymond G., Jr., Acting Chief Financial Officer/Assistant
Secretary for Administration, Secretary of Commerce, Department
of Commerce.................................................... 151
Kennedy, Hon. Anthony M., Associate Justice, Supreme Court of the
United States, the judiciary................................... 383
Prepared statement........................................... 384
Lautenberg, Hon. Frank R., U.S. Senator from New Jersey:
Prepared statement........................................... 3
Questions submitted by.......................................
343, 377, 458..............................................
Leahy, Hon. Patrick J., U.S. Senator from Vermont, questions
submitted by................................................... 209
Levitt, Hon. Arthur, Chairman, Securities and Exchange Commission
Biographical sketch.......................................... 213
Prepared statement........................................... 212
Lyman, Princeton N., Assistant Secretary for the Bureau of
International Organization Affairs, United Nations............. 229
Mecham, Leonidas Ralph, Director, Administrative Office of the
U.S. Courts, the judiciary, prepared statement................. 400
Meissner, Doris, Commissioner, Immigration and Naturalization
Service, Department of Justice................................. 247
Prepared statement........................................... 271
Mikulski, Hon. Barbara A., U.S. Senator from Maryland:
Questions submitted by.......................................
55, 346....................................................
Prepared statement........................................... 431
Moxam, Andrew, Deputy Chief Financial Officer, Chief
Administrative Officer, National Oceanic and Atmospheric
Administration, Department of Commerce......................... 417
Reno, Janet, Attorney General, Office of the Attorney General,
Department of Justice.......................................... 91
Prepared statement........................................... 92
Richardson, Ambassador Bill, U.S. Permanent Representative to the
United Nations................................................. 229
Biographical sketch.......................................... 235
Prepared statement........................................... 232
Roper, Michael J., Deputy Assistant Attorney General, Controller,
Office of the Attorney General, Department of Justice.......... 91
Scalet, Charles G., president, National Association of University
Fisheries and Wildlife Programs, prepared statement............ 486
Souter, Hon. David H., Associate Justice, Supreme Court of the
United States, the judiciary................................... 383
Suter, Bill, Clerk, Supreme Court of the United States, the
judiciary...................................................... 383
Walter, Greg, Deputy Chief Financial Officer, Small Business
Administra- tion............................................... 57
Zobel, Hon. Rya W., Director, Federal Judicial Center, U.S.
courts, the judiciary, prepared statement...................... 405
SUBJECT INDEX
----------
DEPARTMENT OF COMMERCE
National Oceanic and Atmospheric Administration
Page
Account structure changes........................................ 422
Additional committee questions................................... 453
Advanced weather interactive processing system................... 444
Status on.................................................... 444
Aeronautical charting transfer to the FAA........................ 445
Aquaculture...................................................... 456
Budget, fiscal year 1998:
Highlights of the............................................ 421
Review....................................................... 417
Capital assets acquisition....................................... 444
Charleston laboratory staffing................................... 446
Chesapeake Bay blue crab stock assessment........................ 433
Clean water initiative........................................... 451
Coastal monitoring............................................... 436
Committee on Environment and Natural Resources................... 427
Community right to know.......................................... 435
Corps............................................................ 437
Disestablishment.............................................
437, 454...................................................
DOD polar orbiting satellite convergence......................... 448
East coast flounder and striped bass catch quota................. 430
Ecosystem fisheries management................................... 458
Endangered Species Act [ESA]..................................... 453
Environmental assessment and prediction.......................... 422
Environmental stewardship........................................ 425
Facilities maintenance requirements.............................. 440
Fisheries stock assessment accuracy.............................. 435
Fleet............................................................ 450
Maintenance.................................................. 442
Modernization................................................ 455
Goddard Space Flight Center, NOAA facility at.................... 433
GOES follow-on program........................................... 450
Halibut and sable fish individual fishing quotas................. 440
Highly migratory species......................................... 459
National Hurricane Center staffing............................... 432
National Marine Fisheries Service:
Charleston laboratory staffing............................... 446
Reorganization of regions.................................... 457
National Ocean Service........................................... 443
National ocean survey............................................ 450
``National Performance Review'' and streamlining................. 427
National Undersea Research Program [NURP]........................ 456
Nautical charting activity in Alaska............................. 439
Oceanic research................................................. 443
Pacific area office.............................................. 457
Pacific insular area fisheries agreement......................... 457
Partnership, benefits of......................................... 429
Portland, ME, data buoys......................................... 447
Reducing costs and improving effectiveness....................... 427
Right whale rulings.............................................. 451
Role: Doing what's needed........................................ 420
Lack of increased tempo off of Alaska compared to the rest of
the coun- try.............................................. 439
Satellite funding requirements................................... 449
Species recovery................................................. 454
Stock assessment, status of...................................... 436
Striped bass..................................................... 462
Summer flounder.................................................. 459
Turtle excluder devices.......................................... 446
United States-Japan common agenda global observation information
network [GOIN] initiative...................................... 458
Secretary of Commerce
Additional committee questions................................... 177
Advanced Technology Program......................................
165, 207.......................................................
AWIPS program, status of......................................... 165
Budget restraints................................................ 171
BXA encryption................................................... 172
Census budget.................................................... 190
Circulation and subscriber figures............................... 209
Committee allocation............................................. 163
Economic statistics initiative................................... 180
Encryption....................................................... 178
Management issues................................................ 175
Manufacturing extension partnership [MEP]........................ 208
MBDA/SBA collaboration........................................... 204
Minority Business Development Agency [MBDA] effectiveness........ 202
National Weather Service southern region headquarters, closure of
the............................................................ 185
NOAA--Satellites................................................. 205
Patent and trademark............................................. 167
Fees......................................................... 174
Increases in............................................. 185
Revenue diversion............................................ 166
Performance-based organization................................... 206
Political appointees, reducing................................... 164
Public broadcasting facilities, planning, and construction....... 170
Public Telecommunications Facilities Program [PTFP].............. 187
Effect of in Arkansas........................................ 176
Grants, awarding 1997........................................ 170
Proposed termination of...................................... 173
Sampling......................................................... 191
Statistical agencies, consolidation of........................... 179
Summary statement................................................ 151
Survey of minority-owned business enterprises [SMOBE] and survey
of women-owned business enterprises [SWOBE].................... 179
Tourism.......................................................... 169
Trade Compliance Center.......................................... 183
And IA's Office of Agreements Compliance, difference between. 197
Status of the initiative..................................... 173
Trade missions................................................... 163
Translation costs................................................ 210
2000 census...................................................... 166
U.S. and Foreign Commercial Service [US&FCS]..................... 192
U.S. innovation partnership...................................... 188
Weather station closings......................................... 176
WNC:
Budget....................................................... 209
Marketing.................................................... 210
Vs. sources in ``FBIS Daily Report'', sources in............. 210
DEPARTMENT OF JUSTICE
Drug Enforcement Administration
Additional committee questions...................................
303, 310, 334..................................................
And FBI training at Quantico..................................... 281
Colombia......................................................... 318
Director for Investigative Agency Policy [DIAP].................. 335
Drugs:
Emerging problems............................................ 264
Entering through the port of entry........................... 295
War on....................................................... 310
Fenfluramine descheduling........................................ 343
Fight against global drug trafficking: Lessons learned........... 266
Fiscal year 1998 budget: Equipping the agency for the future..... 267
Heroin use in Baltimore.......................................... 291
HIDTA funding.................................................... 287
Illegal immigration and drug enforcement in Texas................ 296
Infrastructure................................................... 258
International organized crime....................................
256, 259.......................................................
Methamphetamine:
Labs......................................................... 316
Strategy..................................................... 288
Mexico........................................................... 312
Certification of............................................. 286
Colombia..................................................... 341
Trafficking organizations from............................... 260
National drug trafficking problems............................... 257
Puerto Rico...................................................... 321
Station, permanent change of..................................... 334
United States:
Law enforcement response to organized crime.................. 265
Organized crime's surrogates in the.......................... 262
Violent drug trafficking organizations in the................ 263
Federal Bureau of Investigation
Additional committee questions...................................
303, 331.......................................................
Agents in Maryland............................................... 290
And DEA:
Cooperation between.......................................... 280
Laboratories for............................................. 304
Construction.....................................................
251, 255.......................................................
Of facilities................................................ 284
Director Freeh's opening statement............................... 248
Disciplinary office.............................................. 306
Employees, investigating misconduct of........................... 339
Fingerprint card backlog......................................... 331
Fingerprints/immigration......................................... 331
Freedom of Information Act....................................... 255
Infrastructure................................................... 255
Initiative................................................... 251
Integrated automated fingerprint identification system [IAFIS]... 303
International law enforcement....................................
250, 254.......................................................
La Cosa Nostra................................................... 254
Laboratory....................................................... 285
Investigation................................................ 303
Management................................................... 337
Mt. Pleasant illegal aliens...................................... 333
National Crime Information Center................................ 303
1998:
Budget request............................................... 252
Initiatives.................................................. 252
Southwest border................................................. 254
Initiative................................................... 250
Technology crimes................................................ 253
Initiative................................................... 249
Telecommunications carrier compliance............................
248, 253, 307, 338.............................................
Immigration and Naturalization Service
Achievements..................................................... 271
Additional committee questions...................................
303, 308, 322, 327, 331, 340, 343
Affidavits of support and public charge bonds.................... 322
Aliens:
Initiative, remove criminal and other deportable............. 278
Removal of illegal........................................... 272
Sponsorships of legal........................................ 293
Bars to reentry.................................................. 327
Border control...................................................
282, 302.......................................................
Achievements................................................. 271
Crossings, number of......................................... 300
Facilitation and control initiative.......................... 277
Border Patrol:
Agent increases.............................................. 327
Request for agents........................................... 299
Budget, fiscal year 1998......................................... 276
Challenges, facing............................................... 269
Charleston Border Patrol......................................... 340
Citizenship USA.................................................. 308
Citizenship, requirements for.................................... 294
Colorado, illegal immigration in................................. 289
Concerns and issues.............................................. 275
Consolidation.................................................... 309
Detention representation project................................. 343
Drug investigations, major....................................... 346
Drug trafficking by gangs........................................ 344
Facilities, construction of...................................... 284
Federal Law Enforcement Training Center, consolidation of the.... 330
Fingerprint card backlog......................................... 331
Fingerprints/immigration......................................... 331
Illegal workers, policy on....................................... 290
Immigration services............................................. 274
INS and FBI, coordination between................................ 283
Interagency cooperation.......................................... 282
Interior deterrence initiative................................... 278
Juveniles, special immigrant status for certain.................. 322
Law enforcement, funds for local................................. 290
Management reforms............................................... 270
Mt. Pleasant illegal aliens...................................... 333
Naturalization application increase--interaction with welfare
reform......................................................... 322
Naturalization:
Backlogs.....................................................
295, 323...................................................
Efforts...................................................... 284
Of immigrants................................................ 292
Process...................................................... 341
Other accomplishments............................................ 274
Police, INS coordination with.................................... 302
Professionalism initiative....................................... 276
Section 245(i)................................................... 340
Extension of................................................. 330
Services and benefits initiative, improving...................... 279
States, assistance to............................................ 274
Technology improvements.......................................... 273
Welfare Act, effect of........................................... 294
Worksite enforcement............................................. 272
Office of the Attorney General
Additional committee questions................................... 124
Attorney General Reno's opening remarks.......................... 91
Baltimore-Washington corridor.................................... 114
Border Patrol.................................................... 104
Campaign finance................................................. 103
Charleston Border Patrol training facility....................... 139
Citizenship USA.................................................. 109
Community-oriented policing services [COPS]......................
93, 113, 145...................................................
Counterterrorism................................................. 123
Crime:
Assisting other countries fight.............................. 135
Laboratories................................................. 115
Prevention................................................... 98
Criminals, keeping off the street................................ 94
DEA and Mexico................................................... 138
DIAP, effectiveness of the....................................... 145
District of Columbia:
Prosecutions in the.......................................... 93
Situation.................................................... 147
Division of the Ninth Circuit.................................... 139
Drug trafficking and drug abuse, fighting........................ 94
FBI:
Fingerprint issue............................................ 121
Laboratory................................................... 122
FBI/White House:
Confrontation................................................
99, 101....................................................
Issue........................................................ 120
Federal prison system............................................ 124
Fighting crime and youth violence................................ 93
Fingerprints/immigration......................................... 141
Fiscal year 1998 request......................................... 93
Fundraising...................................................... 100
G-7 summit in Denver, security for the........................... 137
General legal activities......................................... 96
Hepatitis C in prisons........................................... 144
Immigration...................................................... 120
Fighting illegal............................................. 95
Information technology........................................... 115
Information, exchange of......................................... 116
International crime, impact of on the United States.............. 133
Investigations................................................... 118
Justice Department programs, out-year needs of................... 131
Juvenile crime...................................................
97, 130........................................................
Prevention................................................... 117
Programs, successful..................................... 98
Juveniles, special immigrant status for certain.................. 111
Laboratory consolidation......................................... 122
Lorton........................................................... 149
Management initiatives........................................... 92
McAllen, TX/Mexico border........................................ 106
Mexico and extradition of drug traffickers....................... 132
Mount Pleasant illegal aliens.................................... 140
National Advocacy Center.........................................
104, 146.......................................................
New initiatives.................................................. 93
New State and local assistance programs.......................... 143
Restoring critical infrastructure................................ 96
Rocky Mountain HIDTA............................................. 136
Southwest border staffing........................................ 125
Special immigrant status......................................... 129
Staffing......................................................... 105
Terrorism and international crime, fighting...................... 95
Val Verde County military voting issue........................... 110
Victim witness assistance........................................ 94
Women, violence against.......................................... 94
Violent Crime Reduction Trust Fund
Additional committee question.................................... 326
$1.4 billion cut in VCRTF after 1999 proposed by the President... 326
DEPARTMENT OF STATE
Secretary of State
Additional committee questions................................... 35
Ambassadors and foreign service officers, U.S. treatment of...... 26
Arrearages, advance appropriation for............................ 33
Budget request...................................................
21, 22.........................................................
Percent increase of.......................................... 26
Bulgaria......................................................... 50
Capital improvement funding...................................... 51
Germany...................................................... 52
Capital investment fund.......................................... 34
China, funding request for....................................... 30
Consolidation of the............................................. 31
Crime:
Assisting other countries fight.............................. 46
Coordination of programs..................................... 47
Denmark/biker gangs.............................................. 45
Diplomatic readiness, tools to maintain our...................... 10
Drug enforcement:
Certification of Mexico as cooperating in.................... 14
Sincerity of President Zedillo to cooperate in............... 26
Economic officers, importance of................................. 34
Fees............................................................. 53
Retention of proposal........................................
31, 32.....................................................
Function 150 priorities.......................................... 53
ICASS reform..................................................... 51
Illegal immigration.............................................. 49
International crime.............................................. 18
Impact of on the United States............................... 44
International drug trafficking/HIDTA............................. 43
International organizations supplemental......................... 54
Latin American arms sales policy................................. 41
Leadership through international organizations, tools for........ 11
Mexican progress................................................. 21
Mexico:
Benefits to the United States of certification of............ 25
Evidence to support certification of......................... 20
Senator Hollings' comments on certification of............... 29
Microcredit...................................................... 50
Middle East peace process........................................ 47
NATO:
Enlargement.................................................. 42
Expansion.................................................... 55
Russian disquiet with the enlargement of..................... 19
Position on importation of U.S. military weapons that are
considered relics.............................................. 24
Reorganization................................................... 35
Secretary Albright's opening statement........................... 3
621 provision, current position on the proposed.................. 50
State and FCS, duplication between............................... 54
Technology, outdated............................................. 55
Terrorism........................................................ 48
Coordination of efforts to fight............................. 27
United Nations................................................... 40
Arrearages...................................................
21, 22.....................................................
Budget for the............................................... 26
USIA and ACDA.................................................... 13
Vietnam, new post in............................................. 52
War Crimes Tribunal:
Croatian cooperation with.................................... 23
Foreign assistance for cooperation with...................... 23
U.S. support of.............................................. 24
FEDERAL COMMUNICATIONS COMMISSION
Access charges................................................... 362
Additional committee questions................................... 361
Alcohol advertisements........................................... 360
Appropriation request............................................ 361
Auction debt, shifting management responsibility for............. 354
Budget request, overview of fiscal year 1998..................... 350
Cable rates...................................................... 356
Increases.................................................... 369
Census, mandated PSA time to encourage response to the........... 377
Consumer education and outreach.................................. 352
Digital television............................................... 365
Conversion to................................................ 359
Direct appropriations increase................................... 361
Electronic licensing............................................. 353
Operations, improving............................................ 352
Personnel reduction.............................................. 356
Portals lease.................................................... 360
Public safety spectrum........................................... 351
Radio channel licenses........................................... 357
Relocation cost.................................................. 356
Spectrum:
Auctions..................................................... 358
Cost for public safety entities.............................. 358
Technology to use............................................ 358
Transition to digital TV..................................... 367
Subscriber line charges.......................................... 355
Telecommunications Act implementation............................ 350
Universal service................................................
364, 370, 378..................................................
Funding for.................................................. 354
SECURITIES AND EXCHANGE COMMISSION
Additional committee questions................................... 219
Carryover funds.................................................. 219
Electric industry restructuring.................................. 222
Electronic data gathering analysis and retrieval [EDGAR] system.. 227
Electronic markets............................................... 213
Federal/State regulatory responsibilities........................ 217
Investment advisers.............................................. 227
Market:
Enforcing and regulating the................................. 223
Event, preparation for a..................................... 217
Growth....................................................... 224
Mutual fund:
Fees......................................................... 215
Industry..................................................... 226
Problems..................................................... 215
National Securities Markets Improvement Act of 1996.............. 216
National standards and Federal securities litigation reform...... 219
Offsetting collection fees....................................... 222
Organized crime.................................................. 214
Public Utility Holding Company Act...............................
218, 222.......................................................
Stock market infiltration........................................ 216
Streamlining initiatives......................................... 221
Summary statement................................................ 211
SMALL BUSINESS ADMINISTRATION
Additional committee questions................................... 75
Budget request, fiscal year 1998................................. 59
Business loans (credit reform), subsidy rate on.................. 84
Disaster funding................................................. 71
Disaster Loan Program............................................
85, 88.........................................................
Field structure.................................................. 90
Loan guarantee volume............................................ 90
Loans............................................................ 69
MBDA/SBA minority assistance..................................... 89
Microloan program................................................ 74
New Administrator's goals........................................ 87
Office of Women's Business Ownership............................. 76
Paperwork reduction within the................................... 80
Programs, review of.............................................. 69
Reauthorization of the........................................... 81
Recent accomplishments of the....................................
58, 65.........................................................
SBA 2000......................................................... 74
Section 8(a), the Minority Small Business Program and 8(d), the
Small and Disadvantaged Business Program....................... 83
Reauthorization.............................................. 83
Streamlining................................................. 84
7(a) program..................................................... 71
Small business:
Development centers..........................................
81, 90.....................................................
Development councils......................................... 73
In the U.S. economy.......................................... 58
OSHA's definition of......................................... 86
Small Business Regulatory Enforcement Fairness Act advisory
panels......................................................... 75
Summary statement................................................ 68
Training programs................................................ 70
THE JUDICIARY
Supreme Court of the United States
Ninth circuit split.............................................. 386
U.S. Courts
Administrative Office:
Achievements................................................. 402
Funding...................................................... 402
Plays a unique role.......................................... 401
Staff contributions.......................................... 397
Support of economy and efficiency efforts.................... 404
Automation and technology........................................ 396
Budget request, restrained....................................... 393
Capital cases.................................................... 410
Cost information............................................. 413
Increase defender services costs............................. 395
Cost containment................................................. 411
Cost-of-living adjustment........................................ 414
Court security................................................... 400
Courts, applying technology in the............................... 403
Defender services................................................
400, 408.......................................................
Federal Judicial Center support.................................. 398
Future, looking to the........................................... 398
Judicial compensation............................................ 394
Judiciary's role in society...................................... 393
Jurors and commissioners, fees and expenses of................... 400
Legislative initiatives.......................................... 395
Salaries and Expenses............................................ 399
Space............................................................ 396
Staffing......................................................... 395
Videoconferencing................................................
397, 414.......................................................
Violent crime reduction trust fund............................... 400
Working more efficiently......................................... 395
Workload, uncontrollable......................................... 394
UNITED NATIONS
Arrears..........................................................
230, 238.......................................................
Offsets for.................................................. 243
Credit........................................................... 235
DOD's resources.................................................. 240
International police task force.................................. 238
Israeli housing issue............................................ 239
Office of Internal Oversight Services............................ 243
Opening statement of Ambassador Richardson....................... 230
Peacekeeping..................................................... 231
Reforms..........................................................
230, 241.......................................................
Unencumbered balances............................................ 236
War crimes tribunals............................................. 240
Withdrawal from organizations.................................... 243